California Saves $7 Million on Colonoscopies by Limiting Reimbursements to High-Cost Facilities
A new payment model known as “reference pricing” saved the California Public Employees’ Retirement System (CalPERS) $7 million on colonoscopies since its introduction in 2012, according to an AHRQ-funded study. Under reference pricing, CalPERS covered the full cost of a colonoscopy if a member chose to have it at a facility that cost less than the 80th percentile of prices in the market ($1,500), but covered only the first $1,500 for the same procedure at higher-priced facilities, with the patient responsible for the remaining cost. The authors found that implementation of reference payments greatly increased the percentage of patients choosing lower-priced facilities. This led to a substantial reduction in the mean price paid for the procedure (21 percent less on average), without any observed reduction in safety. In the first two years after implementation, CalPERS saved 28 percent compared with what it would have spent in the absence of reference payments. The study was published online September 8 by the journalJAMA Internal Medicine.