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What is Reference Based Pricing (RBP)?

In the simplest terms, RBP is re-structuring the way a Plan reimburses for covered services. By using an RBP strategy, we are helping clients obtain the best and most cost-effective care at a “reasonable” price.
In the traditional PPO (top-down) model, the Plan’s reimbursement is based on a negotiated discount off the provider’s billed charges. Typically, a hospital has a “charge-master” that serves as the menu for services and the charges to be billed for those services. At present, there are no check and balances to regulate when or how often a provider changes (increases) their requested fees. As the charge-master (billed charges) increases, payment increases. When a provider agrees to a network arrangement, they have agreed to accept as payment in full the Plan’s reimbursement along with any cost-sharing required by the patient (covered member). This is a contractual agreement whereby the provider will not “balance bill” for any additional fees, in excess of the covered amount, to reach their billed amount.

In an RBP (bottom-up) model, the Plan is looking to maximize their healthcare dollars without the use of a traditional provider network (PPO), for some or all services. The reimbursement level is designed to compensate providers using fees that are reasonable and already accepted within each market being served. Reimbursements for covered services will be paid using a number of potential methodologies, the most common of which is to base the Plan’s reimbursement as a percentage of Medicare current reimbursement. The Plan has the flexibility to determine the multiplier of Medicare for the services delivered to their covered members. In an RBP arrangement, there are no contracts or network agreements with providers. With no network agreements, the provider could, potentially, bill the patient for the balance not paid by the Plan. However, during the pre-certification and medical review process, we may look to negotiate on the Plan’s behalf with the provider to accept a reasonable and competitive fee for needed services. By taking charge of the Plan on behalf of the client and their members, we look to eliminate the potential for balance-bill while lowering the overall liability of the plan.

This process can be very fluid. Medicare reimbursement rates, in many cases, do not allow for provider profits. Our intent is to find the balance between cost to the Plan and service to the members that allows the Plan to best take care of its members’ healthcare needs.
We have been administering RBP plans for many years. One of the key elements in a successful RBP strategy is providing information and education - we offer strong member and patient advocacy.

Let us know how we can assist your Plan in this process.