This Trends From the Field article about awareness and adoption of reference-based pricing in The American Journal of Managed Care® comes as the price of medical services is increasingly seen as a driver of the cost of healthcare, even as overall trends level off or stabilize.
(CRANBURY, N.J. — February 12, 2019) - Few employers are using reference-based pricing (RBP) benefit design, even though there is broad awareness of its potential for delivering savings, according to a qualitative study published in the February issue of The American Journal of Managed Care®.
The authors, from Harvard T.H. Chan School of Public Health, Harvard Medical School, and Beth Israel Deaconess Medical Center, sought to understand employers’ point of view about RBP as a strategy to engage employees in healthcare decision making, as well as their adoption of and concerns about this type of benefit design.
Under RBP, employees have a financial incentive to use lower-cost providers, usually for nonemergent medical services where a large pool of providers is available. The plan determines a “reference price” for a given medical service, and the plan will cover medical expenses for that service up to the reference price. If a patient chooses a provider whose negotiated price with the plan is above the reference price, the patient is responsible for all costs above the reference price, including all cost sharing.
The paper, “Why Aren’t More Employers Implementing Reference-Based Pricing Benefit Design?” identifies the roadblocks to adopting RBP, as well as three strategies that might boost participation in RBP.
Employers identified several concerns that kept them from implementing RBP designs, including plan complexity, fear of catastrophic out-of-pocket costs, and worries that RBP could hurt employee recruitment in a tight labor market.
“Our interviews revealed that although employers were aware that RBP could lower spending, the difficulty they expected to face to put RBP in place and the possible risks for employees, both current and future, left them deciding it was not worth it,” said lead author Anna D. Sinaiko, PhD, MPP, of Harvard T.H. Chan School of Public Health.
Simplifying the plans, setting out-of-pocket maximums to protect patients from catastrophic costs, and using “turnkey” solutions for communicating the changes to employees could help increase uptake of RBP plans, the authors wrote.
“Solutions that can eliminate employers’ biggest concerns about RBP, such as these, are likely needed if there is to be broader uptake of RBP benefit design than what we are currently seeing in the market,” Sinaiko said.
For the full February issue, click here.
About The American Journal of Managed Care®
The American Journal of Managed Care® (AJMC®) is a peer-reviewed, Medline-indexed journal that keeps readers on the forefront of health policy by publishing research relevant to industry decision makers as they work to promote the efficient delivery of high-quality care. AJMC.com is the essential website for managed care professionals, distributing industry updates daily to leading stakeholders. Other titles in the AJMC® family include The American Journal of Accountable Care® and two evidence-based series, Evidence-Based Oncology™ and Evidence-Based Diabetes Management™. These comprehensive offerings bring together stakeholder views from payers, providers, policymakers and other industry leaders in managed care. To order reprints of articles appearing in AJMC® publications, please contact Gil Hernandez at 609-716-7777, ext. 139.
AJMC® Media Contacts
Alexandra Ventura, 609-716-7777, ext. 121
John Patricolo, 609-325-4630, ext. 133
Looking Back on ISPOR 2024: Hot Policy Topics, Welcome Focus on Employers, and More
May 10th 2024Kimberly Westrich, MA, chief strategy officer of the National Pharmaceutical Council, reflects on the most valuable learnings from the 2024 meeting of ISPOR—The Professional Society for Health Economics and Outcomes Research, including lively discussions of the Inflation Reduction Act and workshops on value assessment.
Read More
How Can Employers Leverage the DPP to Improve Diabetes Rates?
February 15th 2022On this episode of Managed Care Cast, Jill Hutt, vice president of member services at the Greater Philadelphia Business Coalition on Health, explains the Coalition’s efforts to reduce diabetes rates through the Diabetes Prevention Program (DPP).
Listen
Key Issues Influencing 2022 Employer Health Care Strategy and Plan Design
August 31st 2021On this episode of Managed Care Cast, we speak with Ellen Kelsay, president and CEO of the Business Group on Health, on the findings from her organization's 2022 Large Employers’ Health Care Strategy and Plan Design Survey.
Listen
Retaining Health Care Workers Starts With Insights on “How We Can Stop Breaking Them”
March 2nd 2024Friday's keynote speaker, Katherine A. Meese, PhD, addressed the conference theme of workforce support at the Association of Cancer Care Centers 50th Annual Meeting and Cancer Center Business Summit.
Read More
Lowering Cardiometabolic Drug Costs May Improve Diabetes Health Outcomes
February 9th 2024Patients enrolled in a preventive drug list (PDL) benefit saw an 8.4% reduction in acute, preventable diabetes complication days, and PDL members residing in lower-income areas saw a 10.2% decrease compared with control members.
Read More