The Impact of Reference Pricing on Consumer Choice and Provider Pricing Strategies for Laboratory Tests and Diagnostic Imaging

The researchers examined the impact of reference pricing on consumer choice and provider pricing for laboratory tests and diagnostic imaging using claims data from Safeway, a national food retailer, wholesaler and manufacturer with 40,000 employees, retirees and dependents in its self-insured health benefits plan. The researchers interviewed executives and managers at Safeway and Castlight Health in order to understand the structure of Safeway’s reference pricing program and the ways in which it was communicated to employees. They also conducted a difference-in-difference analysis to determine the impact of reference pricing after controlling for patient characteristics and market factors not related to reference pricing. The analysis included a control group of employees from other firms who are in the same geographic regions but were not subject to the reference pricing initiative. The goal of this project was to inform self-funded public and private employers and health insurance plans interested in stimulating price competition among providers while upholding choice for consumers.