CHICAGO--(BUSINESS WIRE)--More brokers and employer groups are exploring reference-based pricing (RBP) as a way to control skyrocketing healthcare costs while simultaneously achieving greater transparency and better access to care. Marty Joseph, founder of Benefit Administrative Systems (BAS), a division of HealthComp Holdings, discussed this model at the World Health Care Congress in Washington, D.C. In his session, Joseph drew on his years of experience in the RBP industry to talk about the challenges and benefits of RBP, as well as key strategies for successfully implementing and administering RBP plans.
“Innovative CEOs and CFOs are frustrated by year over year double-digit increases in healthcare spending within traditional health plans,” said Joseph. “At the same time, they don’t have the data or cost transparency to know what’s behind this cost escalation. They want to approach healthcare differently. Many of them are coming to BAS as a Center of Excellence in this area and saying, let’s talk about reference-based pricing. In 2018, 75% of our new business inquiries were around RBP. This represents significant movement in the market – it’s changing the landscape and giving companies more power to impact costs and outcomes.”
According to Joseph, executives are particularly interested in RBP since it could save them up to 20-30% on healthcare spending in the first year. With these results, RBP will likely continue to gain in popularity, especially as healthcare costs continue to rise.
Many hospitals and healthcare facilities charge inflated prices. Traditional health plans negotiate discounts to these prices through provider networks, but this model still results in high costs. RBP, on the other hand, does not utilize a carrier or provider network. Members may see any healthcare provider; this freedom of access coupled with cost transparency helps foster better-informed healthcare consumers.
In addition, provider reimbursement in RBP is based on either a percentage of Medicare reimbursement rates or the true cost of the healthcare service. This simple and fair methodology is what yields the cost transparency, a core tenant of the RBP model. Employers have claims and cost information, so they can better assess how their plans are performing and address problem areas in a very data-driven approach.
As part of the session, a success story was shared of an employer group that recently switched from a traditional preferred provider organization (PPO) to an RBP plan. This group had about 1,200 employees across more than 35 states. Before RBP, it spent about $5 million a year on healthcare. An initial analysis and forecast of the group’s claims projected it would save approximately $1.1 million in the first year using RBP. After just 10 months, however, the group reduced its healthcare spending by an estimated $1.7 million, far exceeding the initial projection.
According to Joseph, for RBP to be successful, employer groups have to be “all in.” The key is to provide plan members with ongoing communication, education, and support. As such, it’s critical to partner with an RBP administrator that has the experience and processes in place to seamlessly handle implementation, administration, and member support.
“With RBP, members must engage and take action,” said Joseph. “Member education is the foundation, so they understand how RBP works, and what to do in case of balance billing. In the case study presented, we saw 98.7% of all claims go through without a balance bill. If you look at PPO plans today, they experience roughly the same rate. However, with RBP, members actually receive extensive support to assist and resolve these bills.”
In addition, BAS has established an outreach program that alerts members with a text and live phone call when an RBP claim is processed. Members are constantly reeducated on the steps they need to take. “Overall, our process gives members a high-touch experience, along with empowerment,” added Joseph.
To hear Marty Joseph speak about RBP and how employers are using this model to reduce healthcare spending, tune into his video interview at the World Health Care Congress:
About Benefit Administrative Systems, LLC (BAS)
BAS, a division of HealthComp Holdings, is a results-driven third-party administrator that was founded in 1983. The company has a track record of delivering cost savings and customer satisfaction. It utilizes specialized services, tools, and partners to create a robust partially self-funded plan as unique as each client. BAS is headquartered in Chicago, Illinois.
About HealthComp Holdings
For more than 35 years, HealthComp Holdings has been dedicated to transforming benefits management into an experience that employees and employers love. Bringing together concierge-level service, operational excellence, powerful analytics and cost management, we’ve built a solution that integrates seamlessly with any benefits ecosystem. As one of the nation's leading benefits administrators for self-funded employers, we are comprised of two Centers of Excellence: Our Center of Excellence for PPO administration is based in Fresno, California, and our Center of Excellence for Reference-Based Pricing (RBP) is based in Chicago, Illinois.