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Why Aren’t More Employers Implementing Reference-Based Pricing Benefit Design?

Anna D. Sinaiko, PhD, MPP; Shehnaz Alidina, SD, MPH; and Ateev Mehrotra, MD, MPH
This qualitative study finds low employer adoption of reference-based pricing (RBP) benefit design and that redesign of RBP may be necessary to overcome barriers to adoption.
ABSTRACT

Objectives: There is robust evidence that implementation of reference-based pricing (RBP) benefit design decreases spending. This paper investigates employer adoption of RBP as a strategy to improve the value of patients’ healthcare choices, as well as facilitators and barriers to the adoption of RBP by employers.

Study Design: We conducted a qualitative study using 12 in-depth interviews with human resources executives or their representatives at large- or medium-sized self-insured employers.

Methods: Interviews were conducted and recorded over the phone between March 2017 and May 2017. Interviewees were asked about their adoption of RBP and facilitators and barriers to adoption. We applied thematic analysis to the transcripts.

Results: Despite broad employer awareness of RBP’s potential for cost savings, few employers are including RBP in their benefit design. The major barriers to RBP adoption were the complexity of RBP benefit design, concern that employees could face catastrophic out-of-pocket costs, lack of a business case for implementation, and concern that RBP could hurt the employer’s competitiveness in the labor market. The few employers that have adopted RBP have implemented extensive, year-round employee education campaigns and invested in multipronged and proactive decision support to help employees navigate their choices.

Conclusions: Unless several fundamental barriers are addressed, uptake of RBP will likely continue to be low. Our findings suggest that simplifying benefit design, providing employees protection against very high out-of-pocket costs, understanding which decision-support strategies are most effective, and enhancing the business case could facilitate wider employer adoption of RBP.

Am J Manag Care. 2019;25(2):85-88

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