Employers Capping Health Care Procedures

In an effort to slow health care spending, more employers are looking at capping what they pay for certain procedures — like joint replacements — and requiring insured workers who choose hospitals or medical facilities that exceed the cap to pay the difference themselves.

But a study out Thursday finds employers might be disappointed with the overall savings. While the idea, known as “reference pricing,” does highlight the huge variation in what hospitals and other medical providers charge for the same services, the report says, it does little to lower overall health care spending.

“It’s zeroing in on a piece of the health spending puzzle that is critical, the unreasonably high negotiated prices paid by health plans … but it’s not going to get you there if you need to save a lot of money,” said co-author Chapin White. The study was done by the National Institute for Health Care Reform, a nonprofit, nonpartisan research group sponsored by auto makers and the United Auto Workers union.

The use of price limits has also drawn concern from consumer groups that it might lead to confusion — and end up sticking patients with large, unexpected bills if the programs are not clearly explained.

The Obama administration, in a document about health law implementation in May, essentially gave its blessing to large or self-insured employers to use reference pricing in their health plans.

While only about 10 percent of employers currently have such programs, about 68 percent plan to do so soon, according to a recent survey by Aon Hewitt, a management consulting firm.

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Jeffrey R. Ungvary President

Jeffrey R. Ungvary