Business of Health with Mike Martens

Todd Archer: Understanding Reference Based Pricing (RBP)

April 18, 2023 Mike Martens / Todd Archer Episode 17

Business of Health with Mike Martens

Apr 18, 2023 Episode 17

Mike Martens / Todd Archer

Todd Archer is the President of Concierge Third Party Administrator, a company recognized as one of the nation’s premier industry leaders in third-party administration of self-funded health benefit plans for employer groups of all sizes. With over 35 years of experience, Todd has a proven track record in the field of health benefits third-party administration. He joins Mike today to delve into the topic of reference-based pricing, a reimbursement approach that relies on Medicare allowable rates. They discuss the origins and evolution of this concept.

Reference-based pricing (RBP) is gaining traction as an effective method for employers to reduce their healthcare expenses. This pricing model emerged as a solution to the flawed US healthcare system, where consumers often remain uninformed about the cost of treatments until after receiving them.

RBP operates by establishing treatment prices based on Medicare allowables. This enables employers to pay a fixed amount for treatments instead of depending on the carrier's explanation of benefits. As a result, employers have a clear understanding of treatment costs upfront, allowing them to plan accordingly. Moreover, it empowers employers to negotiate better discounts with healthcare providers, as they are aware of the maximum payable amount.

In summary, reference-based pricing offers employers a viable way to cut healthcare costs while maintaining quality care for their employees. This approach gives employers greater control over expenses, facilitates better discounts with providers, and ensures upfront knowledge of treatment costs, aiding in effective planning. Due to these advantages, reference-based pricing is becoming an increasingly sought-after option for employers looking to save on healthcare costs.

Three Takeaways