Reference Pricing: The Case of Screening Colonoscopies

Due to concerns over growing health care spending, programs that increase patient cost-sharing are being implemented by both public and private organizations. We study the introduction of reference pricing, a health insurance reform, to the California Public Employees' Retirement System. Reference pricing changes the relative costs between using a hospital versus an ambulatory surgery center for patients receiving a screening colonoscopy. We find an approximate 10 percentage point increase in the share of patients who use an ambulatory surgery center, leading to a reduction in total costs between $2300 and $1700 for those patients who switch to ambulatory surgery centers.