RBP Buzz

Referenced Based Pricing – Another Self-funded option. Referenced Based Pricing is a non-traditional way of paying hospitals (and in some cases providers) based on a percentage of Medicare pricing instead of the traditional provider network contracted rates. The idea is that traditional provider network rates are much higher than Medicare rates, so Referenced Based Pricing pays somewhere in the middle of the two. This method saves costs for the member and the plan, and pays hospitals timely. The glitch is that the member can be “balance-billed” by the hospital. “Balance-billing” refers to when a hospital expects to get paid $5,000 for a service, but is only paid $2,000 by the plan. The hospital may send the balance of the bill to the patient for payment. Employers are aligning with Reference Based Pricing companies that assist in negotiating with the hospital on the member’s behalf to resolve any unpaid balances.
The hope is that Referenced Based Pricing is bringing more transparency to the cost of care and that it is a step in the right direction in addressing health care costs at large. We know for sure that if an employer implements Referenced Based Pricing, it must go hand in hand with employee education and excellent employee communications so that employees are not surprised by any balance billing practices.