Reference pricing: The case of screening colonoscopies

Area of Science:

• Health Economics
• Healthcare Policy
• Surgical Outcomes

Background:

• Reference pricing is a healthcare policy tool.
• Colonoscopy procedures can be performed in hospitals or ambulatory surgery centers (ASCs).
• Understanding the economic and clinical impact of shifting procedures to ASCs is crucial.

Purpose of the Study:

• To evaluate the impact of reference pricing on the utilization of ASCs for colonoscopies.
• To determine the effect of reference pricing on healthcare costs.
• To assess the influence of ASC utilization on patient health outcomes.

Main Methods:

• The study analyzed data from the California Public Employees' Retirement System (CalPERS).
• Reference pricing was introduced, altering the relative cost of hospital versus ASC procedures.
• The policy created near-random variation in patient choice between hospitals and ASCs.

Main Results:

• A 10 percentage point increase in ASC utilization was observed.
• Prices paid decreased significantly for patients switching to ASCs, from $2300 to $1700.
• The shift to ASCs demonstrated a causal effect on reducing prices.

Conclusions:

• Reference pricing effectively reduced the cost of colonoscopies.
• Increased use of ASCs, driven by reference pricing, did not adversely affect patient health.
• ASCs represent a cost-effective alternative for certain procedures.