Publications
HCCI’s external researcher publications powered by #HCCIdata

American Academy of Actuaries: Estimating the Potential Health Care Savings of Reference Pricing

Executive Summary:

High and rising health care prices play a major role in the persistent increases in health care spending. This study, undertaken by the American Academy of Actuaries Health Practice Council, explores the potential for reference pricing to counter high health care prices and contain health care spending growth. Reference pricing is a system in which an insurer selects a price it is willing to pay for a health care service. Enrollees who obtain care from a provider with a price at or below the reference price pay only the normally required cost sharing (e.g., deductibles, coinsurance). Enrollees obtaining care from a higher-priced provider pay not only the normally required cost sharing but also an additional cost, typically the difference between the reference price and the allowed charge. Such a system can provide consumers the incentive to seek care at lower-cost providers and can also put pressure on providers to lower their prices.