The Clinton Herald, Clinton, Iowa

National News

May 16, 2014

New health cost controls get go-ahead from feds

(Continued)

Economist James C. Robinson of the University of California at Berkeley studied the CalPERS experiment and found not only that many patients shifted to lower-cost hospitals, saving money, but that expensive hospitals responded by cutting their prices.

Although insurers don't appear to be using reference pricing on the new health exchanges, Robinson said he thinks it's only a matter of time.

"The vast majority of people buying on the exchanges are price sensitive," he said. "People, when they are spending their own money, tend to go for thinner benefits."

However, the strategy appears to be suitable only for a subset of medical care: procedures and tests that are frequently performed, where the prices charged vary widely, but the quality of results generally does not. In addition to knee and hip replacements, that could include such procedures as MRIs and other imaging tests, cataract surgery and colonoscopies.

Robert Berenson, a physician and health policy expert at the Urban Institute think tank, said he worries that advocates of reference pricing may be overlooking quality differences.

"There are differences in MRIs and in how a hip replacement is done," he said. "If you are going to say 'Our judgment is better than your doctor's,' then you've got to meet tests that you are actually assuring quality and safety."

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