Implementation Of Reference Pricing Research Articles

Reference Pricing Reduces Total Knee Implant Costs

BackgroundReference pricing establishes a set price a hospital is willing to pay for total knee arthroplasty (TKA) components regardless of vendor. The hospital contracts with vendors that sell implants to the hospital at the hospital-dictated prices. Orthopedic surgeons are free to utilize any implant system that has met the reference price using their best clinical judgment. Our hypothesis is that vendors will meet the set price and selection of different vendors and technologies will not change. MethodsWe retrospectively analyzed the 12 months prior (May 2017-2018) and the most recent 12 months after (March 2019-2020) implementing reference pricing at our institution. We investigated differences in average prices for total implant and component costs. We evaluated cost of implants with respect to surgeon volume, assessed the rate of cementless TKAs used, and number of companies purchased from before and after reference pricing. ResultsIn total, 7148 TKAs were included in the study with 3790 arthroplasties before and 3358 after implementation of reference pricing. Overall implant costs decreased by 16.7% (P < .0001). All individual knee component costs decreased by at least 11% (P = .0003). No difference in prices were found among surgeons (P = .9758). Cementless knee use increased by 9% (P < .0001; odds ratio 1.94, 95% confidence interval = 1.69-2.24). No vendor business was lost. ConclusionThe strategy of reference pricing significantly reduced costs for TKA implants at our institution. The reduction in implant costs was regardless of surgeon volume. Newer technologies were utilized more often after reference pricing. This strategy represents a significant cost-savings approach for other hospitals.

Physician and Patient Adjustment to Reference Pricing for Drugs

Reference pricing has been shown to reduce drug spending in Europe and has been adopted by some employers and labor unions in the United States. Its association with patient cost sharing depends on whether and how quickly physicians adjust their prescribing patterns to favor the least costly alternatives within each therapeutic class. To examine whether the implementation of reference pricing is associated with physicians and patients shifting to lower-cost drugs, thereby reducing consumer cost sharing and the prices paid by employers. This economic evaluation included employees of Catholic organizations who purchased health insurance through the Reta Trust and a random sample of employees of public sector organizations who purchased insurance through the California Public Employees' Retirement System (CalPERS) as a comparison group between July 1, 2010, and December 31, 2017. Data analysis was performed from January 1, 2019, to September 1, 2019. The Reta Trust implemented reference pricing in July 2013; CalPERS did not adopt reference pricing during the study period. Probability that the drug prescribed was the least costly alternative within its therapeutic class, price paid per prescription, and patient cost sharing per prescription. Multivariable, difference-in-differences regression analysis of drug insurance claims was performed for patients before and after implementation of reference pricing, adjusted for patient characteristics, each drug's therapeutic class, and the month and year of the prescription. During the study period, a total of 1.2 million prescriptions were submitted by 34 319 individuals covered by Reta Trust and 2.1 million prescriptions were submitted by 738 159 individuals covered by CalPERS. In the first 2.5 years after implementation of reference pricing, the percentage of prescriptions made for the low-priced drug within each therapeutic class increased by 5.1 percentage points (95% CI, 1.8 to 8.4 percentage points), patient cost sharing increased by 10.3% (95% CI, -1.6% to -23.6%; this difference was not statistically significant), and prices paid decreased by 19.1% (95% CI, -30.2% to -6.2%) for Reta Trust patients compared with CalPERS patients. During the subsequent 2-year postimplementation period, the percentage of prescriptions made for the low-priced drug increased an additional 6.2 percentage points (95% CI, 2.3 to 10.1 percentage points), patient cost sharing decreased by 21.3% (95% CI, -31.2% to -9.9%), and prices paid increased by 7.2% (95% CI, -12.6% to 31.4%; this difference was not statistically significant). Relative to the change experienced by the CalPERS population, during the study period, the share of prescriptions for lower-priced drugs increased by 6.3 percentage points (8.9% relative increase), the mean prescription drug price decreased by $9.5 (12.1% relative decrease), and the mean patient cost sharing decreased by $1.8 (4.3% relative decrease). In this study, reference pricing was associated with a combination of lower prices paid by employers and lower cost sharing by employees but with a time lag in prescribing habits by physicians.

Association of Reference Pricing with Drug Selection and Spending

BackgroundIn the United States, prices for therapeutically similar drugs vary widely, which has prompted efforts by public and private insurers to steer patients toward the lower-priced options. Under reference pricing, the insurer or employer establishes a maximum contribution it will make toward the price of a drug or procedure, and the patient pays the remainder.MethodsWe used difference-in-differences multivariable regression methods to analyze changes in prescriptions and pricing for 1302 drugs in 78 therapeutic classes in the United States, before and after implementation of reference pricing by an alliance of private employers. We assessed trends for the study group relative to those for an employee group that was not subject to reference pricing. The study included 1,122,741 prescriptions that were reimbursed during the period from 2010 through 2014.ResultsImplementation of reference pricing was associated with a higher percentage of prescriptions that were filled for the lowest-priced reference drug within its therapeutic class (difference in probability, 7.0 percentage points; 95% confidence interval [CI], 4.0 to 9.9), a lower average price paid per prescription (−13.9%; 95% CI, −23.8 to −2.7), and a higher rate of copayment by patients (5.2%; 95% CI, 0.2 to 10.4) than in the comparison group. During the first 18 months after implementation, spending for employers was $1.34 million lower and the amount of copayments for employees was $0.12 million higher than in the comparison group.ConclusionsImplementation of reference pricing was associated with significant changes in drug selection and spending for a population of patients covered by employment-based insurance in the United States. (Funded by the Agency for Healthcare Research and Quality and the Genentech Foundation.)

