Workers and Health Plans Save Money with Reference-Based Pricing 

“Reference-based pricing” refers to a health plan using a fixed price for a particular procedure or treatment (for example, a knee replacement or a particular prescription drug), which the healthcare provider accepts as payment in full.  Providers that do not accept a fixed amount as payment in full would require individuals to pay the difference.

This form of cost-sharing has saved self-insured and large group plans millions of dollars while ensuring adequate individual access to quality providers.  By setting a reference price, consumers and physicians are becoming sensitive to the relative prices of procedures and treatments used to treat a particular health condition.  The overall effect of reference-based pricing has been to lower the cost of healthcare.

For example, the California Public Employees’ Retirement System (CalPERS, the second largest public health purchaser in the country) saved almost $3 million during the first two years of its reference-based pricing program, and participants saved $300,000 through lower out-of-pocket cost-sharing.

Currently, HHS allows a plan to treat providers that accept the reference amount as the only in-network providers, provided the plan uses a reasonable method to ensure that it provides adequate healthcare.  By using reference-based pricing, plans can negotiate cost-effective treatments with high quality providers, making quality care more affordable for plans and their participants.

If your plan does not currently provide reference-based pricing, you may want to talk to your Plan Administrator about how it could save money for you and your plan.
For more information on reference-based pricing, please contact your Trust Fund counsel.

By Kristina Zinnen and Carlos Isidro | December 11, 2014

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