Health Reimbursement

Arrangement

Level Funding

Self-Funding

Medical Management

Reference Based Pricing

Prescriptions

Find out how Metro Area Group Insurance Consultants can impact your health care benefits bottom-line through cost-savings and expense management.

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Strategies

 

 

 

If there ever was “smoke and mirrors” in the world of healthcare, how doctors or hospitals bill for their services would certainly qualify.

 

It is the only purchase made where the price is revealed after services are rendered. Just imagine purchasing something for your business or organization, and you don’t know the price of the item until you receive the bill. You would never do this. However, you do it every day with the second or third most expensive item in your budget – your healthcare spend.

 

Although it is not the ultimate answer, reference-based pricing or RBP is a big step in that direction.

 

There are typically large discrepancies between what providers charge for care and what is ultimately paid by the insurance carrier. This difference, or “discount,” is what insurance carriers promote as the savings they provide to you through their provider negotiations. The issue is that even after the promised discount, the paid amount is often significantly greater, sometimes 10 times as much, than what Medicare pays.

 

With RBP there are no networks to deal with. Reimbursements are based on a percentage of what Medicare would typically pay the provider. It is not uncommon to see reimbursements range from 120 to 170 percent of Medicare.

 

In the RBP model, you realize lower claims payments, due to capped claims, as well as total claims transparency. You see exactly what is being charged for a claim, which can provide insight into how  your plan is running. So, it’s rich in data.

 

But RBP isn’t without its challenges.

 

Example

 

Let's say that a participant needs a certain kind of surgery, and a hospital would expect to be paid $2,500 for it, even if some insurance carriers may have contracted to pay less than that. The Medicare rate is $500, and the reference-based pricing plan's fixed limit is 200 percent of the Medicare price, which comes out to $1,000.

 

With RBP, the hospital may perform the service and expect to receive $2,500. Once the hospital is only paid $1,000 from the employer, it may seek the $1,500 balance from the patient. This concept is referred to as "balance billing." The patient, the employer, or a third-party administrator may then help negotiate down the amount of the balance billing. Of course, there are varying degrees of success for these negotiations.

 

It is critical to ensure your program is well-defined and your employees are well educated on how to utilize it.  If not, there is the potential for employees to get balance-billed after a claim is paid. Employees who don’t understand how reference-based pricing works could be saddled with steep medical bills for services they thought their healthcare insurance would cover.

While many employers work with vendors that have created a structure for defining prices (and also provide legal defense to help negotiate bills and prevent employees from getting balance-billed) this process can take a long time and may be confusing for employees.

Reference Based Pricing

MAGIC Health Insurance Solutions

14-B E. Cherry  Street

PO Box 1130

Sunbury, OH

43074

(844) 800-MAGIC

(740) 965-3560

Strategies

 

 

 

If there ever was “smoke and mirrors” in the world of healthcare, how a doctor or hospital bills for their services would certainly qualify.

 

If there ever was “smoke and mirrors” in the world of healthcare, how a doctor or hospital bills for their services would certainly qualify. It is the only purchase made where the price is revealed after services are rendered. Just imagine purchasing something for your business or organization, and you don’t know the price of the item until you receive the bill. You would never do this. However, you do it every day with the second or third most expensive item in your budget – your healthcare spend.

 

Although it is not the ultimate answer, reference-based pricing or RBP is a big step in that direction.

 

There are typically large discrepancies between what providers charge for care and what is ultimately paid by the insurance carrier. This difference, or “discount,” is what insurance carriers promote as the savings they provide to you through their provider negotiations. The issue is that even after the promised discount, the paid amount is often significantly greater, sometimes 10 times as much, than what Medicare pays.

 

With RBP there are no networks to deal with. Reimbursements are based on a percentage of what Medicare would typically pay the provider. It is not uncommon to see reimbursements range from 120 to 170 percent of Medicare.

 

In the RBP model, you realize lower claims payments, due to capped claims, as well as total claims transparency. You see exactly what is being charged for a claim, which can provide insight into how  your plan is running. So, it’s rich in data.

