As self-insured employers seek new ways to reduce healthcare costs, an approach called “reference-based pricing” (RBP) is gaining popularity. A 2020 survey found that 6% of employers already use RBP as a cost-control technique. By some estimates, another 10% to 20% of employers are considering its adoption.
RBP differs from traditional healthcare pricing in at least two major ways:
- Employers control how much they pay for healthcare services. RBP typically sets payment levels at a percentage above Medicare’s reimbursement rate, but below the network discount rates negotiated by health plans. Thus, Medicare becomes the “reference” point on which provider payment is based.
- The concept of “in-network” is eliminated. In most cases, members can see any provider, assuming the provider agrees to be paid at the RBP rate.
Partners for a new pricing strategy
Most HR leaders will rely on an experienced benefits consultant to help determine whether and when RBP fits in their benefits road map. A consultant can help:
- Decide whether to pilot RBP by adding it to one of the health plans offered to members, or make a wholesale change and offer only an RBP plan.
- Establish a rollout plan and timeline, including plenty of time for member education.
- Assess whether HR has the bandwidth and know-how to take on the additional member and provider inquiries and education that come with RBP.
A consultant also will help the employer identify and retain an RBP services firm. These firms help develop the reimbursement formula and conduct advance communication and negotiations with facilities and providers. Some have negotiated RBP agreements with provider networks or major healthcare systems in certain geographic areas.
If a doctor or facility balks at an RBP payment and wants to “balance bill” for higher charges, the RBP partner often handles negotiating a final amount. Usually HR sets a policy that members won’t be at risk from balance billing. Instead, employers typically pay and involve a stop-loss carrier if the charges are especially high.
Insights from the front line
Based on Quantum Health’s experience working with employers that are using RBP, independent healthcare navigation also has a valuable role to play, filling education and engagement gaps for members, providers and HR teams. Examples include:
- Ongoing education and guidance. No matter how much provider notification and member education there’s been, RBP can be confusing. As providers contact us for service authorizations, Quantum Health routinely reminds them about RBP provisions. Meanwhile, members sometimes struggle to find a provider that understands and will accept RBP. A member might even be denied care at the point of service. Our Care Coordinators can assist with education and problem solving, smoothing the way for members to get the care they need while ensuring providers get the information they require.
- Issue resolution and advocacy. Balance billing is a concern for employers considering RBP. While some discover that it’s relatively rare, it will happen. When it does, members often feel alarmed by the unexpected bills. The right navigation partner will step in, first assuring the member that the plan will cover any additional expenses, then engaging the provider to remind them of RBP reimbursement limits. In some cases, the HR team, consultant and RBP partner agree in advance how much above the RBP rate an employer will pay if a provider insists on balance billing. A navigation partner can make that counteroffer on the employer’s behalf and resolve many situations without escalation.
- HR workload and expertise. Most HR teams would prefer not to take on the daily, detailed, case-by-case engagements with members, providers and the RBP partner. A navigation partner enables even resource-constrained benefits teams to explore this cost-control technique without stretching their core skills sets and resources.