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Walgreen Co. Message Board

  • hotstock13 hotstock13 Nov 3, 2013 8:11 PM Flag

    Reference pricing is the way to go for health care

    [Source: 10/28/13 WSJ]: Reference pricing is a reverse deductible. Rather than a patient paying a set amount for a medical procedure and the insurer the balance, roles are reversed. The insurer now pays a set amount and the patient pays the balance. Such pricing makes the patient more cost conscious. CalPERS, a California public pension fund, used this pricing scheme with orthopedic knee and hip replacement with its 1.3 million members after it saw price differentials for the procedure varying from $20,000 to $120,000. It set its payment limit at $30,000. Results: (a) Patients look at price when they are paying for it. Patients selected low-price hospitals 63% of the time with reference pricing compared to 48% before reference pricing was used. (b) Half of the high-price hospitals cut their rates (to guess near which figure). Overall pricing for joint-replacement surgery DROPPED 26% in the first year and more in the second year. (c) The savings to CalPERS: $6 million. Perhaps corporations can mimic them to lower their health costs. Reference pricing incentivizes patients to select the procedure, not the doctor, who may have a conflict of interest. As an example, MTWA non-invasively determines susceptibility to Sudden Cardiac Arrest. More than 300,000 Americans die from SCA annually (in June, James Gandolfini, of The Sopranos fame, died from SCA). MTWA costs but hundreds of dollars, yet doctors continue to use an older invasive technology (electrophysiology) to detect susceptibility to SCA that costs $9,000.

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