@hyperplanes eg, you can get free care at VA, or get a reimbursed at the reference price for care anywhere else.
— Matthew Martin (@hyperplanes) November 11, 2015
This is an extremely interesting idea for the start of the next administration to get some really good data on the plausibility of reference pricing to change cost curves. I don’t think there would be sufficient time to set up the plumbing for a pilot project to launch in the next twelve months, but this model could be intriguing.
Currently, most individuals who are receiving care from the Veterans Administration go to a VA owned facility and get treated by VA employed doctors. There are a couple of counter-examples due to the recent 2014 law responding to the VA wait time crisis where eligible veterans who lived far away from VA facilities could get care at other, government owned facilities. Additionally, when the VA gets a very weird case, it is likely they ship the patient to a high end specialty care hospital that handles eleven of the thirty one cases in the United States each year.
What this proposal would do would expand that pilot program. Eligible veterans would be able to either their care at their current cost-sharing at the VA or get a voucher for the same value of care to take on the open market. For instance if an annual wellness visit costs $93 for the VA to perform in-house, the pilot project would give people the option to find a provider willing to do an annual wellness visit for $91 where the voucher covers everything OR if they elect to stay closer to home and go to a doc charging $118 for an annual wellness visit, the veteran would be on the hook for $25 in out of pocket gap coverage.
An even more interesting twist would be an individual level shared savings model where the government and the individual split the savings. If the voucher is worth $93, and the individual finds a doc willing to perform the service for less, the individual gets half of the savings or the individual gets the first $10 in savings, and then there is a split of some percentage. That arrangement could create an incentive of new cash in pocket to shop for cheaper pricing. This would be far more valuable on high cost interventions like knee replacements but the logic would be the same.
I think the VA is large enough of an entity that some providers who currently don’t have access to the VA patient base would be willing to compete on price for some common procedures. Designing a program where there is an incentive for price transparency from some providers while also collecting good data for scaling up reference pricing using government provided medical care as the baseline reference price. If there are no providers willing to drop pricing, then no one is worse off besides three policy geeks and a program evaluator at the VA as they sit at work trying to analyze a program with no data. If there are providers willing to compete on clear pricing, then we could actually get Pareto improvements.