Referenced-Based Pricing Defined
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Medical care costs have increased 318% since 1991. That represents an average increase of 13.85% per year. During this period, our Gross National Product averaged an increase of 4.64% per year and incomes increased by a mere 0.6% per year. The cost of health care is taking a bite out of household income and we cannot continue on this path as health care will become prohibitively costly for employers and their employees.
Our country has been plagued with rising costs of health care for decades and we have been challenged with devising ways to control these costs. We have introduced HMOs, PPOs, POS plans and these mechanisms have not resulted in stability in the health care market.
Our most popular approach today is the utilization of PPO networks. These Preferred Provider organizations represent a group of select providers who have agreed to “discount” the cost of their services. They have also agreed to forego a “balance bill” for this discounted amount - thus the PPO DILEMMA - a "discount" from an UNKNOWN billed charge and restrictions on the prudent fiduciary responsibility of the Plan to challenge excessive or invalid charges. These "managed-care" programs continue to be touted as the "answer" to controlling the rising cost of health care; however, many employers are now discovering the complete lack of transparency and consumerism these "TOP-DOWN" approaches represent.
HSG's approach to this dilemma is one that promotes consumerism by removing the restrictions of a select group of providers. Through education, Plan Participants are encouraged to research the quality of providers to get the best care possible. Most employers also provide incentives such as lower out-of-pocket costs when selecting a provider who has agreed to a fair, reasonable, and transparent price.
Referenced-Based Pricing (RBP) finally offers the employer the ability to gain control of rising health care costs, but there are certain challenges as Plan Participants are now being asked to become consumers of their health care for the very first time. The success of this program requires a "buy-in" from the executive level of your company and the willingness to provide continued education and support for your employees and their families.
HSG recognizes these challenges and provides solutions for the employer to achieve the desired results. Referenced-Based Pricing (RBP) represents a "Fair Market Value Model" allowing employers to continue offering affordable health care coverage to their employees by providing a fair and reasonable payment to all providers.