To decrease the spending on employee benefits, many employers are opting for reference based pricing for reducing their claims spend. Unlike the traditional “networks,” which aims to negotiate a lower fee of the hospital/provider’s billed charge, reference-based pricing (RBP) is a revolutionary concept different from more traditional pricing options.
By choosing reference based pricing health plans, the employer can better control the cost of the claims by starting at their cost basis with the “bottom-up” pricing. Unfortunately, these often include the most expensive claims, like hospital stays, surgeries, and other treatments that vary significantly in price and outcomes.
Benefits of Reference Based Pricing
Cost Transparency
It is the cost transparency of reference based pricing which makes it different from the traditional funding arrangements. Employers who choose RBP have more control over the rising healthcare costs, and they can deal with these increasing costs without interfering with their bottom line. However, it is vital to inform your employees that not all healthcare systems accept capped insurances like reference based pricing. To ensure that your employees understand how balance billing works, hiring an experienced service provider with solid patient advocacy is a good idea.
Efficiency
One of the significant benefits of choosing reference based pricing health plans is knowing how much a specific procedure or a treatment will cost. Agreements with in-network healthcare providers can ensure that as long as an employee visits a provider who is in-network, the total cost will be covered at the established price. While an employee can still opt to see an out-of-network provider, they might have to pay out-of-pocket a portion of the bill. Reference based pricing enables employers to save money on healthcare expenditures and fix the stop-loss premium. These savings can be further passed onto the employees.
Beneficial For Employer As Well
Reference based pricing is not only beneficial for employees but also beneficial for employers. With RBP, an employer doesn’t have to risk paying high costs for the medical services, which can be completed more inexpensively. Setting a cap on specific procedures enables employers to encourage their employees to take charge of their healthcare. They are then forced to consider both cost & quality while choosing where to have their procedure done; this often requires research and individual participation in one’s own health care. The healthcare industry is where most people don’t know the cost of a particular service until they get the bill. Thus, RBP creates higher employee engagement in health care decisions.
