Transforming Health Care Through Evidence and Collaboration
Transforming Health Care Through Evidence and Collaboration
The NIHCM Foundation is a nonprofit, nonpartisan organization dedicated to improving the effectiveness, efficiency and quality of America's health care system.
  • Data Insights

    The second part in this ACEs infographic series, this infographic explores the challenges facing children and families and provides actionable guidance to nurture resilience and support caregivers and parents.

    Part 1 Part 2
  • Data Insights

    The COVID-19 pandemic has placed a spotlight on the link between systemic racism and health in many communities. This new NIHCM infographic clarifies the relationship between long-standing social and economic inequities and health disparities affecting Black Americans, over the life course and in relation to COVID-19.

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  • Data Insights

    Globally, outdoor air pollution is attributed to 4.2 million deaths every year. This infographic explores air pollution in America and the unequal impact it has on Black and Latinx communities. It also looks at the current solutions that are already available to improve air quality.

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  • Awards

    We are honored to announce the winners for the 26th Annual Health Care Research and Journalism Awards. This year’s awards are virtual because of the COVID-19 pandemic, yet we invite you to meet the winners and learn about their award-winning work. NIHCM is also announcing the largest grant program in our history — $1 million to support work in journalism and research.

    Meet the Winners Press Release
  • Data Insights

    This infographic highlights the health challenges faced by the homeless community and outlines short and long term solutions to improve the health and well-being of these individuals, through social, economic and housing interventions.

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  • Data Insights

    This new Data Insights highlights the rapid rise in overdose deaths involving cocaine and methamphetamine, illustrates the geographic variations in utilization and death rates, and quantifies the increasing burden that these drugs are placing on the hospital system.

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Events

September 23, 2020
Latino Graphic

This webinar will highlight how systemic racism, the challenges of immigration, language barriers and other factors harm the health and well-being of Latinos.

September 10, 2020
Protecting Our Children

This webinar brought together experts to provide insight on early childhood development, ACEs and COVID-19’s impact on children.

In the News

September 2020
Population Health Spotlight
september-newsletter 8

How Do Providers Respond to Reference Pricing?

Why This Study Is Important

Prior research has demonstrated that patients respond to the incentives of reference pricing by shifting their demand to providers with lower prices. This study of reference pricing for three types of common surgical procedures explores whether providers respond to this shift in consumer demand by lowering their own prices in a bid to remain competitive.

What This Study Found

  • Despite initially pricing below the reference price thresholds in most cases, ambulatory surgical centers (ASCs) showed modest reductions in their prices for colonoscopy, cataract surgery and some types of joint arthroscopy after reference pricing began. ASCs may have been especially responsive to the reference pricing pressures because the targeted procedures constitute a large share of their total patient volume.
  • As a group, hospital outpatient departments (HOPDs) did not reduce their mean prices in response to demand shifts arising from reference pricing. However, HOPDs whose colonoscopy prices began above the reference price threshold did reduce their price for that procedure after reference pricing was implemented.
  • There was no evidence that providers responded to the changing incentives by lowering prices only for patients facing reference pricing. Rather, over 75 percent of the provider price reductions accrued to the insurer’s non-CalPERS population.
  • There also was no evidence that providers attempted to compensate for lower facility prices by raising other fees, by charging higher prices to other insurers for these services or by letting quality decline.

What These Findings Mean

Reference pricing for common, non-emergent procedures whose quality is comparable across providers can be an effective strategy for steering patients to lower-priced providers. This study shows that there may also be supply-side impacts as some providers lower their prices in response to shifting demand. Together, these findings suggest that reference pricing could help to moderate health care spending through two avenues. At the same time, the provider price responses documented here were modest, and few payers have the purchasing power of CalPERS. Significant changes in provider pricing behavior in response to reference pricing are unlikely unless these programs are coordinated across many large employers and purchasers.

More About This Study

This study uses 2009-2013 claims data from a large insurer that began administering a reference pricing program for colonoscopy, cataract surgery, and joint arthroscopy in 2012 for people receiving health benefits through the California Public Employees’ Retirement System (CalPERS). The claims data were used to determine the negotiated prices paid to each provider, and market areas were characterized by the extent to which the local commercially insured population was exposed to the CalPERS reference pricing program. Providers in markets with higher exposure are expected to be more responsive to the program’s incentives. Difference-in-difference modeling was used to estimate the post-reference pricing change in providers’ negotiated prices as a function of market exposure, with non-CalPERS patients insured by this carrier serving as the control group. A similar triple difference model was estimated to differentiate pricing responses based on whether the provider’s baseline price was above or below the reference price threshold. Results are robust across a number of alternative specifications.

Full Citation

Whaley CM and Brown TT. “Firm Responses to Targeted Consumer Incentives: Evidence from Reference Pricing for Surgical Services.” Journal of Health Economics, 61:111-33. July 2018.

For more information about this study, contact Dr. Christopher Whaley at This email address is being protected from spambots. You need JavaScript enabled to view it..
For more information about the NIHCM Foundation Investigator-Initiated Research Grant Program, contact Dr. Julie Schoenman at 202-296-4426.

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This Research Insights summarizes a study showing that provider-side price responses exist but appear to be modest.

Events

September 23, 2020
Latino Graphic

This webinar will highlight how systemic racism, the challenges of immigration, language barriers and other factors harm the health and well-being of Latinos.

September 10, 2020
Protecting Our Children

This webinar brought together experts to provide insight on early childhood development, ACEs and COVID-19’s impact on children.

In the News

September 2020
Population Health Spotlight
september-newsletter 8

Grants

Journalism GrantsJournalism Grant Program

The deadline for the 2020-2021 round of grant making has passed. NIHCM will notify the grant winners in the fall.

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NYTUpshotLogo

Investigator-Initiated Research Grant Program

The deadline for the 2020-2021 round of grant making has passed. Finalists have been notified.

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Awards

The 26th Annual Research and Journalism Awards

Winners Announcment 2018 1

We are honored to announce the winners for the 26th Annual Health Care Research and Journalism Awards.

Learn More