Findings from HCFO-Funded Work on Reference Pricing Featured in Reuters

Publication Date: 
July 27, 2016

Commonly used in Europe for medications, reference pricing is a mechanism by which insurers reimburse a patient’s medication or health care service up to a certain limit, and the patient pays the rest out of pocket if the price charged is higher. The mechanism incentivizes patients to choose medications or services as close to the reference price as possible to reduce their own spending. In a recent piece for Reuters, Kathryn Doyle discusses findings from a HCFO-funded study from James Robinson, Ph.D., University of California, Berkeley, that found when employers and insurers used reference pricing for diagnostic tests, the average price paid for those tests decreased by almost a third. Robinson notes that reference pricing puts some, but not most, of the cost of a service on the patient, so it should steer people to lower cost services rather than stopping them from seeking care at all. He cautions that reference pricing is not appropriate for all types of health care, such as urgent care and hospital tests. In his HCFO study, Robinson and colleagues examined the impact of reference pricing on consumer choice and provider pricing for laboratory tests and diagnostic imaging using claims data from Safeway.