Reference Payment Model Cuts Colonoscopy Cost, Not Safety

Diana Swift

September 10, 2015

In the 2 years after the implementation of a reference pricing model for colonoscopy, the California Public Employees' Retirement System (CalPERS) saw a $7.0 million (28%) cost saving without a change in quality, according to a study published online September 8 in JAMA Internal Medicine.

"This is high amount to save in 2 years...and there was no change in safety," said James C. Robinson, PhD, a health economist at the School of Public Health, University of California, Berkeley, in an audio interview for the journal.

The cost for a colonoscopy can range from $500 to more than $8000 and can vary 10-fold within a community.

The reference pricing model is one of the new approaches being tried as the US moves away from fee-for-service payment. In it, a payer encourages insured patients to seek care at lower-cost facilities by setting a limit on its full coverage of specific procedures, over which insured patients must copay out of pocket.

CalPERS implemented reference pricing in January 2012, following cash constraints after the 2008 recession. With the reference pricing model, CalPERS paid the facility's negotiated price without consumer cost sharing if a patient selected an ambulatory surgery center, but limited its contribution to $1500 for a patient who selected hospital-based outpatient departments.

The investigators collected data on 21,644 CalPERS enrollees who had screening or diagnostic colonoscopy in the 3 years before implementation and on 13,551 enrollees who underwent the procedure in the 2 years after implementation. Control group data came from 258,616 Anthem Blue Cross enrollees who had colonoscopies but were not subject to reference payment initiatives during this 5-year period.

During the study years, 42% to 44% of the CalPERs participants were male, as were 46% to 47% of Anthem participants. The mean ages were 54 to 55 (CalPERS) and 53 (Anthem) years.

In the CalPERS cohort, the use of low-priced facilities increased from 68.6% in 2009 to 90.5% in 2013, after implementation of the reference pricing model. After adjusting for patient demographics, comorbidities, and other factors, reference payment increased the use of low-priced facilities by 17.6% (95% confidence interval [CI], 11.8% - 23.4%; P < .001).

The mean price paid for colonoscopy for the CalPERS population increased in the preimplementation period from $1587 (95% CI, $1555 - $1618) in 2009 to $1716 (95% CI, $1678 - $1753) in 2011, but decreased to $1508 (95% CI, $1469 - $1548) in 2013 for reference-payment patients. After adjustment for other relevant factors, CalPERS paid $476 less per colonoscopy procedure in 2012 than Anthem (95% CI, −$616 to −$335; P < .001). Prices paid continued to decrease in the second year after implementation, and in 2013, they were $562 less than 2011 levels (95% CI, −$715 to −$410; P < .001).

After adjustment for relevant factors such as demographics and clinical status, reference payment was responsible for a 21.0% (95% CI, −26.0% to −15.6%; P < .001) reduction in price. There was no change in the rate of complications in the 90 days after the procedure, at 2.1% in 2009 and 2.0% in 2013 (P = .47). Rates ranged from 2.0% to 2.4% for CalPERS and from 2.3% to 2.6% for Anthem.

In the audio interview, Dr Robinson noted that it is often difficult to save healthcare dollars, whatever the measure taken, and it generally takes longer than expected. "But with reference pricing you get big effects right away. Providers and consumers can taste it quickly," he said.

When benefit design prompts patients to move the market by consumer choice, the change is greatly accelerated. In contrast, changing the way doctors and hospitals are paid, say by bundling services, "is important but slow."

The investigators say reference payment may encourage people to get preventive screening tests encouraged by the Affordable Care Act. It is more consumer-friendly than high deductibles and more flexible than a narrow-network scheme that excludes all higher-priced facilities, as it accommodates patients willing to make up the difference. It is also compatible with measures such as service bundling.

The authors note that the US departments of Health and Human Services and the Treasury have decided reference payment does not violate the ACA if implemented appropriately. These departments will, however, monitor whether payment limits are high enough to ensure access to a reasonable number of facilities in each market, and ensure that the policy is not applied to emergency services in which shopping for alternatives is not feasible and that exceptions are made for special clinical or geographic circumstances.

Patients selecting lower-cost centers require assurances that they are receiving high-quality care.

In an accompanying editorial, David Lieberman, MD, a gastroenterologist at Oregon Health and Science University in Portland, and John Allen, MD, a gastroenterologist at Yale University School of Medicine, New Haven, Connecticut, say that although the study findings support reference pricing for reducing colonoscopy costs, more study is needed.

"Regardless of whether the discussion is about reference or bundled pricing for colonoscopy, knee or hip replacements, or other procedures, public reporting of cost information, as well as meaningful quality benchmarks, should be required," they write. "Patients selecting lower-cost centers require assurances that they are receiving high-quality care."

Dr Lieberman outlined his main concerns in the JAMA Internal Medicine audio interview. Although "we learned a lot from the CalPERS study," a low complication rate is not the only measure of quality care, he said. Patients need assurance that endoscopists at lower-cost sites will examine the entire colon up to the cecum and detect and remove adenomatous polyps at high rates for the prevention of colon cancer.

In addition to ensuring adequate numbers of lower-cost sites in given regions, reference payments must not be set so low that they require high copayments, as that will be a disincentive to undergoing procedures. He also raised the concern that affordable lower-cost sites might charge higher prices over time.

Although encouraged by mounting evidence that new approaches can lower costs while maintaining access and quality, Dr Lieberman and Dr Allen write, "We should continue to seek improved payment models that ensure that patients have incentives, not disincentives, to obtain important and high-quality preventive care."

This research was supported by CalPERS and the US Agency for Healthcare Research and Quality, neither of which had any role in any aspect of the study. The authors have disclosed no relevant financial relationships. Dr Lieberman is on scientific advisory boards for Given Imaging, Ironwood Pharmaceuticals, Exact Sciences, and Motus GI. Dr Allen is under contract for internal consulting with Olympus, gMed, and Pentax but has received no payments in the past 12 months.

JAMA Intern Med. Published online September 8, 2015. Article full text, Editorial full text


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