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Original Investigation
September 2016

Association of Reference Pricing for Diagnostic Laboratory Testing With Changes in Patient Choices, Prices, and Total Spending for Diagnostic Tests

Author Affiliations
  • 1School of Public Health, University of California, Berkeley
JAMA Intern Med. 2016;176(9):1353-1359. doi:10.1001/jamainternmed.2016.2492

Importance  Prices for laboratory and other clinical services vary widely. Employers and insurers increasingly are adopting “reference pricing” policies to create incentives for patients to select lower-priced facilities.

Objective  To measure the association between implementation of reference pricing and patient choice of laboratory, test prices, patient out-of-pocket spending, and insurer spending.

Design, Setting, and Participants  We conducted an observational study of changes in laboratory pricing and selection by employees of a large national grocery firm (n = 30 415) before and after the firm implemented a reference pricing policy for laboratory services and compared the findings with changes over the same period for policy holders of a large national insurer that did not implement reference pricing (n = 181 831). The grocery firm established a maximum payment limit at the 60th percentile of the distribution of prices for each laboratory test in each region. Employees were provided with data on prices at all laboratories through a mobile digital platform. Patients selecting a laboratory that charged more than the payment limit were required to pay the full difference themselves. A total of 2.13 million claims were analyzed for 285 types of in vitro diagnostic tests between 2010 and 2013.

Main Outcomes and Measures  Patient choice of laboratory, price paid per test, patient out-of-pocket costs, and employer spending.

Results  Compared with trends in prices paid by insurance policy holders not subject to reference pricing, and after adjusting for characteristics of tests and patients, implementation of reference pricing was associated with a 31.9% reduction (95% CI, 20.6%-41.6%) in average price paid per test by the third year of the program. In these 3 years, total spending on laboratory tests declined by $2.57 million (95% CI, $1.59-$3.35 million). Out-of-pocket costs by patients declined by $1.05 million (95% CI, $0.73-$1.37 million). Spending by the employer declined by $1.70 million (95% CI, $0.92-$2.48 million).

Conclusions and Relevance  When combined with access to price information, reference pricing was associated with patient choice of lower-cost laboratories and reductions in prices and payments by both employer and employees.