City or country: Where will reference-based pricing work best? | Employee Benefit Adviser

Benefits brokers know that healthcare is local. When it comes to alternatives to a fully-funded benefit strategy, brokers typically consider new ideas and plan designs in the context of whether it will work in their specific market.

Reference-based pricing, which is changing the way self-funded employers pay for healthcare, is no different.

Brokers on the cutting edge are increasingly adopting or considering implementing reference-based pricing with their groups, but so far, there isn’t a lot information on how the plans work in different markets.

First, what is reference-based pricing? Under a reference-based pricing strategy, employers pay hospitals directly instead of going through an insurance company to obtain discounted rates for services. Typically, they pay in excess of Medicare’s reimbursement rate, which is the “reference” point.

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City or country: Where will reference-based pricing work best? | Employee Benefit Adviser.