[1] RP requires consumers to have access to price and quality information, which is not general practice in many industries.
Reference prices in this context are related to work by Nobel Prize winner Richard Thaler on "transaction utility" in his theory of mental accounting.
The insurer announces prices that it is willing to pay for specific surgical procedures, pharmaceuticals and other services.
One study estimated that about 40 percent of health care spending is for services for which patients could shop.
[1] Appropriate services include hip and knee replacement, colonoscopy, magnetic resonance imaging (MRI) of the spine, computerized tomography (CT) scan of the head or brain, nuclear stress test of the heart, and echocardiogram because they have relatively uniform protocols and are less likely to experience variation in quality.
[6] In health care, a more common alternative is to limit patients to a specific network of providers who have accepted the pricing and other terms specified by the insurer.
[9] In 2011 California Public Employees' Retirement System (CalPERS) adopted reference pricing for 450,000 members.
Initially 41 of the hundreds of hospitals provided knee and hip replacement procedures at or below the RP with acceptable quality.