By Bill Rusteberg
Through an innovative plan design, Reference Based Pricing (RBP) plans seeking to contract with local providers can do so quite easily. It’s turning lemons into lemonade and it’s called an APO (All Provider Organization).
Under this strategy, plan members will actually decide what their co-pay will be when seeking care. In most cases the co-pay will be zero, a benefit improvement for many plans. It’s all about turning the big bad balance billing wolf into a coveted “benefit.”
Here is how employers can enter into direct provider agreements easily and quickly:
– Simply limit the plan’s payment to professionals to a percentage of Medicare such as 150%.
– Co-pay equals balance billing amount. For example, if the plan limit is 150% of Medicare and the physician charges 160%, the co-pay is 10% of the Medicare allowable fee schedule for the services provided.
Providers can name their price. An agreement is then set based upon a sharing arrangement between the plan and plan members. For example, the agreement stipulates the plan will pay 180% of Medicare for Dr. Jones. Dr. Jones will collect a patient co-pay equal to 30% of Medicare. Dr. Smith may agree to an agreement at 150% of Medicare. No co-pay is collected at Dr. Jone’s office. Or in the case of Dr. Garcia, his agreement stipulates 200% of Medicare with a co-pay collected at the point of service equalling 50% of Medicare. Which doctor would you visit?
Plan members will be able to review a listing of contracted physicians which will indicate expected co-pay amounts for services rendered by each provider. If they seek care from non-contracted physicians members will not know in advance what their co-pay will be, unless they ask.
Under an RBP APO plan members are empowered to control health care costs. They enjoy the freedom to choose their provider of choice. Having skin in the game, members will seek to limit their expenses by seeking lower cost professional providers in their respective communities.
Now we turn to quality of care. Ah, but that is another subject for another blog entry…………..