OnDemand WTP Pricing Research

Will reference-based pricing be in Buffet’s future – or yours? | Redding

Today, we use Preferred Provider Contracts where the insurer pre-negotiates reimbursement amounts for procedures. To determine in advance the allowed amount for a procedure requires the skills of Columbo.

Reference Based Pricing (RBP) is a new twist on the old pricing approach. It is currently being used by some self-insured plans. The plan specifies a limit on the amount that will be paid for specific procedures. Often the starting point is what Medicare pays and the plan will pay something like 150 percent of the Medicare amount.

Typically, the plan targets procedures and services that have widely different costs in a geographic area. For example, cost of an MRI might range from $400 to $4,000 in a particular city. The plan will assign $800 as the limit. This requires the insured to shop for a vendor that will accept the price. Transparency and price predictability plus simplified plan administration add to the overall cost savings. This is a very simple overview of the process.

There are multiple challenges to this approach. When care is needed urgently, there is no time to shop. The plan administrator will often provide a list of providers who will accept the payment schedule in advance.

Read complete article here:

Will reference-based pricing be in Buffet’s future – or yours?.

Post a Comment

WP-SpamFree by Pole Position Marketing