AN ONLINE TRANSPARENCY PLATFORM ENABLES PREFERENCE-APPROPRIATE BEHAVIOR CHANGE FOR CONSUMERS ON A REFERENCE-BASED PRICING BENEFIT PLAN

Purpose:    Reference-based pricing (RBP) is an increasingly popular benefit design among self-insured employers.  RBP addresses medical price variation by establishing a reference price that an employer is willing to pay for a service. Employees choosing a provider with negotiated rates above the reference price typically pay the difference.  In this study, we assess the effects of an online healthcare cost transparency tool on utilization behaviors after implementation of an RBP program.

Method:      Eligible participants were registered users of an online healthcare cost transparency tool (Castlight Health) whose employer had implemented an RBP benefit for lab tests who: 1) received lab tests before and after implementation of the RBP program; 2) used the tool to search for lab tests at least once between lab visits; and 3) for 2 years prior to their search, had received all lab tests from providers above the reference price.  All participants meeting these criteria were invited to complete a survey about factors affecting their choice of lab provider before and after using the transparency tool.  Additionally, participant lab test utilization data was obtained from the transparency tool.  All participants provided informed consent. 

Result:    77 participants met inclusion criteria; 38 completed the survey.  Based on lab utilization data, after using the transparency tool, 75% of women (compared to 41% of men (p=0.03)), and 61% of all participants changed some or all subsequent lab tests to lab providers below the reference price.   For these participants, cost was a more important factor in their decision on where to get their labs compared to those who did not change providers (p=0.002).  Among participants who self-reported on the survey that they changed to a below reference price provider after using the tool, 100% ranked cost as the most or a very important factor for their switch (p=0.03).   On the other hand, convenient location and familiarity were ranked as the most or a very important factor (93% and 79%, respectively, p=0.02) for participants who self-reported that they continued to use a provider above the reference price.

Conclusion:  Reference pricing allows employers to limit their medical expenditures in the face of price variations.  Online healthcare cost transparency tools enable employees enrolled in RBP programs to make healthcare decisions based on their preferences including lower costs or convenience.