Reference-Based Pricing in Self-Funded Health Plans

A key to cost savings

PART 2 OF 2 (See part 1 in the March issue) 

Dorothy Cociu interviews Omar Arif and Mike Sigal of ClaimDOC


What should employers know about reference-based pricing?

The most important thing that employers should know about reference-based pricing (RBP), according to Omar Arif, SVP of Growth for ClaimDOC is that “it can be a wonderful tool to unlock transparency and price controls for your organization. RPB can also make health benefits much more affordable for your employees.” 

However, brokers should prepare employers that in order to be successful with an RBP plan, you need real expertise to help implement it. It’s not as simple as a PPO plan. It takes a tremendous amount of up-front education, training and constant education to the employees and plan participants; it’s not a one-and-done type of plan. It requires participants to relearn the health insurance system. That is not an easy task. It takes a high level of understanding, and a lot of tools, including written materials, videos, and other educational vehicles. But if done right, it can save your health plan considerable money over the long run. 

“You need a consultant that is an expert to help you through the process,” Arif explained. “Don’t think you can get it done with your brother-in-law or golf buddy. You need an expert, not a friend.”

If you want to help your group clients save 20-30% or more of your PPO self-funded health plan, you should look at RBP. But remember, it’s not simple and it’s a long-term process.

Many good vendors offer RBP repricing and services. Some of the major players include ELAP, ClaimDOC, HST, AMPS, 6 Degrees and Payer Compass, to name a few. 

Any employer currently in the RBP space will tell you — the level of service, advocacy and negotiation abilities of the RBP vendor is critical. You need a vendor who is on the employer’s side, and works with the plan participants to resolve claim disputes. Member success is the way to grade your RBP plan. All RBP vendors can reprice the claims to an RBP rate. The difference is in how they work with the plan members and resolve their issues. 

What to look for in an RBP vendor

  • Provider Balance Billing: A provider may bill the patient a balance after receiving the reduced payment from an RBP health plan. In this phase, it’s imperative that the employer work with a skilled RBP vendor that has a robust patient/member advocacy program dealing with providers who balance bill, to avoid collections actions by the provider which could impact the plan participant’s financial situation and credit scores. How this works and how successful it is can make all of the difference to the plan participant. 
  • Legal assistance to settle claims: Sometimes, on rare instances, the employer/plan sponsor may need legal assistance to resolve a claim. RBP vendors need to have expert legal support on their team. 
  • Co-Fiduciary role: One particular difference that only a small number of RBP vendors can claim is that they have taken a co-fiduciary role in the plan. For those of you familiar with ERISA, a plan fiduciary has decision-making authority over the plan, and therefore has liability. They are required by law to make plan decisions based on the best interest of the plan and its participants. Often, RBP vendors avoid fiduciary liability. 
  • Provider communication skills: RBP vendors need to establish open communication with providers — doctors, hospitals, clinics, etc. — to make sure they understand and agree to all the nuances of RBP.

So, if you’re a broker representing group employers who want to keep health benefit costs down and potentially save a substantial amount, consider self-funding with RBP. It doesn’t work for all plans, but it does work for a lot of them. Whether we’re in a recession or a booming economy, most employer plan sponsors are open to claim savings. But remember, you need experts to make it successful. 

To find out if your health plan or your clients’ plans are good candidates, reach out to ClaimDOC.

Of Note: ClaimDOC would like to thank health benefits broker and self-funded and RBP expert and plan consultant Dorothy Cociu, president of Advanced Benefit Consulting, for her assistance with this article. For more information on this topic, you can listen to Dorothy’s weekly podcast series, Benefits Executive Roundtable, Season 4, Episode 12, where she interviews Sigal and Arif on Reference-Based Pricing, available on all podcast platforms, or here

Omar Arif, SVP of Growth                   

469-939-7286 cell   

Mike Sigal, VP of Business Development              

714-916-4210 cell