A cash-based health plan with a RBP wrap does not require a traditional TPA nor does the plan require stop loss insurance. In lieu of stop loss insurance a risk transfer mechanism is triggered when the plan aggregate limit is breached.
The following plan document language outlines the plan’s reimbursement parameters. (Not included is plan aggregate limit language):
SELF-FUNDED GROUP HEALTH PLAN DOCUMENT AND SUMMARY PLAN DESCRIPTION (SPD)
ARTICLE X – REIMBURSEMENT OF ELIGIBLE MEDICAL BENEFITS
SECTION 10.1 – OVERVIEW OF PAYMENT METHODOLOGY
This Plan operates using a Reference-Based Pricing (RBP) model to determine reimbursement for most Covered Services. Reimbursement is based on a percentage of the applicable Medicare allowable amount for the relevant service in the applicable geographic area. In addition, the Plan includes a cash-based payment program to reduce costs and protect Participants from out-of-pocket exposure when Providers agree to favorable terms.
SECTION 10.2 – CASH-BASED REIMBURSEMENT PROGRAM
When a medical Provider agrees to accept a negotiated cash payment equal to or less than 150% of the applicable Medicare allowable rate, the Plan will:
(a) Reimburse the full amount of the negotiated cash price;
(b) Waive all applicable Participant financial responsibility for the service, including deductibles, coinsurance, and copayments; and
(c) Ensure that the Provider agrees not to balance bill the Participant.
Such arrangements must be approved in advance by the Plan Administrator or a designated medical pricing partner. The Plan encourages Participants to utilize Providers willing to accept these terms.
SECTION 10.3 – NON-ACCEPTANCE OF CASH PAYMENT
In the event a Provider refuses to accept a negotiated cash payment less than 150% of Medicare, the Plan will limit reimbursement to 100% of the applicable Medicare allowable rate, and the following applies:
(a) The Plan shall not be liable for any charges in excess of the Medicare allowable amount;
(b) The Participant shall be responsible for any balance bill from the Provider; and
(c) The Plan shall not be responsible for mediating any such disputes unless required by applicable law.
SECTION 10.4 – STANDARD REFERENCE-BASED PRICING REIMBURSEMENT LEVELS
Unless superseded by a negotiated cash payment as outlined above, the Plan will reimburse Covered Services at the following standard RBP levels:
- 100% of Medicare for inpatient and outpatient facility services;
- 100% of Medicare for physician and professional services;
- Other services as determined and disclosed in the applicable Schedule of Benefits.
SECTION 10.5 – PARTICIPANT NOTICE AND RESPONSIBILITY
Participants are advised of the following:
- Providers are not contractually obligated to accept RBP payments;
- The Plan Administrator may assist in identifying Providers that accept the cash-based or RBP payment methodology;
- Participants are responsible for charges that exceed the Plan’s maximum allowable reimbursement if the Provider balance bills;
- Participants should confirm acceptance of Plan terms prior to receiving non-emergency services.
ARTICLE XI – DEFINITIONS
- Medicare Allowable Amount: The amount Medicare would reimburse for a service before coinsurance and deductible obligations.
- Reference-Based Pricing (RBP): A reimbursement methodology where payments are based on a set percentage of Medicare’s published allowable charges.
- Negotiated Cash Payment: A mutually agreed cash price between the Provider and Plan (or Participant with Plan approval) in advance of receiving care.
- Balance Billing: Billing a patient for the difference between the Provider’s billed charge and the amount paid by the Plan.
- Covered Service: A medical service or supply that is medically necessary and eligible for reimbursement under this Plan.
ARTICLE XII – EXECUTION AND ADOPTION
This Plan Document and Summary Plan Description is adopted and effective as of the ___ day of __________, 20, by the undersigned Plan Sponsor.
IN WITNESS WHEREOF, the Plan Sponsor has caused this instrument to be executed:
Authorized Representative – Plan Sponsor
Printed Name / Title
Date
This document is a legal Plan Document and Summary Plan Description prepared in accordance with ERISA disclosure requirements and should be maintained with the employer’s benefits files. Questions regarding plan administration or application of these terms should be directed to the Plan Administrator.
RiskManagers.us is a specialty company in the benefits market that, while not an insurance company, works directly with health entities, medical providers, and businesses to identify and develop cost effective benefits packages, emphasizing transparency and fairness in direct reimbursement compensation methods.
