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Beginner's Guide To Reference-Based Pricing

What's the hype around reference-based pricing (RBP)? Employers and benefits advisers alike rave about RBP and what it can mean for business owners to save on health care costs.

Let's start with the basics. What is reference-based pricing?

Reference-based pricing (RBP) is a reimbursement method that uses Medicare reimbursement rates (or a derived equivalent) as a reference, and prices claims based on a multiple of that rate.

Benefit example for an outpatient service

Reference-based pricing is designed to deal with cost variations for the same service or procedure across providers.

Setting objective payments infographic

What else makes reference-based pricing different?

It's not just the reimbursement method that differentiates RBP from other group benefit models. Members with a reference-based pricing plan may have more flexibility when seeking care.

RBP plans typically don't use provider networks

Unlike traditional PPO plans, reference-based pricing doesn't require the use of a network. The plan reimburses the same amount — no matter which health care provider members receive care from. So, there's no need to worry about out-of-network charges.

Reference-based pricing Q&A

Despite the advantages RBP can do for health care costs, many employers don't know about this affordable option for group health benefits and how it works. We've put together a quick Q&A to clear some of the fog surrounding RBP.

Is it a more cost-effective solution?

Depending on the employer's needs and chosen plan structure, it absolutely can be. RBP plan rates through Allstate Benefits are often lower than plans that use a network, and that may save on monthly costs.

Not only are monthly rates lower, but the Medicare reimbursement rates we use as benchmarks also help to reduce costs.

Many hospitals bill employer health plans as much as 224% of the Medicare reimbursement rate, and that's after any negotiated discounted rates with the insurer.

A reference-based pricing plan typically reimburses 100% to 150% of the Medicare reimbursement rate2 to pay for a covered service. This reimbursement model helps employers contain claims cost on their health plan and helps members save money on health care costs.

How does RBP reduce surprise medical bills?

A well supported and structured reference-based pricing plan can reduce the chance of surprise bills. If a member receives a balance bill after a service, they need to know what to do and who to contact.

Core Value plans through Allstate Benefits have dedicated staff to negotiate with providers on a reasonable payment for services on the member's behalf.

This staff can also direct plan members to local health care providers that accept their health plan. This may also help lessen the chance of receiving a balance bill.

What are the first steps benefit advisers should take when setting up customers with reference-based pricing?

First things first, choose a benefits partner that specializes in RBP. Allstate Benefits is a great start. We're experts in the reference-based pricing space and can help employers choose the right plan to fit their business's needs and budget.

Training is key. Having a thorough communication and education plan is critical. This is so employees can learn about the new health plan, how it works, and how to use it to save the most on health care expenses.

Lastly, ensure ongoing support. Plan members will need help understanding the ins and outs of their RBP plan, locating providers in their area, and resolving potential billing issues. Choosing a benefits partner through Allstate Benefits will give both employers and plan members the assistance they need to successfully use their RBP plan.

Group of coworkers in an office hugging and smiling.

Final thoughts

As more employers opt for reference-based pricing plans, it's imperative that employees have the right tools and resources to understand how the plan works and make informed decisions about their health.

When deciding on what reference-based pricing option to choose from, check out Core Value products through Allstate Benefits.

Learn more about Core Value – Reference-based pricing options through Allstate Benefits.

One phone call is all it takes to get started. Contact an Allstate Benefits – Group Health sales consultant today.

1Sometimes members may be balance billed for the amounts in excess of the plan MAA.
2Or another derived equivalent.

The Self-Funded Program through Allstate Benefits provides tools for employers owning small to mid-sized businesses to establish a self-funded health benefit plan for their employees. The benefit plan is established by the employer and is not an insurance product. Allstate Benefits is a marketing name for: Integon National Insurance Company in CT, NY and VT; Integon Indemnity Corporation in FL; and National Health Insurance Company in CO, WA and all other states where offered. For employers in the Allstate Benefits Self-Funded Program, stop loss insurance is underwritten by these insurance companies in the noted states.

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