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Reference Pricing Lowers Colon Cancer Screening Cost

By Sarah Wickline Wallan, MedPage Today  
   September 11, 2015

The California Public Employees' Retirement System saved $7 million after replacing a cost-sharing model with a reference pricing model for colonoscopy procedures, researchers say. From MedPage Today.

This article originally appeared in Medpage Today.

A California public employee retirement system saved $7 million just a couple of years after replacing a cost-sharing model with a reference pricing model for colonoscopy procedures, researchers reported.

For the years tracked before implementation of reference pricing, 68.6% of the California Public Employees' Retirement System (CalPERS) enrollees opted for colonoscopies at low-priced ambulatory surgery centers (ASCs) versus 86% in 2012 and 90.5% in 2013 after implementation, according to James C. Robinson, PhD, of the University of California Berkeley, and colleagues.

After adjustments for patient demographics, the implementation of reference payment boosted the use of low-priced facilities by 17.6 percentage points (95% CI 11.8-23.4, P<0.001), they wrote in JAMA Internal Medicine.

In addition, the mean price paid for a colonoscopy for the CalPERS population increased from $1,587 in 2009 to $1,716 in 2011, and then dropped to $1,508 in 2013 under the reference payment plan.

In January 2012, CalPERS implemented a reference payment plan for colonoscopy and other ambulatory procedures. In the plan, the cost of procedures and screenings would be fully covered at ASCs, and if patients chose to go to a more expensive facility, or a hospital-based outpatient department (HOPD), CalPERS would pay $1,500 and the patient would pay any excess.

There were exemptions for patients living more than 30 miles from an ACS, and those who needed to undergo deep sedation for medical reasons.

While the finances looked good, "the study...was unable to measure other important metrics of colonoscopy quality, such as adenoma detection rate, which has been linked to the development of interval cancers after colonoscopy," cautioned David Lieberman, MD, of Oregon Health and Science University in Portland, and John Allen, MD, of Yale University School of Medicine in New Haven, Conn., in an accompanying editorial.

Lieberman and Allen noted that, in some areas of the U.S., colonoscopy prices can range widely, from $500 to $8,000, in part due to the level of sedation used. Conscious sedation, as opposed to deep sedation with propofol and other drugs, is less expensive as it does not require the services of an anesthesiologist or nurse anesthetist.

"In a fee-for-service health care environment, anesthesia services are just one more expense," they stated.

They also warned that reference pricing could go too far. "We can imagine future scenarios in which payers reduce reference prices to a level where it essentially becomes a high patient co-payment plan, creating disincentives for important care...Lacking adequate quality differentiation, reference pricing may initiate a price war, with a race to the bottom -- a worrisome scenario."

And tracking quality will be difficult with this model, they added.

Robinson's team used data from 21,644 CalPERS enrollees who had colonoscopy exams in the three years prior to implementation and also from 13,551 patients in the two years after implementation.

A control group of 258,616 Anthem Blue Cross enrollees who underwent colonoscopy during the same time period were included in the analysis.

In the year prior to the implementation of reference pricing, HOPD colonoscopies averaged $2,273, ranging from $552 to $8,883, and ASCs prices averaged $878, ranging from $500 to $6,003. The reference price set at $1,500 was based on the 80th percentile of the distribution of ASCs prices.

For Anthem enrollees, the rates of ASCs use remained steady from 71% to 74% across five years.

In the first year after implementation, after adjustments for patient demographic characteristics, comorbidities, and other factors, the average price decreased by 20.3% (P<0.001), then dropped again by 21% the second year after implementation (P<0.001).

In 2012, after adjustments, CalPERS paid $476 less per colonoscopy compared with Anthem, and by 2013, CalPERS paid $562 less than the 2011 payouts.

Complication rates were similar between pre- and post- implementation groups and the Anthem group, ranging from 2.0% to 2.4% among the CalPERS enrollees versus 2.3% to 2.6% among the Anthem enrollees. However, Robinson's group reported that implementation of references payments were associated with a 0.18% reduction in the total rate of complications (95% CI -0.69% to 0.32%, P=0.47).

CalPERS enrollees who were not exempt from the reference payment limits, but still chose to have the procedure done at an HOPD, paid an average of $678 in 2012 and $723 in 2013. Prior to implementation of reference payments, cost sharing averaged $194 for CalPERS enrollees, and after implementation, average cost sharing was $584 higher for CalPERS patients who chose an HOPD instead of the fully covered ASCs.

Study limitations included having no way to tell if full coverage of the procedure prompted enrollees to undergo a colonoscopy, or past history of screening. Also, the data was from employed people with employment-based health insurance so the results may not be reproducible in an older Medicare population.

"Reference payment may be of particular value for preventive screening tests such as colonoscopy, where social policy and the Affordable Care Act seek to encourage utilization by minimizing consumer cost sharing," the authors suggested. "Consumer cost sharing can induce facilities to moderate prices, and the elimination of cost sharing can increase the price of preventive services."

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