Safeway Study Finds Value in Reference-based Health Care Pricing

Reference-based health care pricing, a design that sets a maximum contribution from a health plan to pay for a particular service, can help control the price of lab costs when employees are provided with the necessary tools and education, according to a study conducted by Safeway Inc. and global health services company Cigna.

The study, “Reference-based Pricing: An Evidenced-based Solution for Lab Services Shopping," finds that employers view reference-based health care pricing as a way to incent employees to consider carefully the price of lab services -- such as a lipid panel, comprehensive metabolic panel or prostate-specific antigen test – when making care decisions.

Employees reap a savings when they choose services at or below the reference price, as opposed to paying additional cost out-of-pocket when choosing services above this price, the study found.

“We already had strong evidence through our RxTE program that reference-based pricing in the pharmaceutical space could dramatically increase selection of therapeutically equivalent lower cost options," confirmed Dr. Kent L. Bradley, Safeway's SVP and chief medical officer. "Now we see that reference-based pricing has promise in doing the same for certain medical services."

The study involved two groups of employees enrolled in a Cigna health plan, the first of which comprised Safeway employees who had a reference-based pricing benefit for lab services, as well as access to an online shopping tool that showed information about cost, location and type. They also received educational information about this benefit. The second group comprised employees of various employers who did not have this benefit but lived in the same community and received the same lab services as members of the first group.

The study revealed that the first group demonstrated a 20 percent increase in selection of lab services below the reference price compared to those without the benefit (69 percent vs. 57 percent).

“Ultimately, it’s up to individuals to make choices that are right for them, but the education and online tools that health plans and employers offer can help individuals make more informed decisions," added Jackie Aube, Cigna's VP for Product.

Pleasanton, Calif.-based Safeway operates 1,331 stores in 20 states and the District of Columbia, 13 distribution centers and 19 manufacturing plants.