Is reference pricing headed to your market?

Learn the warning signs

Shay Pratt, Marketing and Planning Leadership Council

Last year we told you about the reference pricing program for hip and knee replacements established by the California Public Employees' Retirement System (CalPERS). 

Through the program, CalPERS caps the price for joint replacements at $30,000. If a beneficiary chooses a provider that charges more, the individual is responsible for covering the difference.

The program encourages individuals to consider the cost of procedures when selecting providers, but it also places pressure on providers to meet the reference pricing threshold or risk losing access to a sizeable population for at least one grouping of highly-coveted services. The model is also noteworthy because it allows the employer to create a kind of narrow network for a high-volume, high-cost procedure.

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