Traditional Reference Based Pricing Strategies Don’t Work In Las Vegas

Maybe we should be using Medicare – 20% from now on……………..?

By Bill Rusteberg

I have noticed that almost all purveyors of reference based pricing strategies are hobbled by self-imposed limitations. “You can’t sell RBP in my backyard at 120% of Medicare, the provider community will not accept it!? Or, “Let’s put the benchmark at 150% of Medicare just to be sure there is as little push back as possible!”

Its all about perception and acceptance of inner persuasive inclinations fueled by a sought environment that drive self-immobilization. It is, to some degree, group think. The later is important because those just now entering the RBP market are reliant upon and influenced by those who have preceded them. If they had been independent, out-of-the-box thinkers in the first place they would have come to their own conclusions through their own market research with their own clients. Or is this just wish think on my part?

I’m guilty of all of the above (please, please don’t tell anyone). Imagine my embarrassment when invited to Las Vegas to meet with a consortium of progressive employers some years ago. “In Texas we are paying 120% of Medicare!” I boasted. A polite member of the audience, during the question and answer period, asked “Why would we pay 120% of Medicare in this market when we are paying less than 100% now?”

Yes, its true. With the strength of labor in that market (think casinos), major employers in the area have negotiated reimbursement rates below Medicare.

Maybe we should be using Medicare – 20% from now on……………..?