Mind the Gaps: Why Partners Are Pivotal to Implementing Reference-Based Pricing
Having the right partners for this cost-saving strategy helps ensure a
positive member experience while relieving HR workload.
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.
Because it’s so unlike a traditional health plan, RBP poses added workload and expertise demands for HR
teams. That’s why having the right partners is key to a successful implementation.
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.
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