National Institute for Health Care Management (NIHCM)
March 5, 2018
Prices for common medical services often vary significantly across providers even when similar quality can be expected from all providers. Opportunities for cost savings exist if patients using these services can be encouraged to seek out lower-priced providers. Evidence is mounting, however, that price transparency tools do little to encourage such price shopping; only a very small portion of patients use these tools, limiting their overall impact. This finding is seen even among patients in high deductible health plans, who should have a strong financial incentive to shop for lower-priced providers. This study examines the additive impact of an alternative way to incent patients to price shop for specific services, reference pricing. With reference pricing, patients have access to a broad network of providers but must pay the full difference between the provider’s price and a pre-set threshold if they receive care from a high-priced provider.
What This Study Found
- When given access to a price transparency tool alone, employees of a major national retailer were not more likely to shop for lower-priced providers, despite being enrolled in a high deductible health plan.
- When the incentives of reference pricing were added to the price transparency tool, patients made large shifts to lower-priced providers. The average price paid for a laboratory test fell by 27 percent once reference pricing was introduced, and the average price paid per imaging test fell by 13 percent. These changes reflect price shopping by patients who used the targeted services, not a response by providers to lower their prices.