October 28, 2013
DEFINED CONTRIBUTION, NOT DEFINED BENEFIT:
Comparison Shopping for Knee Surgery : The same procedure Might cost $ 20,000 or $ 120,000. Here's one way to bring down prices. (JAMES C. ROBINSON, Oct. 27, 2013, WSJ)
A small number of large employers have developed "reference pricing" for At least some of the services covered by their health-insurance programs, a major shift from traditional designs benefit. Some insurers are Incorporating it into their product designs. Under reference pricing, the employer or insurer sets a maximum contribution it will make toward the payment for a test or treatment. The employee or enrollee can select any hospital or clinic but must pay the difference Between the contribution limit and the actual price.Reference pricing serves as a reverse deductible. Rather than the patient paying up to a defined limit and then the insurer covering the remainder, the insurer pays up to a defined limit and the patient pays the remainder. This has the remarkable feature of exposing the patient to the variation in prices for treatments That are above deductible thresholds. And the patient's contribution is not limited by an annual out-of-pocket maximum.Apparently, the prospect of paying more sharpens the attention of buyers on the bottom line, que in turn changes the behavior of sellers.An example of reference pricing is the initiative by the California Public Employees' Retirement System, or Calpers, for orthopedic knee and hip replacement.
Medicine is just another consumer good.Posted by Orrin Judd at October 28, 2013 9:28 PM