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.
ssociation of Reference Payment for Colonoscopy With Consumer Choices, Insurer Spending, and Procedural Complications ONLINE FIRST
JAMA Intern Med. Published online September 08, 2015. doi:10.1001/jamainternmed.2015.4588
ABSTRACT
Importance Regulatory limits on consumer cost sharing permit wide variation in the prices charged for screening and diagnostic tests such as colonoscopy. Employers are experimenting with reference payment initiatives that offer full insurance coverage at low-priced facilities but require substantial cost sharing if patients select high-priced alternatives.
Objective To ascertain the effect of reference payment on facility choice, insurer spending, consumer cost sharing, and procedural complications for colonoscopy.
Design, Setting, and Participants The California Public Employees’ Retirement System (CalPERS) implemented reference payment in January 2012. We obtained data on 21 644 CalPERS enrollees who underwent colonoscopy in the 3 years prior to implementation and on 13 551 patients in the 2 years after implementation. Control group data were obtained on 258 616 Anthem Blue Cross enrollees who underwent colonoscopy and who were not subject to reference payment initiatives during this 5-year period.
Main Outcomes and Measures Consumer choice of facility, price paid per procedure, total insurer spending, consumer cost sharing, and procedural complications.
Exposures Choices, prices, and complications were compared for CalPERS and Anthem patients before and after implementation of reference payments, using difference-in-difference multivariable regressions to adjust for patient demographic characteristics and comorbidities, procedure indications, and geographic location.
Results Utilization of low-priced facilities for CalPERS members increased from 68.6% in 2009 to 90.5% in 2013. After adjusting for patient demographic characteristics, comorbidities, and other factors, the implementation of reference payment increased use of low-priced facilities by 17.6 percentage points (95% CI, 11.8 to 23.4; P < .001). The mean price paid for colonoscopy for the CalPERS population increased from $1587 (95% CI, $1555-$1618) in 2009 to $1716 (95% CI, $1678-$1753) in 2011 and then decreased to $1508 (95% CI, $1469-$1548) in 2013 for patients subject to reference payment. After adjustment for other relevant factors, reference payment was responsible for a 21.0% (95% CI, −26.0% to −15.6%, P < .001) reduction in the price. Reference payment was associated with a small but statistically insignificant decline in procedural complications, from 2.1% in 2009 to 2.0% in 2013 (P = .47). In the first 2 years after implementation, CalPERS saved $7.0 million (28%) on spending for the procedure.
Conclusions and Relevance Implementation of reference payment for colonoscopy was associated with reduced spending and no change in complications.
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