It’s surprising to me how many new companies are popping up that profess to do Reference Based Pricing (RBP). It seems like every week I get emails from companies about their new program for my clients.
The number of employers utilizing RBP is growing exponentially across the country. They are finally realizing that the traditional PPO approach using a BUCA (Blue Cross, United, Cigna, Aetna) is no longer working, or saving them any money. Once an employer understands how a PPO really works and its meaningless approach to containing costs, they are open to exploring new strategies that actually lower the cost of this ever increasing expense.
Anyone can set up a RBP company and pay providers based on Medicare. We all pay taxes to Medicare – public money; Medicare reimburses hospitals and doctors for their patients – public money; so the amount paid to Medicare patients is public information. But the reality is that Medicare doesn’t necessarily cover the providers reported cost to the Centers for Medicare and Medicaid (CMS). This means that an RBP company who reimburses the provider based only upon ~150% of Medicare, may not even cover the reported cost by the provider – which means the provider is losing money.
Their services are pretty much the same – they pay providers at a percentage of Medicare, or whatever amount the employer would decide to pay them. By the way, how is an employer supposed to know how much to reimburse providers?? What’s fair, what’s normal, what about different geographic regions, hospitals versus doctors, etc.?
The company that I recommend doesn’t reimburse the provider solely upon Medicare. They utilize two metrics – Cost Plus and Medicare Plus – and reimburse the provider based upon the greater of these two, so that the provider realizes a fair and reasonable profit.
The difference between all these new RBP companies and the one that I recommend to my clients is service. Without true member support and advocacy, the result will be a disaster. When, and if employees get a balance bill from a provider and don’t know what to do with it is a significant issue.
Service comes down to advocacy. Having access to a personal advocate who can instruct and assist members with balance bills is extremely important and necessary. Employee education and a communication plan only go so far, and needs to be repeated often, but when and if an employee receives a balance bill, they need to be able to speak with their advocate directly.
The other element of service that none of these other companies have is free legal assistance and support. When a provider must be approached and communicated with regarding an egregious bill, who better to discuss that matter then an attorney. All of these other companies require the Plan or the member to contact a local attorney who may or may not know anything about RBP, or utilize their in-house attorney at ~$300 an hour. The company I work with provides free legal assistance if needed.
At the end of the day, and employer seeking an RBP strategy which is offered by their broker or their Third Party Administrator (either of which may not know the difference between one RBP company and another) – doesn’t even know what questions to ask or what to compare. They’re simply taking the advice of their broker and/or TPA who may or may not have enough experience with these plans. They essentially leave the employer and employee hanging out to dry.
One RBP company they contacted me said “we don’t need legal assistance because we don’t have any balance bills. We negotiate everything.” What this means is that if an employee gets a balance bill, the employer will simply ‘buckle’ and pay the provider whatever they demand. What if that provider decides to dig their heels in and sends the member to collection? If the plan is going to pay the provider an egregious rate and whatever they demand, what good is the RBP plan? If the employer/employee is intimidated by a provider who demands full payment and has no legal assistance, what is the employer/employee supposed to do other than acquiesce and pay the full amount the provider requests?
If you are considering an RBP plan, you really need to look under the hood and no what you’re looking for. Don’t for a minute think that they’re all the same – you don’t know what you don’t know. If you want to know about the differences and which programs are Best In Class, contact me at [email protected] or call me at 970-349-7707.
