Reference-based pricing: 3 models that cut health care cost inflation at its roots

Catalyst for Payment Reform April 12, 2021
Julianne McGarry

Reference-based models address the root cause of high health care costs: the prices.

Studies of health care costs reaffirm the following adage time and again: prices, not utilization, drive health care cost inflation. Data from The Health Care Cost Institute confirm that increased prices accounted for 75% of per person health care cost increases over the past five years. Meanwhile, the most recent report from the RAND Corporation’s Hospital Price Transparency study demonstrates that the gap between Medicare and Commercial rates continues to widen year over year: in 2018, hospitals’ average commercial prices grew to 247% of Medicare, up 17 points from the previous year.

It’s no wonder then that employers and other health care purchasers are eager for solutions...

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