ADVANTAGES

Adoption of reference pricing for hip and knee replacements requires that both purchasers and consumers have information on hospital prices. Purchasers need access to enough claims data to identify services with significant price variation and then determine appropriate reference prices for such services. A single purchaser’s access to enough claims data to make meaningful judgments can be a challenge, and some health plans’ reluctance to help purchasers implement reference pricing makes them unlikely partners in performing this data analysis. As one respondent explained, “You need more data than one purchaser can typically generate for its own population to understand patterns in pricing,” especially when enrollees live across a large geographic area.

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