By Bill Rusteberg
“Balance billing only occurs when purchasing goods or services without asking the price.”
Under government mandated health plans, once a consumer has reached the magical out-of-pocket maximum, there is no incentive whatsoever for consumers to seek cost effective health care. After all, it’s now “Other Peoples Money” paying the bills.
Utilization increases, virtually unnecessary and unchecked in the real world of personal economics. Pent up utilization is thus jet fueled, an actuary’s nightmare, an employer’s sanction.
Reference Based Pricing plans offer a solution. In theory and practice, these plans pay most providers the same for services rendered. For example, Dr. Jones is paid the same for an office visit as Dr. Smith. Or, Hospital “A” is paid the same as Hospital “B” for identical services. These plans are designed to pay fair, transparent and reasonable reimbursement rates through a systematic combination of pricing data points, a defensible methodology to pay health care providers.
Balance billing can occur when a provider wants more than they receive in payment. For example, Dr. Jones may want $150 more for an office visit than Dr. Smith. Or Hospital “A” wants $75,000 more for the same procedures/admission as Hospital “B”.
Although the consumer may have reached the magical out-of-pocket ACA mandated maximum, in the case of Dr. Jones or Hospital “A” it doesn’t matter. The plan pays what it pays, nothing more and nothing less.
Money affects behavior. Balance billing puts the brakes on “Other Peoples Money”, necessarily bringing the consumer back into the economic equation.
Unfortunately balance Billing is a dirty word in our industry. Many fear it. However, it should not paralyze plan sponsors to inaction and continuation of the status quo. Rather, it should be embraced as an important strategy in controlling health care costs.
Balance billing only occurs when purchasing goods or services without asking the price. The threat of balance billing should be enough to change the nature of health care financial transactions at the consumer level.
Plan sponsors would be wise to educate employees on a fast changing world. It’s not business as usual any more. It’s not so much an employer’s moral responsibility these days, health care is now more of an individual responsibility. The ACA mandates it so.