A Health Insurance Solution: Reference-based Pricing

In the continued quest to manage rising healthcare expenses, many employers want more control and freedom in plan designs that can lower their payments. And one way to achieve it is with reference-based pricing. When members receive healthcare under a reference-based pricing plan, the plan pays benefits based on a multiple of the Medicare reimbursement rate regardless of the amount charged by the provider.

Self-insured employers who opt for this model don’t look to their carrier or a network to fix the cost of covered services. Instead, they determine a reasonable set amount the plan will pay for certain procedures and services – particularly important for treatments that can vary widely in price. Here’s how it works:

Not only do employers realize greater claims savings through these set costs but employees get armed with the information they need to make decisions when shopping for what will reduce their out-of-pocket spending. See a list of pros and cons with reference-based pricing plans. The key to success with these arrangements? Employee communication.

If you’re thinking about implementing reference-based pricing, be sure to have a plan in place to educate workers about how the coverage works, what they need to know to benefit from it, the importance of researching providers, and situations that could trigger balance-billing for amounts above the fixed payment. It’s also wise to have employee advocates available who can answer questions about reference-based pricing and help them select the right provider.

For more information about self-funding and reference-based pricing, contact Complete Payroll Solutions at 877.253.9020.


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