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Study Finds Steering Patients Towards Lower-Price Providers Could Generate Savings

A study published in Health Affairs found that steering patients toward lower-price providers or setting price ceilings could generate potential savings of 9.0–12.8 percent. Using data from the Massachusetts All-Payer Claims Database (APCD) containing health care prices for nearly every insurer-provider-service triad across a large local market, researchers examined variation in fee-for-service paid commercial prices in Massachusetts for 291 predominantly outpatient medical services. They found that prices varied considerably across hospital service areas. Prices for medical services at acute hospitals were, on average, 76 percent higher than at all other providers. The service categories with the widest price variation were ambulance/transportation services, physical/occupational therapy, and laboratory/pathology testing. In this market, simulations suggested that steering patients toward lower-price providers or setting price ceilings could generate potential savings of 9.0–12.8 percent. The research concluded marketwide price information at the insurer-provider-service level could help target policy interventions to reduce health care spending.

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Market-wide Price Transparency Suggests Significant Opportunities For Value-Based Purchasing. Health Affairs. September 2019

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