Have You Read Your RBP Contract?

Stop! Don’t Sign Until You Read It!

Years ago a client signed a contract before we had the chance to review it. When we did we found the vendor was royally screwing the client with new terms and conditions not memorialized in their winning proposal.

I asked the owner who happened to be an attorney too, “Did you read the contract before you signed it?” He bowed up and said “Yes, of course I read the contract!” 

“Then why did you sign it?” I countered.

By Bill Rusteberg

Reference Based Pricing is a growing market phenomenon with new entrants coming in every month. There are many flavors and colors to suit varying levels of risk tolerance among plan sponsors.

The most important aspects of Reference based pricing include legal defense and balance billing representation. The later addresses the fear based mindset of ruined credit. Americans simply can’t or won’t pay cash for things they need or not. The former (legal defense) is based on commonly held fear of being sued and the expense associated with that.

I have come to believe most brokers selling Reference Based Pricing plans don’t really know what they are selling. They may think they are selling a product that protects plan members against balance billing and legal defense but in many cases these contracts contain vague and ambiguous terms and conditions that leave huge holes in coverage protection for both plan and plan members.

And, common to all of these Reference Based Pricing services, there is no or very limited tail coverage. That’s important to consider because lawsuits don’t happen overnight and may crop up years later after a plan changes vendors.