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Reference pricing (RP) is an insurance design that can be used to incentivize patients to use low-price settings. While RP is not intended to affect overall utilization, it could unintentionally reduce utilization. We examined whether utilization was reduced when a large employer adopted RP for selected elective surgeries, including inpatient joint replacement surgery and outpatient cataract surgery, colonoscopy, and arthroscopic surgery. Data included a treatment group subject to RP implementation and a comparison group that was not. We applied autoregressive integrated moving average analysis as comparison-population interrupted time-series analysis to determine whether there were procedure reductions following RP implementation. We find no evidence of short-term decreases (within 3 months of RP implementation). However, we find very modest declines of approximately 14 (20%) fewer arthroscopic knee surgeries 6 months after RP implementation and 129 (17.2%) fewer colonoscopies 8 months after RP implementation. There were no declines in the other procedures examined. [ABSTRACT FROM AUTHOR]

This study examines how reference-based benefits (RBB) affect patient out-of-pocket payments across outpatient procedures. The California Public Employees' Retirement System (CalPERS) implemented RBB asymmetrically for outpatient procedures in 2012, only applying RBB to outpatient procedures performed in a hospital outpatient department (HOPD), and not applying RBB to outpatient procedures performed in a lower cost ambulatory surgery center. Using claims data (2009-2013) on arthroscopy and colonoscopy services, we found that for colonoscopy, CalPERS patients paid an average of 63.9% (p < .01) more for HOPDs than ambulatory surgery centers in 2012. For arthroscopy, no statistically different cost sharing was found on average. However, high-priced HOPDs were 17.3% and 17.9% less likely to be chosen by CalPERS patients in 2012 for colonoscopy and arthroscopy, respectively. These magnitudes increased in 2013 to 25.2% and 24.2% less, respectively. Overall, responsiveness to RBB with regard to the most expensive HOPDs was similar despite varying cost sharing by procedure. [ABSTRACT FROM AUTHOR]

We study the introduction of reference pricing to the California Public Employees' Retirement System. Reference pricing changes the relative price of using a hospital versus an ambulatory surgery center (ASC) for patients receiving a colonoscopy, leading to as good as random variation in patients' use of ASCs. We find a 10 percentage point increase in the share of patients using an ASC, leading to a $2300 to $1700 reduction in prices paid for patients who switch to ASCs. Our results suggest that the use of ASCs has a causal effect on prices paid and has no negative effect on patient health outcomes. [ABSTRACT FROM AUTHOR]

Background: Hospital-based outpatient departments traditionally charge higher prices for ambulatory procedures, compared with freestanding surgery centers. Under emerging reference-based benefit designs, insurers establish a contribution limit that they will pay, requiring the patient to pay the difference between that contribution limit and the actual price charged by the facility. The purpose of this study was to evaluate the impact of reference-based benefits on consumer choices, facility prices, employer spending, and surgical outcomes for orthopaedic procedures performed at ambulatory surgery centers.Methods: We obtained data on 3962 patients covered by the California Public Employees' Retirement System (CalPERS) who underwent arthroscopy of the knee or shoulder in the three years prior to the implementation of reference-based benefits in January 2012 and on 2505 patients covered by CalPERS who underwent arthroscopy in the two years after implementation. Control group data were obtained on 57,791 patients who underwent arthroscopy and were not subject to reference-based benefits. The impact of reference-based benefits on consumer choices between hospital-based and freestanding facilities, facility prices, employer spending, and surgical complications was assessed with use of difference-in-differences multivariable regressions to adjust for patient demographic characteristics, comorbidities, and geographic location.Results: By the second year of the program, the shift to reference-based benefits was associated with an increase in the utilization of freestanding ambulatory surgery centers by 14.3 percentage points (95% confidence interval, 8.1 to 20.5 percentage points) for knee arthroscopy and by 9.9 percentage points (95% confidence interval, 3.2 to 16.7 percentage points) for shoulder arthroscopy and a corresponding decrease in the use of hospital-based facilities. The mean price paid by CalPERS fell by 17.6% (95% confidence interval, -24.9% to -9.6%) for knee procedures and by 17.0% (95% confidence interval, -29.3% to -2.5%) for shoulder procedures. The shift to reference-based benefits was not associated with a change in the rate of surgical complications. In the first two years after the implementation of reference-based benefits, CalPERS saved $2.3 million (13%) on these two orthopaedic procedures.Conclusions: Reference-based benefits increase consumer sensitivity to price differences between freestanding and hospital-based surgical facilities.Clinical Relevance: This study shows that the implementation of reference-based benefits does not result in a significant increase in measured complication rates for those subject to reference-based benefits. [ABSTRACT FROM AUTHOR]