Lowering Out-O-Pocket Healthcare Costs

Could the Reference-Based Pricing Model Benefit You?

As healthcare spending escalates, many organizations are looking to design innovative programs that curb costs without sacrificing overall employee care and satisfaction. One cost-shifting strategy gaining popularity amongst employers is the reference-based pricing (RBP) model.

How RBP Works

RBP works by setting spending limits on certain procedures or services — ultimately acting as a cost-containment strategy. In an RBP transaction, the individual is covered up to the established limit for services and would pay an out-of-pocket cost for the difference.

Through the RBP model, an individual can compare and decide on “shoppable” services based on price and quality, such as for prescriptions, lab tests, or joint replacements. In these examples, there are lower cost options that can reflect the same quality as more expensive alternatives, which can be an incentive for employees struggling financially.

Employers will typically work with a third-party vendor to establish the best limit for a procedure or service. The vendor will help conduct market research and negotiate the most appropriate deals with providers. Should the model be implemented, it is fundamental for an employer to locate a reliable vendor that works well with the organization. If an inexperienced vendor is chosen, RBP limits might be set too low for the services employees need, making the plan costs extremely high and potentially unaffordable. In addition, not using a vendor could potentially leave you vulnerable to providers attempting to balance bill.  

Employer Value

Employers that use a RBP model have the potential for two main benefits: lower total healthcare expenses and higher employee engagement in healthcare decisions.

Healthcare coverage generally extends to any in-network procedure, regardless of the cost – which is why this model can be attractive to employers and employees. By setting a limit on certain procedures, employers are empowering and encouraging employees to take charge of their healthcare decisions.

It is important to note that utilizing alternative funding options such as RBP is not right for every employer. However, as the market evolves, learning and implementing creative strategies may benefit your organization during these uncertain times.

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If you have any questions regarding this information, don’t hesitate to reach out to the Creative Benefits Team at 866-306-0200 or solutions@creativebenefitsinc.com.