Using the Reference Pricing Strategy, Safeway and its Employees Reduce Spending on Clinical Laboratory Tests by 32% in Only 24 Months by Selecting Lab with Lowest Prices

Researchers at the University of California Berkeley tracked how the incentives of Safeway’s reference pricing program caused patients to reduce their use of medical labs with the highest prices

It took just 24 months for Safeway and its employees to pay 32% less for clinical laboratory tests using a new health benefits strategy called “reference pricing.” This strategy targets the large variation in prices that different medical laboratories charge for the same tests and incentivizes employees in a consumer-friendly way to select medical laboratories with lower prices over labs with higher prices.

Dark Daily’s sister publication, The Dark Report recognized how Safeway’s use of reference pricing to reduce the overall cost of what it and its employees pay for clinical laboratory tests by about a third in just 24 months could turn out to be a sentinel event of a wider trend. This trend would put those medical labs with the highest lab test prices under significant financial pressure if other employers and health insurers were to incorporate a reference pricing arrangement in their health benefit plans.

This is why, on September 6, 2016, The Dark Report devoted an entire issue to the topic of reference pricing and its potential to trigger powerful downward pressure on the highest lab test prices charged by some labs. This is essential reading for senior lab administrators, executives, CFOs, and their financial advisors. (more…)