NCPA - National Center for Policy Analysis

Companies Steering Workers to Lower Priced Medical Care

September 27, 2011

Executive Sarah Gardner recently rolled out a plan that sets limits on how much her company will pay toward a range of tests and procedures, from MRIs to hysterectomies.  She wants her workers to be savvy medical shoppers and encourages them to find the best price for the covered procedures, though the workers may choose more expensive providers and make up the difference themselves.  Before the new program, workers' incentive to shop around was limited because they had no idea -- or any easy way to find out -- that prices for many types of medical treatments varied widely, says Kaiser Health News.

Other employers and insurers are pursuing the same strategy, experimenting with ways to slow rapidly rising spending on medical care.  Employers say they hope the efforts, often called "reference pricing," will get patients to act more like consumers -- and drive down the cost of some procedures.

The idea of having employees pay the difference for higher-cost services is not new.

  • About 39 percent of large employers surveyed in an August National Business Group on Healthreportsaid they use the technique in their prescription drug programs, often by requiring workers who want a brand-name drug when a generic is available to pay the difference.
  • Some employers encourage workers to use "high-performance" networks of doctors or hospitals by lowering their copayments if they seek care there.

Source: Julie Appleby, "Companies Steering Workers to Lower Priced Medical Care," Kaiser Health News, September 22, 2011.

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