Reference Based Pricing (RPB) Group Health Insurance
It’s time to shine the light on healthcare pricing. Now’s the time for employers to seriously consider reference based pricing, which does just that.
In the past, it has been the norm for different healthcare service providers to set vastly different prices for the same medical services and procedures. Patients were (and still are) not usually pre-informed about their upcoming healthcare costs – thus keeping them in the dark before undergoing the procedures. Since most patients only have to pay co-pays, they continue in their un-awareness of what the real costs of their procedures were, because they’re not the ones paying the costs. (Insurance carriers pay the majority of the costs.)
Thankfully, with reference based pricing, both employees and employers have ample opportunity to review pricing details beforehand and to select a healthcare provider accordingly. Reference Based Pricing (RBP) works extremely well – especially for healthcare services where there are wide variations in the prices among the providers for the same services and the same quality.
Reference-based pricing is meant for small and medium sized businesses who want to reduce the costs of their group health insurance plans. It is ideal for any organization that has a staff of 26 or more – especially those who are struggling to afford traditional group health insurance.
Within the reference-based pricing model of health insurance, if an employee participating in the plan decides to seek a procedure from a non-participating provider, the employee is responsible for the payment of the extra charges above the limit set by the group health plan.
In actuality, both medical service providers and the insured group seem to benefit from this reference-based pricing approach, because RBP limits usually pay a little higher than the generally accepted Medicare-negotiated price. (Typically 50% higher.)
One major objective of reference-based pricing is to inform employees that they can save money, and sometimes even be financially compensated, for making smart choices about their healthcare.
Another major objective of reference-based pricing is to avoid high-cost healthcare providers, and It has been observed in communities where RBP health insurance has been introduced, that the highest-cost providers in such communities usually reduce their prices in order to stay competitive and stay in business. This is beneficial to the community as a whole.
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