Please note: All research in progress seminars are off-the-record. Any information about methodology and/or results are embargoed until publication.

Reference-based pricing (RBP) is a healthcare benefit design through which employers/payers seek to address price variation by placing a cap (or ³reference price²) on clinical services.  For example, if the negotiated rate for a cholesterol test ranges from $10 to $150, a payer may set the reference price at $20.  If a patient receives the cholesterol test from a provider below the reference price, regular benefits apply; however, if the patient receives the test from a provider above the reference price, the patient is responsible for the costs above the reference price.  RBP has been used previously in managing pharmaceutical costs with moderate success. More recently, RBP has been expanded to selected healthcare services, such as lab testing, imaging, and hip replacement surgery.  Initial results show cost savings through patient behavioral change and shifting of costs from payers to patients.  In this RIP, we¹ll describe an implementation of reference pricing for medical services, the behavior changes in health services utilization, and costs associated with this benefit design.

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MSOB X303
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1265 Welch Road
Stanford, CA 94305
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FSI Contact
Christine Geibel