This is what happens when Reference Based Pricing gains market share in a geographic area like the Lower Rio Grande Valley.
By Bill Rusteberg
Valley Baptist Hospital and Harlingen Medical Center are the only two hospitals in Harlingen, Texas. For years neither have been Reference Based Pricing friendly. Yet both have a consistent history of treating RBP plan members without issue. They have cashed RBP checks and rarely attempt to collect balance billing they know they can’t collect.
Since our RBP clients in the area have historically paid hospital bills at 120% of Medicare we felt no need to seek direct agreements with either hospital. Why should we?
Then out of the clear blue sky Harlingen Medical Center called us three years ago asking for a direct agreement in favor of a specific listing of our RBP clients. “We will take 140% of Medicare” they offered. We counted with 120%. “Let’s do 130% and call it a day” they said. So, after consulting with our clients, we memorialized terms in a Master Agreement. There are no gag clauses to worry about, and I could post the agreement here if I had a mind to do that.
The Master Agreement is a flat 130% of Medicare with no outliers.
Now we learn that Valley Baptist Hospital has entered into a direct Master Agreement through a local marketing firm at the same rate – 130% of Medicare. We are not privy to contract details as we were not involved but we will find out as we always do.
Meanwhile thirty minutes down the road we have a direct hospital agreement for one of our clients at 100% of Medicare, no outliers.
This is what happens when Reference Based Pricing gains market share in a geographic area like the Lower Rio Grande Valley. The same phenomenon relates to our San Antonio clients.
Meanwhile large employers in the area like the Brownsville Independent School District continue to subscribe to PPO networks paying hospitals much more than 130% of Medicare, as much as 200% or 300% or even 400% of Medicare.
The boys in the domino parlor are wondering “Why do they continue to do that?”
The sign of a good business deal is when everyone walks away happy.
