What’s the best Medicare pricing benchmark plan sponsors should use? Is it 100%, 120%, 150% or 200% of Medicare? Is there a material difference in balance billing issues between these tiers? The answer may surprise you.
Most believe the higher the tier the less chance there is of a balance bill. However that’s not always true.
Studies show there is little difference in the number of balance billing issues between these tiers. For example the BUCAs pay out-of-network providers anywhere from 105% – 140% of Medicare with balance billing averaging less than 5% of claims. Reference Based Pricing plans, no matter what tier is used, uniformly experience balance billing issues averaging 2% of claims or less.
If you’re a Reference Based Pricing plan, why aren’t you paying 100% of Medicare? Why pay based on a higher benchmark when providers are willing to take less?
A May 12, 2022 KFF Health News report lends support to the argument for a move to lower reimbursement levels by Reference Based Pricing plans:
“Across states, the share of physicians accepting new Medicare patients ranged from a high of 95% in three states (Iowa, Minnesota, and Pennsylvania) to a low of 76% in the District of Columbia, similar to the range across states for privately-insured patients.”
“Previous KFF analysis has found that even though Medicare payments to physicians are lower, the vast majority of Medicare beneficiaries report having a usual source of care and high levels of satisfaction with the quality of their medical care. In addition, two separate KFF analyses, using data from 2012-2013 and 2020, found that the nearly all physicians accept Medicare, and only a small fraction “opt out” of Medicare altogether.”
On his popular insurance blog, Joe Paduda wonders why the BUCAs pay twice what Medicare Pays – ”You and your insurance company pay your doctors and hospital more than twice what Medicare does. Yes, the Feds can exert pricing power – but why can’t United Healthcare, or Aetna, or Blue Cross?”
Our answer is “They can but they don’t.” The reasons make for a good topic for another blog posting.
Last year we moved several of our Reference Based Pricing groups to 100% of Medicare. To date there has been no uptick in balance billing.