By Bill Rusteberg
Reference based pricing schemes employ all kinds of middlemen to keep noise down and make member experience as easy and pleasant as possible. Adding all the layers needed to accomplish that proves the cost of convenience is high at the expense of reduced provider reimbursement.
Middlemen skim plan assets off the top at the expense of providers who otherwise could have been paid more.
The Edgewood Independent School District in San Antonio found that out in 2015 when their Reference Based Pricing vendor charged over $1,000,000 in fees that otherwise could have gone to pay area providers. A Texas county experienced a similar haircut to the tune of $900,000 by the same vendor.
A pure Reference Based Pricing plan without the bells and whistles is not a new idea or one hatched in the loony tune factory. Back in the early 70’s before PPOs and “preferred providers” were invented all group plans were indemnity plans as are Reference Based Pricing plans today. Balance billing was rare back then and rare today. Industry statistics show less than 2% of claims are balanced billed and usually for small amounts.
A simplified Reference Based Pricing plan without all the vendor baggage is not a new idea. It’s an old idea whose time is yet to come again.
