Consumer Choice Between Hospital-Based and Freestanding Facilities for Arthroscopy

Abstract

Background: Hospital-based outpatient departments traditionally charge higher prices for ambulatory procedures,

How robust are reference pricing studies on outpatient medical procedures? Three different preprocessing techniques applied to difference‐in differences

“…First, the program allows for patient choice, does not penalize those who need to use an HOPD for medical reasons, and does not penalize those who live an unreasonable distance away from an HOPD. In fact, exemptions were granted for physician‐indicated medical need and when the closest ASC was more than 30 miles away (Robinson, Brown, & Whaley, ; Robinson, Brown, Whaley, & Bozic, ; Robinson, Brown, Whaley, & Finlayson, ). In addition, significant selection into or out of CalPERS PPO products due to the implementation of the reference pricing policy is unlikely, although the other health insurance choices of CalPERS employees were health maintenance organizations, which have less choice regarding site of care than a PPO for the procedures in question.…”

“…Although reference pricing is also beginning to be used to control pharmaceutical expenditures for some organizations in the United States (Robinson, Whaley, & Brown, ), reference pricing is also being applied to other areas of health care such as imaging, laboratory testing, inpatient care (hip and knee replacement), and to our area of interest, outpatient procedures, including arthroscopy, colonoscopy, and cataract surgery (Brown & Robinson, ; Chia‐Hsuan, Wu, & Devries, ; Melton, Bradley, Fu, Armata, & Parr, ; Robinson, Brown, & Whaley, ; Robinson, Brown, & Whaley, ; Robinson, Brown, Whaley, & Bozic, ; Robinson, Brown, Whaley, & Finlayson, ; Robinson, Whaley, & Brown, , ; Robinson, Whaley, & Brown, ; Zhang, Cowling, & Facer, ). Studies of the application of reference pricing to the above three outpatient procedures have found that reference pricing results in reductions in per‐procedure expenditures from 17% to 21% (Robinson, Brown, & Whaley, ; Robinson, Brown, Whaley, & Bozic, ; Robinson, Brown, Whaley, & Finlayson, ). Moreover, reference pricing applied to colonoscopy has been found to constitute an effective cost‐saving policy with substantially lower negative impacts on consumer surplus compared with widely used policies like high‐deductible health plans (Whaley, Guo, & Brown, )…”

“…We revisit three studies evaluating the application of reference pricing to the outpatient procedures arthroscopy, colonoscopy, and cataract surgery to provide health economists with concrete examples (Robinson, Brown, & Whaley, ; Robinson, Brown, Whaley, & Bozic, ; Robinson, Brown, Whaley, & Finlayson, ). The three preprocessing techniques we apply to these previously published analyses are as follows: propensity score weighting, exact matching, and genetic matching.…”

“…However, because of the asymmetric nature of the reference pricing program (reference pricing is only applied when consumers choose an HOPD), all patients are able to receive needed care, without any additional charge, by simply choosing an ASC. In addition, patients are exempt from reference pricing if they live more than 30 miles away from an ASC or have a medical need (documented by a physician) to receive care in an HOPD (Robinson, Brown, & Whaley, ; Robinson, Brown, Whaley, & Bozic, ; Robinson, Brown, Whaley, & Finlayson, ). Finally, reference pricing in this program only applies to facility fees, not physician fees, so physicians have no incentive to prefer one setting above another with respect to their fees.…”

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“…Reference pricing is an insurance design that offers good coverage to patients up to a defined contribution limit but requires the patients who select high priced facilities to pay the remainder out of pocket. Robinson and colleagues at the University of California [5][6][7] have looked at patient choices for imaging and for outpatient arthroscopy. In all instances, patients responded by choosing lower cost options, with resulting cost reductions of 10% to 15%.…”