Analysis: Medicare reference-based pricing — down but not out

• North Carolina may be abandoning its efforts to implement Medicare reference-based pricing for state employees.
• As the cost of healthcare continues to increase, this is not the last to be heard of this cost-cutting strategy from large employers.

It looks like North Carolina is abandoning its efforts to implement Medicare reference-based pricing for state employees. With only four of the state’s 126 hospitals signing the contract, the state was unable to provide its employees with an adequate hospital network.

Takeaway

However, I don’t think this is the last we’ve heard of this strategy from large employers by a long shot.

Large employers are projecting their healthcare costs will grow twice as fast as the economy as a whole.

So, something has to give if alternative payment models and steerage strategies don’t yield savings for employers.

I would expect the next state that tries Medicare reference-based pricing will, like Montana, offer more of a quid pro quo (e.g. yes, we’re cutting your payments for state employees, but we’ll use those dollars to fund Medicaid expansion). Or at least be more flexible in their approach.

One of my April blogs provides some detail on Montana’s dive into Medicare reference pricing, and an HFMA special report on states looking into Medicare reference pricing is available too.