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What's The Deal With Reference-Based Pricing?

Physicians Bulletin • March/April 2019

In a nation with rising health costs, hospitals, patients, employers and health plans are all looking to cut costs where they can. In recent years, some self-insured health plans have explored what is known as “reference-based pricing” or “RBP.” Reference based pricing is a pricing structure under which a health plan pays only a fixed dollar amount for a particular procedure, regardless of who the provider is and what the provider’s actual charges are, and certain health care providers will accept that prearranged fixed dollar amount as payment in full. Prices for various health-related services vary across the United States due to fluctuating costs of living by geographic location. In order to encourage participants in a health plan to use less expensive providers where pricing has no bearing on the quality of service, the RBP structure establishes a “reference price” for particular procedures and will only cover those procedures up to that reference price. Theoretically, the reference price encourages participants to stay away from more expensive providers. CLICK HERE to read the full article.
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