Reference Pricing, Consumer Cost-Sharing, and Insurer Spending for Advanced Imaging Tests.

Fees charged for similar imaging tests often vary dramatically within the same market, leading to wide variation in insurer spending and consumer cost-sharing. Reference pricing is an insurance design that offers good coverage to patients up to a defined contribution limit but requires the patients who select high-priced facilities to pay the remainder out of pocket. To measure the association between implementation of reference pricing and patient choice of facility, test prices, out-of-pocket spending, and insurer spending for advanced imaging (CT and MRI) procedures. Difference-in-differences multivariable analysis of insurance claims data. Study included 4751 employees of a national grocery chain (treatment group) and 23,428 enrollees in the nation's largest private insurance plan (comparison group) that used CT or MRI tests between 2010 and 2013. Patient choice of facility, price paid per test, patient out-of-pocket cost-sharing, and employer spending. Compared with trends in prices paid by insurance enrollees not subject to reference pricing, and after adjusting for characteristics of tests and patients, implementation of reference pricing was associated with a 12.5% (95% CI, -25.0%, 2.1%) reduction in average price paid per test by the end of the second full year of the program for CT scans and a 10.5% (95% CI, -16.9%, 3.6%) for MRIs. Out-of-pocket cost-sharing by patients declined by $71,508 (13.8%). The savings accruing to employees amounted to 45.5% of total savings from reference pricing, with the remainder accruing to the employer. Implementation of reference pricing led to reductions in payments by both employer and employees.

Association of Reference Pricing for Diagnostic Laboratory Testing With Changes in Patient Choices, Prices, and Total Spending for Diagnostic Tests.

Prices for laboratory and other clinical services vary widely. Employers and insurers increasingly are adopting "reference pricing" policies to create incentives for patients to select lower-priced facilities. To measure the association between implementation of reference pricing and patient choice of laboratory, test prices, patient out-of-pocket spending, and insurer spending. We conducted an observational study of changes in laboratory pricing and selection by employees of a large national grocery firm (n = 30 415) before and after the firm implemented a reference pricing policy for laboratory services and compared the findings with changes over the same period for policy holders of a large national insurer that did not implement reference pricing (n = 181 831). The grocery firm established a maximum payment limit at the 60th percentile of the distribution of prices for each laboratory test in each region. Employees were provided with data on prices at all laboratories through a mobile digital platform. Patients selecting a laboratory that charged more than the payment limit were required to pay the full difference themselves. A total of 2.13 million claims were analyzed for 285 types of in vitro diagnostic tests between 2010 and 2013. Patient choice of laboratory, price paid per test, patient out-of-pocket costs, and employer spending. Compared with trends in prices paid by insurance policy holders not subject to reference pricing, and after adjusting for characteristics of tests and patients, implementation of reference pricing was associated with a 31.9% reduction (95% CI, 20.6%-41.6%) in average price paid per test by the third year of the program. In these 3 years, total spending on laboratory tests declined by $2.57 million (95% CI, $1.59-$3.35 million). Out-of-pocket costs by patients declined by $1.05 million (95% CI, $0.73-$1.37 million). Spending by the employer declined by $1.70 million (95% CI, $0.92-$2.48 million). When combined with access to price information, reference pricing was associated with patient choice of lower-cost laboratories and reductions in prices and payments by both employer and employees.

Physician gender and changes in drug prescribing after the implementation of reference pricing in British Columbia

Background: Gender-specific attitudes and communication styles are known to influence both the content and outcome of medical visits. Therefore, gender-specific differences in response to cost containment may also occur. Objective: The purpose of this study was to assess the effect of physician gender on changes in prescribing patterns of angiotensin-converting enzyme (ACE) inhibitors after the implementation of reference pricing for prescription drugs in British Columbia, Canada. Methods: Reference pricing is a cost-sharing policy by which use of high-priced medication requires out-of-pocket payment of the price difference between the cost-sharing drug and a lower-cost drug within the same class. In British Columbia, reference pricing for ACE inhibitors was introduced on January 1, 1997. Analysis was carried out on linked pharmacy and medical service claims data on 927 female and 2922 male physicians treating 47,680 Pharmacare Plan A enrollees who were aged >-65 years and were prescribed a high-priced ACE inhibitors before the implementation of reference pricing. Results: Female physicians (24.1% of all physicians) were younger, treated more female patients, had patients with fewer chronic illnesses, and worked more often as general practitioners than did male physicians. The patients of female physicians were more likely to receive a written physician-requested exemption from copayment, according to a multivariate logistic regression analysis (odds ratio [OR], 1.25; 95% CI, 1.04–1.50). Data suggested that patients of female physicians were more likely to stop antihypertensive drug therapy (OR, 1.43; 95% CI, 0.96–2.13); however, this was independent of the new copayment policy. Conclusions: The results provide empirical evidence that physician gender is associated with slightly different patient management strategies regarding physician-requested exemptions after the start of a new drug cost-sharing policy. However, these differences are unlikely to have meaningful clinical or economic consequences.