It’s not rocket science. It’s easy to implement. It can be placed side by side to any existing health plan gifting plan members a choice at the point of service between “Free Care” and “Not so free care.”
By Bill Rusteberg
Years ago, a hedge fund operator called seeking market intel on Reference Based Pricing, a nascent but growing market trend at the time. He continued calling over the next six months to which I was happy to share my experience, both good and bad, with Reference Based Pricing.
On what would be my final call with him he asked “Bill, you have repeatedly said Reference Based Pricing is a transitory phenomenon. What do you see as the future of health care financing?”
Without hesitation I replied “Cash paid at the point of service funded in whole or in part through plan assets.”
In partnership with a like-minded plan sponsor we implemented our first Cash Pay Centric Heath Plan in 2018. The results have been phenomenal. Whereas their Reference Based Pricing plan paid 120% of Medicare, cash prices often came well below that.
We have found as much as 80% of claims are cash based, paid at the point of service. This has had an amazing impact on plan finances, improved patient experience and phenomenal buy-in among community care givers.
It’s not rocket science. It’s easy to implement. It can be placed side by side to any existing health plan gifting plan members a choice at the point of service between “Free Care” and “Not so free care.”
There is never a balance bill with associated threats of legal action and ruined credit. Savings are equal to or greater than Reference Based Pricing strategies. Egregious reference based pricing fees, some as high as 12% of billed charges, are gone in place of small transaction fees common to banking transactions.
The hedge fund eventually invested in a legacy Reference Based Pricing vendor which is still selling Reference Based Pricing backroom support to self-funded health plans. They have not moved towards supporting Cash Pay Centric Health Plans as that would be against their business model and hurt their bottom line.
That’s unfortunate because the key to business survival is the ability to adapt to change.
“The challenge facing successful business ventures is to understand the necessity to continuously respond to market forces in a proactive manner since competition will certainly become a factor to consider at some point. To ignore this basic business premise by remaining complacent is business suicide.” Bill Rusteberg
This applies to all, including health insurance brokers. However, market acceptance through legacy distribution channels (insurance brokers) will be slow since transparent cash pricing does not lend itself to more lucrative fees earned through status quo health plans.
We are seeing more interest among plan sponsors in cash pay as a viable alternative to status quo managed care plans. Cash pay adjudication at the pharmacy with real time exchange of money for services and supplies, something we have been doing for over 30 years, is now expanding to the medical side of group health plans.
One wonders ”Why has it taken so long?”
Actual sales Presentation Used To Sell Our First Cash Pay Centric Health Plan
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.
