Why does offering HMO plans affect incentives?

• How could improving access reduce costs?

• How could improving care coordination reduce costs?

• Why is the evidence about effects on cost so varied?

• Why is the evidence about effects on quality so varied?

• Why is the evidence about effects on the patient experience so varied?

• How would a successful PCMH program affect patients? Hospitals? Participating practices?

Reference pricing represents one strategy to reduce costs without harming population health. An insurer sets a reference price for a product, and the patient is responsible for the entire amount in excess of the reference price. Originally used in Europe to steer patients toward less expensive drugs, reference pricing also appears to lead firms to cut prices (Herr and Suppliet 2017). Commonly used in the United States to reduce spending on high- cost products, reference prices typically shift market share to less expensive providers and induce expensive providers to lower prices.