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.

However, if they choose a provider that charges more than the reference price, they are responsible for paying the difference between the provider’s charge and the reference price, in addition to their regular cost-sharing.

How It Works With PPO Plans

  • Employees can choose any provider, in-network or out-of-network
  • If they select an in-network provider accepting the reference price, they pay standard cost-sharing
  • If they choose an out-of-network provider charging more than the reference price, they pay the difference plus standard cost-sharing

How It Works With HMO Plans

  • Employees choose providers within the HMO network
  • If the provider accepts the reference price, employees pay standard cost-sharing
  • If the provider charges more than the reference price, employees pay the difference plus standard cost-sharing

Examples of Potential Savings

  • For a knee replacement surgery with a reference price of $25,000, if an employee chooses a provider charging $35,000, they would pay the $10,000 difference, plus their standard cost-sharing on the $25,000 reference price.
  • For an MRI scan with a reference price of $500, if an employee chooses a facility charging $800, they would pay the $300 difference, plus their standard cost-sharing on the $500 reference price.

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.