Health coverage for employees presents one of the most critical decisions an employer encounters. Fortunately, because of innovative group plans, valuing your employees’ overall health does not need to strain your company’s budget. Credit the reference based pricing (RBP) program and group health insurance plans for the availability of an affordable employee plan. They allow you to approach healthcare costs more efficiently, while still providing your employees with the medical benefits they deserve.
Budgeting is always a concern for businesses and your health care plan is no different. This calls for a means to mitigate costs as efficiently as possible, while making sure employees still feel that their health is valued by your company—exactly what RBP enables you to do.
Cost Conscious and Benefit Centered
RBP works by letting employers set a pricing cap — a maximum amount that is covered in regard to particular medical services. This can include procedures such as colonoscopies, echocardiograms, CT scans of the brain or head, MRI of the spine, knee and hip replacements, and more.
The RBP system only applies to shoppable services, in which a patient can take time to make a decision, based on both the price and quality. Some of these services actually include procedures subject to fluctuating costs, with pricing variations based on the physician.
Closely Examines Prices of Certain Shoppable Services
In terms of services, typically you will find lower-cost options available that deliver the same quality as the more expensive alternatives. To help employers in this case, an RBP plan sets the spending limit to the median price of the particular procedure. Doing this alone for six healthcare services proves to effectively reduce an employer’s overall healthcare spending by as much as 1.6 percent in a single year. Moreover, the savings is based on market findings, so, your employees can complete these treatments without incurring significant out-of-pocket costs.
RBP Encourages Smarter, Cost Conscious Employees
The RBP method encourages smart shopping on the part of your employees as they search for the most affordable procedure, rather than settling for one priced high above the market average. By prompting employees to shop for the same procedure, treatment or medicine at a lower price, the RBP method ingrains workers with a cost-conscious attitude, no matter the service or product they seek.
Applies Pressure on Providers to Lower Prices
On a wider scale, the cost-consciousness of employees subscribed to RBP under group health plans puts pricing pressure on the market’s other providers. For example, high-end physicians can find themselves losing clients if they do not price their services more closely to those providers under group health plans using RBP. Indeed, some providers might even decide to reduce their prices to the level of the average RBP provider. Indirectly, the RBP method looks out for the consumer’s welfare by pressuring the market to charge more affordable rates to clients.
If you are trying to find a way to mitigate your company’s health benefit costs while still making sure you can provide your employees decent healthcare, consider adopting the RBP method under a group health plan. It can be good for the consumer because of its potential to stabilize market prices.
Sources
Employers Turn to Reference-Based Health Pricing, shrm.org
Reference Pricing for Health Care Services: A New Twist on the Defined Contribution Concept in Employment-Based Health Benefits, ebri.org
