Class 1: Case Reference Pricing Choice Architecture Flashcards
What is reference pricing?
Patients assume financial responsiblity to chose between low or high cost care
What is choice architecture?
Structure of incentives
What is the impact of reference pricing on consumer costs?
Ambiguous, some studies show more cost and others less
What are high-acuity and low-acuity care?
level of medical care involvement (ie.” high acuity institutional settings in favor of low acuity alternatives”)
What may be the final goal for reference pricing?
increase pressure on price competition and innovation in health care products and processes
Inpatient vs. outpatient?
admitted vs. not admitted to hopsital for care
What are 2 propositions to providers?
- re-design clinical processes to be more effective 2. expand to price-sensitve markets
How does reference pricing work?
employer or insurers establishes max contribution by selcting midpoint in distribution. Employees retain the ability to select provider. Co=payment remians, but plan will only cover up to the set point.
What are exceptions in place for the extra cost sharing when going to high cost facility?
special clinical considerations or remote geography.
What has lowered the pricing leverage of managed care plans (Aetna, Cigna, UHC)?
low consumer price sensitivity (resulting in high insurance coverages) and high provider pricing power (resulting from market consolidating) - So these plans negotiate contracts are very different price points within, and well as across, local markets.
Reference pricing is an alternative to these
With ref. pricing, where did main savings come from? where there negative implications (i.e complications)?
Switching from high cost to low cost facilities (lowest change in MRI and highest (decreae in cost) for Lan tests
no rate of change in complications, as the lower care centers were ALSO accredited
What was ref pricing impact on costs?
Lower for employers and and insurer, but for OVERALL it varied
What are conditions for succesful implementaions of ref. pricing?
1. Shoppable services 2 Measurable quality 3. Availbnle information 4.Contestable markets -> low barriers of entry 5. Exception for special needs 6.Accomodating regulators
How does specialization of providers support lower costs? How can large hospitals do this?
efficiency through learning and focus, ignite cycle of higher patient volumes, lower unit cos, improved performece, and volume gains
Large hospital can create units with their own laeadrship and focus, stand-alone centers
What is bundled episode of care payment?
single bill that covers all patient care. culture of joint destiny different from disjointed fee-for-service payment -> could bring saving when shifting the whole need to a lower-cost setting with less duplication, complexity, and waste
