Shopping Around Can Save On Colonoscopies
Employers with their fair share of middle-aged workers could significantly reduce how much they and their employees spend on routine colonoscopies by using reference-based pricing, or RBP, rather than traditional health insurance coverage, to pay for the procedures. That’s according to a new study by researchers at the University of California, Berkeley and released by the Health Care Cost Institute, a Washington-based healthcare cost think tank.
Under an RBP approach, a health insurer sets a maximum that it will pay for a specific medical service. If the price for the service falls below that maximum, the usual payment terms apply, such as co-pays and deductibles. If the price for the service falls above that maximum, the enrollee pays 100 percent of the amount above the maximum as well as the co-pays and deductibles that apply.
The California Public Employees’ Retirement System cut its members’ expenditures on colonoscopies by $7 million in the first two years after switching to RBP in 2011, per the researchers, who then wondered how much the country could save if everyone did the same thing. After analyzing medical claim data in the HCCI’s database from Aetna, Humana and UnitedHealthcare, they concluded that the three insurers would spend 8.5 percent less per colonoscopy, or a total of $95 million per year, if they switched to RBP for their enrollees across the country.
The researchers then constructed an interactive map that reveals how much could be saved in individual healthcare markets across the country by using RBP to encourage enrollees—and by extension, employers and employees—to shop around for their colonoscopies.
In Minneapolis, the average price of a colonoscopy is $1,532, and RBP could reduce that amount by almost $107, according to the researchers. In St. Paul, the price is just $1,217, and RBP could trim that another $86. And if you can make it to Rochester, the average price jumps to $2,452, where RBP will take just a little more than $61 off the bill.
The researchers said RBP offers an “innovative solution” to employers and insurers that want to encourage workers and enrollees to shop for medical procedures with high price variations and subsequent high cost to the payers.