Reference-Based Pricing:
A Money-Saving Strategy

Reference-Based Pricing (RBP) is a cost-sharing model that can help you and your employees save on healthcare expenses while maintaining quality care.

What is Reference-Based Pricing?

Reference-Based Pricing is an innovative approach to healthcare costs. Instead of paying a percentage of billed charges, your health plan sets a “reference price” for specific medical services based on a reasonable amount for that service in your geographic area. This reference price is typically derived from a percentage of Medicare reimbursement rates or other benchmarks.

How Does It Work?

With RBP, your employees can choose any healthcare provider, whether in-network or out-of-network. If they select a provider that accepts the reference price as full payment, they pay their standard copay or coinsurance based on the negotiated rate.

How It Works With Your Health Plan

  • Employees generally pay a copay or coinsurance based on the negotiated rate with the health plan.
  • Employees are often provided with information on the reference price and may be able to compare costs between providers.
  • Employees can minimize their out-of-pocket expenses.
  • Health plan sponsors communicate reference-based pricing details through plan documents, benefit summaries, or online tools.
  • If there are disputes or questions about charges, employees should contact their health plan administrator for resolution or clarification

This framework helps health plans manage costs while giving employees the flexibility to choose providers based on their needs and financial considerations.

Examples of Potential Savings

  • Example 1: MRI Scan
    Reference Price: $1,000
    MRI Center A: Center A charges exactly $1,000 for the MRI.
    Patient Cost: If you go to Center A, you might only pay a $200 copay.

  • Example 2: Routine Blood Test
    Reference Price: $50
    Lab Center A: Lab A charges $50 for a blood test.
    Patient Cost: If you use Lab A, you might only pay a $10 copay.

In these examples, the MRI scan and the blood test illustrate how reference-based pricing affects the total cost to you.

A Winning Strategy for Employers

  • Potential significant healthcare cost savings
  • Increased cost transparency and predictability
  • Incentivizes cost-conscious provider choices
  • Promotes provider competition and lower costs

A Winning Strategy for Employees

  • Freedom to choose providers in their plan’s network
  • Lower out-of-pocket costs for cost-effective providers
  • Awareness of healthcare costs and pricing variations
  • Access to quality care while managing expenses

Reference-Based Pricing offers a practical solution to rising healthcare costs while empowering your employees to make informed decisions about their care. By implementing RBP, you can potentially save on healthcare expenses while maintaining quality care options for your employees.

Your Trust Representative is available to answer any questions you might have about Reference-Based Pricing. Contact us today.