The colonoscopy is a routine cancer prevention service performed more than 15 million times a year in the U.S. And yet what providers charge for it may vary by more than tenfold within a metropolitan area, making it a “poster child” for the opacity of medical pricing, writes David Lieberman, M.D., in an invited commentary in JAMA Internal Medicine on the impact of reference pricing for colonoscopy services.

Reference pricing is a reimbursement scheme payers are testing in which they provide full coverage up to a fixed reference price. Patients who choose a doctor or clinic charging more than the reference price are responsible for the extra cost.

The California Public Employees’ Retirement System (CalPERS) reportedly saved $7 million in two years after introducing reference pricing for colonoscopy, according to a new study, also in JAMA Internal Medicine. The researchers found that patients had ample access to medical practices within the reference price range, and CalPERS patients showed no difference in the rate of serious complications compared with patients in a large health plan continuing to use fee-for-service.

Lieberman, a Knight Cancer gastroenterologist, says he is encouraged by the evidence for the effectiveness of new approaches such as reference pricing. But he and co-author Dr. John Allen at Yale University caution that “there are many unknowns and continued study and monitoring is essential as these approaches become more widely used.”

Among the questions and concerns raised by Lieberman and Allen:

• Payers could cut reference prices too much, resulting in the equivalent of high co-payment insurance.
• While reference pricing may reduce variability in pricing, it may have unintended consequences, such as loss of business for academic health systems charging more to cover teaching and research costs. And initially low priced systems may have incentive to raise prices to a reference level set too high.
• Patients choosing lower cost centers will need far better information about the quality than is currently available.

“We should continue to seek improved payment models that ensure that patients have incentives, not disincentives, to obtain important and high-quality preventive care,” Lieberman and Allen conclude.

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New Approaches to Controlling Health Care Costs: Bending the Cost Curve for Colonoscopy by David Lieberman and John Allen, JAMA Internal Medicine (2015)

Association of Reference Payment for Colonoscopy With Consumer Choices, Insurer Spending, and Procedural Complications by James C. Robinson, Timothy T. Brown, Christopher Whaley and Emily Finlayso, JAMA Internal Medicine (2015)