Commercial prices relative to Medicare were lower under an employer-based reference pricing program.

Introduction: Reference-based pricing has shown promise in reducing hospital prices and spending for state employee health plans. However, its impact among other commercially insured populations is not well understood. Methods: We examined price and spending differences under an alternative health plan's reference pricing program for self-funded employers relative to prices paid by employers and commercial payers from Round 5.1 of the Employer Hospital Price Transparency Study. The program we studied paid hospitals at approximately 140% of Medicare payments. Results: We found that the prices paid to hospitals were significantly lower than prices paid by other commercial payers. As a percentage of Medicare, the reference pricing program paid, on average, 118% points less for inpatient services and 162% points less for outpatient services. Relative to the prices paid by other commercial payers, we estimated that employers saved $417 million under the reference-based pricing program. Conclusion: These savings represent 56.5% of what they would have spent on hospital care had they paid similar rates as other commercial payers.