Reference Based Pricing​

The evolution of modern health care has allowed medical providers to determine their own prices; this phenomenon has resulted in large variance is service and treatment cost from one provider to the next. In today's healthcare market the cost of a procedure or treatment can vary by thousands of dollars depending solely on the doctor performing it.

Due to the rising costs of health care many employers feel their ability to provide affordable, quality benefits without shifting much of the cost to employees has become limited. Reference Based Pricing (RBP) has helped many employers reduce their cost of care while continuing to provide excellent benefits to their employees.

What is Reference Based Pricing?

Reference based pricing is a strategy employers can integrate into their health plan that determines the maximum amount it will cover for a procedure. Often the maximum amount allowed in the plan is calculated based on a percentage of Medicare allowable charges, i.e.. 135% of Medicare.

Once the maximum amount is determined, providers are asked to accept the RBP payment as payment in full. If a provider refuses to accept the payment it is often negotiated by the administrator to a reasonable and agreeable amount. The intent of RBP is to help stabilize the cost of healthcare.

For example, the cost variance of an x-ray could range between $30 and $1300, or sometimes more, even though the procedure and quality of care is the same. A plan utilizing RBP eliminates the variance in price with a set amount ensuring the employee and the plan aren't being overcharged and the provider still receives fair payment. It's a win for everyone.

Who Benefits from RBP?

Employers

RBP helps employers achieve optimal savings and cost management while still providing affordable, quality care to their plan members.

Employees

RBP stabilizes the cost of care so employees can better determine their out-of-pocket expenses & encourages members to be proactive in managing the cost of their care. 

Doctors

RBP sets a fair price for payment therefore creating a more competitive market that is focused on providing quality care at a more affordable cost.