The Impact of Reference Pricing on High Cost Medical Procedures

University Of California Berkeley, Berkeley CA

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Abstract

DESCRIPTION (provided by applicant): This project evaluates the effectiveness of reference pricing in reducing expenditures while maintaining quality of care for five common procedures: hip replacement surgery, knee replacement surgery, arthroscopic surgery, cataract surgery and colonoscopy. It is intended to produce knowledge that will significantly improve the efficiency of healthcare in the U.S. while maintaining both quality and effectiveness. The specific aim of this project is to test the following hypotheses: (1) the implementation of reference pricing will resul in a decrease in average total expenditures per procedure for each of the five procedures listed above, (2) the implementation of reference pricing will result in a decrease in average total expenditures per procedure paid for by the insurer for each of the five procedures listed above, (3) the implementation of reference pricing will result in a small increase in average out-of-pocket expenditures per procedure for each of the five procedures listed above, and (4) the implementation of reference pricing will result in no change in the quality of each of the five procedures listed above. The project will evaluate a public-private reference pricing initiative in California using six years of medical claims data and employ a quasi-experimental design with one treatment group and two control groups. Both parametric difference-in-difference models and advanced non-parametric matching techniques (genetic matching) will be employed in order to determine whether the results are sensitive to the analytic approach used.