Tiered Provider Networks and Reference Pricing
Download
Report
Transcript Tiered Provider Networks and Reference Pricing
Tiered Provider Networks and
Reference Pricing:
Promise and Pitfalls
Lynn Quincy
FUSA Health Action
January 24, 2014
1
Tiered Provider Networks
Hospitals and/or physicians grouped into tiers
based on quality and cost metrics.
Patient cost-sharing lowest for the “high
value” tier, incenting patients to use those
providers.
Also known as:
Value-based provider networks
Select provider networks
2
Narrow Networks
Only one in-network tier is offered,
nominally consisting of providers that
are the best value.
4
Reference Pricing
To address variation in pricing, health plan identifies a
cap (“reference price”) for a clinical service.
Examples
CalPERS: Hip Replacement
$15,000
$30,000
$110,000
Safeway: Colonoscopy
$848
$1,500
Source: Wilson, Private Sector Approaches to Health Care Cost Containment: A
Closer Look, Consumers Union and RWJF, November 2013.
$5,984
5
Reference Pricing
Enrollees get a list of providers who
accept the reference price
Enrollees pay the balance if the
provider charges more than the
reference price
6
Reference Pricing:
Dramatic Results
After instituting reference pricing for
hip/knee replacements, CalPERS
experienced 20.2% decline in
spending. (A small portion even
accrued to enrollees!)
Savings due to:
price reductions from higher cost
facilities
greater share of procedures being
conducted at “value” priced facilities
Source: Robinson & MacPherson. “Payers Test Reference Pricing and Centers of Excellence
to Steer Patients to Low-Price and High-Quality Providers,” Health Affairs 2012.
7
Why choose $30,000 for allowed
charges?
• High volume, high quality facilities with geographic dispersion
were charging less than $30,000
95%
percentile
$74,721
5% percentile
$12,588
$30,000
Source: University of California, Berkeley analysis, June 2013. Data for 2008 to 2010. Permission granted for use in
this slide deck.
Allowed charges for the hip or knee replacement
pre- and post- implementation of value based
purchasing design program
95%
percentile
Pre -- $74,721
Post -$40,302
Pre-Implementation
$30,000
Post-Implementation
Source: University of California, Berkeley analysis, June 2013. Pre-implementation data for 2008 to 2010 and postimplementation data for 2011-2012.. Permission granted for use in this slide deck.
Good for Consumers?
Considerations:
Markets have tremendous variation in provider
charges, not reflecting quality differences
Consumers need relief from rising health costs
Consumers believe that high cost=high quality
In surveys and structured focus groups,
consumers have a preference for narrower
networks vs. paying higher premiums or higher
cost-sharing, as long as quality isn’t affected.
10
Consumer Concerns
Can consumers navigate this increased
complexity?
Poor consumer-facing measures of network
adequacy – will a consumer know the plan
features a narrow network?
Do tiered/narrow networks increase
“surprise” out-of-network charges?
If providers are good at some things but
not others, what tier do they go to?
Are some networks being created with little
regard for quality?
11
How Is Provider Quality Measured?
National Quality Forum has endorsed
700+ provider performance measures
Survey of large commercial plans
shows tremendous variation in which
measures are used
Little research showing which
measures are effective
A. Higgins, “Provider Performance Measures in Private and Public Programs: Achieving12
Meaningful Alignment with Flexibility to Innovate,” Health Affairs 32, no. 8 (2013)
Health Plans’ Use Of Performance Measures, By Type Of Measure.
Source: Higgins A et al. Health Aff 2013;32:1453-1461
©2013 by Project HOPE - The People-to-People Health Foundation, Inc.
How Is Provider Quality Measured?
Commonly used measures focus on:
cardiovascular conditions,
diabetes,
preventive services, and
patient safety
What if we care about maternity?
A. Higgins, “Provider Performance Measures in Private and Public Programs: Achieving14
Meaningful Alignment with Flexibility to Innovate,” Health Affairs 32, no. 8 (2013)
Thank you!
Please email with
questions:
lquincy “at” consumer.org
Health cost resources
available on:
www.consumersunion.org/healthcare-costs
15