25 Jul Patients Switch to Lower-Priced Labs If Required To Pay Out-of-Pocket Difference
MedicalResearch.com Interview with:
James C. Robinson PhD
Leonard D. Schaeffer Professor of Health Economics
Director, Berkeley Center for Health Technology
Division Head, Health Policy and Management
University of California
School of Public Health
MedicalResearch.com: What is the background for this study?
Response: To moderate the increase in insurance premiums, employers are increasing consumer cost sharing requirements. Under reference pricing, the employer establishes a limit to what it will contribute towards each service or product, typically set at the 60th percentile or other midpoint in the distribution of prices in the market. If the patient selects a facility charging less than or equal to this contribution, he/she receives full coverage, but if a more expensive facility is chosen, the patient must pay the full difference.
MedicalResearch.com: What are the main findings?
Response: This study compares the experiences of 30,000 employees of a large grocery chain, which implemented reference pricing for laboratory tests, with those of 180,000 enrollees covered by a national insurer that did not use the cost sharing strategy. The grocery employees reduced their use of high-priced labs from 46% to 16%, leading to a 32% reduction in spending on lab tests (compared to the enrollees in the national insurer). Of the total saved, 41% accrued to employees in terms of lower out-of-pocket spending and the remainder to the employer in terms of lower claims payments for lab tests.
MedicalResearch.com: What should readers take away from your report?
Response: Patients will switch from high-priced to lower-priced laboratories when they are required to pay the differential out of their own pockets. This finding for laboratory tests is consistent with analogous findings on the impact of reference pricing on surgical and diagnostic procedures and advanced imaging tes
MedicalResearch.com: What recommendations do you have for future research as a result of this study?
Response: We need better understanding of how consumers respond to benefit design changes and better understanding of who consumer-oriented incentives compare with physician-oriented incentives such as the emerging ‘value-based’ payment methods.
MedicalResearch.com: Is there anything else you would like to add?
Response: Patients are not stupid. When given information and incentives, they switch from high-priced to low-priced laboratories unless convinced that especially high prices are accompanied by especially high quality.
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