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Feds could alter how insurers use reference pricing


As more insurers implement reference pricing to help offset rising healthcare costs, the Department of Labor is deciding whether to change an Affordable Care Act provision that would alter how health plans calculate out-of-pocket costs related to the pricing method, Managed Care reported.

Based on comments on existing regulations, the Department of Labor's Employee Benefits Security Administration is analyzing how insurers that offer reference-priced services should calculate out-of-pocket costs for members who choose providers charging more than the established reference price.

Insurers and employers don't want the out-of-pocket costs to count toward the ACA out-of-pocket limit. They say the point of reference pricing is to address price variation within markets. But they worry that any change to the current ACA provision will decrease the amount of flexibility they have in designing plans.

"Implementing well-designed programs that ensure access to quality hospitals with reasonable prices enables us to provide our members with quality services and control costs," Ann Boynton, deputy executive officer for benefit programs policy and planning at the California Public Employees' Retirement System (CalPERS), told Managed Care.

But consumer groups, unions and the Federal Trade Commission believe insurers would use the out-of-pocket costs as a way to limit networks and shift more financial responsibility onto their members, noted Managed Care

The reference pricing method became a more common approach to lowering costs after CalPERS saved $5.5 million in two years by capping hip and knee replacement procedures, FierceHealthPayer previously reported.

The problem, however, is the widespread misunderstanding surrounding reference pricing. "There's so much confusion about reference pricing because it sounds like employers and plans are setting prices," James Robinson, an economics professor at University of California-Berkeley, told Managed Care. "They're not; they can't set prices."

To learn more:
- read the Managed Care article

Related Articles:
Feds release guidance on reference pricing, network adequacy in ACA group plans
Reference pricing exposes cost variation, but doesn't save money
Holes in the argument for reference pricing