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Rising Importance of Reference Based Pricing

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Reference based pricing health plans

There are many companies that are taking note of the Reference Based Pricing model, which has been around for years, but recent years has witnessed enhanced viability and popularity. While the reference-based pricing is gaining importance as a tool to keep a check on the increasing cost of healthcare, the cost of healthcare is not a cookie cutter and each of the solutions creates an altogether different challenge.

Reference-based pricing programs are designed to reimburse healthcare providers a maximum price per service or procedure. And this maximum price is known as the ‘reference price’. The main idea behind it is that employees are directed to the providers that accept the reference price based on reduced out-of-pocket expenses. For instance, a reference price for a knee replacement is around $15,000. An employee who sees a provider that charges $20000 for knee replacement will be liable to an additional $5000.

Reference-based pricing is basically a modern solution for self-funded employers to manage healthcare costs for their business and employees. So will your employees understand the change? Let us look for the tip for a smooth transition to reference-based pricing without disruption:

Research and find an experienced provider

Employers should only collaborate with partners that can be trusted and experienced with providing successful reference-based pricing solutions. So look for a provider that has extensive experience in auditing claims. Moreover, the provider must also share some case studies from successful partnerships in the past and retains the client for a long-term.

Assess your Provider

Requesting to see the provider’s operations personally to evaluate whether the provider is financially secure or not. Check if the provider is equipped with resources and is committed to the success of their clients. So, you must look for a partner that embraces site visits and pays attention to the size of the customer service team.

Communication is key

When you make a change in order to avail benefits, clear and transparent communication is essential to make sure that the employees understand the plan. Hence, it becomes important to look for reference-based pricing vendors who educate you and answer all your questions regarding any doubts related to the transition.

Evaluate the functioning of your plan

Remember, the association or collaboration doesn’t stop when the plan is all set and going smooth. Therefore, you must look for a partner that drives your result and reports on your cost savings. Apart from it, the provider should also provide a dedicated support specialist and must prove to be a committed resource.

In the end, the success of Reference Based Pricing programs is largely dependent on the co-operation of employees. RBP programs have been successfully implemented or companies all around the world and is expected to grow continuously, especially as medical providers face continued regulatory and uncertainty.

Criteria’s to consider when considering Reference Based Pricing

Type of Service

Plans must not be deceitful for placing limitations on the coverage. Plans must be such that there are high-quality providers that accept the reference price and that reference pricing is applied to situations where employees have the opportunity to assess their choice of providers before receiving care.

Quality Standards

Plans should be such that providers accepting the reference price must meet reasonable quality standards.

Easy Access

Plans must have methods to ensure that there are enough providers available that accept the reference pricing system.

If your plan does not meet the above criteria, then it must include charges in excess of reference-based pricing in an employee’s out of pocket maximum.

Moreover, employers considering a reference-based pricing program should ask their claims administrator to illustrate how the plan meets the criteria. Employers should also consult with their legal counselor to look for compliance risks and whether the steps taken by claims administrator might be deemed to meet each of the criteria.

Diane Smith is a digital marketing professional with over 5 years of experience. She is incredibly passionate about financing, insurance and business services with an inclination towards software and technology.

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