Reference Pricing: The Case of Screening Colonoscopies

from Journal of Health Economics at on March 31, 2019 at 12:06PM

Publication date: Available online 29 March 2019

Source: Journal of Health Economics

Author(s): Marion Aouad, Timothy T. Brown, Christopher M. Whaley


We study the introduction of reference pricing to the California Public Employees’ Retirement System. Reference pricing changes the relative price of using a hospital versus an ambulatory surgery center (ASC) for patients receiving a colonoscopy, leading to as good as random variation in patients’ use of ASCs. We find a 10 percentage point increase in the share of patients using an ASC, leading to a $2300 to $1700 reduction in prices paid for patients who switch to ASCs. Our results suggest that the use of ASCs has a causal effect on prices paid and has no negative effect on patient health outcomes.