 

But RBP isn’t without its challenges.

 

Example

 

Let's say that a participant needs a certain kind of surgery, and a hospital would expect to be paid $2,500 for it even if some insurance carriers may have contracted to pay less than that. The Medicare rate is $500, and the reference-based pricing plan's fixed limit is 200 percent of the Medicare price, which comes out to $1,000.

 

With RBP, the hospital may perform the service and expect to receive $2,500. Once the hospital is only paid $1,000 from the employer, it may seek the $1,500 balance from the patient. This concept is referred to as "balance billing." The patient, the employer, or a third-party administrator may then help negotiate down the amount of the balance billing. Of course, there are varying degrees of success for these negotiations.

 

It is critical to ensure your program is well-defined and your employees are well educated on how to utilize it.  If not, there is the potential for employees to get balance-billed after a claim is paid. Employees who don’t understand how reference-based pricing works could be saddled with steep medical bills for services they thought their healthcare insurance would cover.

 

While many employers work with vendors that have created a structure for defining prices (and also provide legal defense to help negotiate bills and prevent employees from getting balance-billed) this process can take a long time and may be confusing for employees.

Reference Based Pricing

Health Reimbursement

Arrangement

Level Funding

Self-Funding

Medical Management

Reference Based Pricing

Prescriptions

Find out how Metro Area Group Insurance Consultants can impact your health care benefits bottom-line through cost-savings and expense management.

Reference Based Pricing

14-B E. Cherry  Street

PO Box 1130

Sunbury, OH

43074

(844) 800-MAGIC

(740) 965-3560

Reference Based Pricing

If there ever was “smoke and mirrors” in the world of healthcare, how a doctor or hospital bills for their services would certainly qualify.

 

It is the only purchase made where the price is revealed after services are rendered. Just imagine purchasing something for your business or organization, and you don’t know the price of the item until you receive the bill. You would never do this. However, you do it every day with the second or third most expensive item in your budget – your healthcare spend.

 

Although it is not the ultimate answer, reference-based pricing or RBP is a big step in that direction.

 

There are typically large discrepancies between what providers charge for care and what is ultimately paid by the insurance carrier. This difference, or “discount,” is what insurance carriers promote as the savings they provide to you through their provider negotiations. The issue is that even after the promised discount, the paid amount is often significantly greater, sometimes 10 times as much, than what Medicare pays.

 

With RBP there are no networks to deal with. Reimbursements are based on a percentage of what Medicare would typically pay the provider. It is not uncommon to see reimbursements range from 120 to 170 percent of Medicare.

 

In the RBP model, you realize lower claims payments, due to capped claims, as well as total claims transparency. You see exactly what is being charged for a claim, which can provide insight into how  your plan is running. So, it’s rich in data.

 

But RBP isn’t without its challenges.

 

Example

 

Let's say that a participant needs a certain kind of surgery, and a hospital would expect to be paid $2,500 for it even if some insurance carriers may have contracted to pay less than that. The Medicare rate is $500, and the reference-based pricing plan's fixed limit is 200 percent of the Medicare price, which comes out to $1,000.

 

With RBP, the hospital may perform the service and expect to receive $2,500. Once the hospital is only paid $1,000 from the employer, it may seek the $1,500 balance from the patient. This concept is referred to as "balance billing." The patient, the employer, or a third-party administrator may then help negotiate down the amount of the balance billing. Of course, there are varying degrees of success for these negotiations.

 

It is critical to ensure your program is well-defined and your employees are well educated on how to utilize it.  If not, there is the potential for employees to get balance-billed after a claim is paid. Employees who don’t understand how reference-based pricing works could be saddled with steep medical bills for services they thought their healthcare insurance would cover.

 

While many employers work with vendors that have created a structure for defining prices (and also provide legal defense to help negotiate bills and prevent employees from getting balance-billed) this process can take a long time and may be confusing for employees.

Employee Benefit Services

MAGIC Health Insurance Solutions

14-B E. Cherry  Street

PO Box 1130

Sunbury, OH 43074

(844) 800-MAGIC

(740) 965-3560