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Thursday, December 26, 2013

Does Knowing Medical Prices Save Money? CalPERS Experiment Says Yes

Today's post was shared by Kaiser Health News and comes from

The fact that the cost of a hip replacement can ring up as $15,000 or $100,000 — depending on the hospital — makes a lot of people uncomfortable. But that’s only if they know about the wide price tag variations.

In an effort to raise awareness and rein in what can seem like the Wild West of health care, the California Public Employees’ Retirement System (CalPERS), the second largest benefits program in the country, and Anthem Blue Cross started a “reference pricing” initiative in 2011. The initiative involved a system to guide their enrollees to choose facilities where routine hip and knee replacement procedures cost less than $30,000.

Here’s how it works: The CalPERS program designated certain hospitals that met this cost threshold, and enrollees who chose among these facilities pay only the plan’s typical deductible and coinsurance up to the out-of-pocket maximum. Patients who opted for other in-network hospitals were responsible for regular cost sharing and “all allowed amounts exceeding the $30,000 threshold, which are not subject to an out-of-pocket maximum,” noted the report.

The results tallied savings of $2.8 million for CalPERS, and $300,000 in patients’ cost sharing, according to research released Thursday by the Center for Studying Health System Change for the non-profit group National Institute for Health Care Reform.
Researchers found that patients who received “intensive...
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