Choosing a health insurance plan can become complicated when you consider what health care you and your family will need throughout the upcoming year. You try your best to decide between different health plans your company offers, taking into consideration what doctor you already see, what medical procedures you or your family may need, and the largest contributing factor to your healthcare plan of choice – cost.
Many employers are beginning to focus on how they can lower healthcare costs for their team members, and this has taken employers outside the realm of traditional healthcare plans. A key many team leaders have used in unlocking healthcare premium savings for their team members is Reference-Based Pricing (RBP). Over the last ten years, this type of plan has evolved, improved, and become a disruptive force in driving healthcare costs down, offering an innovative alternative to traditional strategies for employers.
Known by other names such as the Medicare Reference-Based Pricing, Reference Pricing, or Informed Pricing, Mazzella Companies has offered this plan structure to their team members for nine years now and Emily Cavazos, Total Rewards Manager, made it clear cost is always at the center, “By going the direction of Reference Based Pricing, it has helped Mazzella Companies keep costs down for team members while still providing good benefits. We have not increased team member premiums for three years now and have not made changes to out-of-pocket costs or deductible for five years now.”
In this article we’ll help answer the following questions:
- What is Reference-Based Pricing?
- What are the benefits of a Reference-Based Pricing plan?
- What are some of the challenges a team member may face?
- And how does a team member go about using it?
What is Reference-Based Pricing?
Reference-Based Pricing is a healthcare plan that uses industry-accepted metrics, such as Medicare pricing, the provider’s reported costs, average wholesale prices, or third-party databases, to calculate the base cost of medical care for plan participants. This payment methodology can replace and enhance a health plan’s traditional “usual and customary” pricing for non-contracted items and reduce the wide variation in prices among states.
Specifically, Mazzella Companies works with Enterprise Group Planning (EGP) on negotiating contracts with providers, using on average 40%-80% above the Medicare Rate as a reference in their pricing structure. This means that EGP will reimburse providers on average 40%-80% more than the amount Medicare would pay. Broadly, this creates a ceiling for payments and establishes a standard of integrity and transparency for service payments. The cost of Medicare is available to anyone here.
Related: What Health and Wellness Benefits Does Mazzella Companies Offer?
What are the benefits of enrolling in a Reference-Based Pricing plan?
1. A plan participant will see a significant reduction in their insurance premium costs which means more money in their paycheck.
This cost-savings is achieved through negotiating an average 40%-80% above Medicare pricing reference rate between EGP and providers, creating a cap on costs, which is a much more objective and sensible framework for determining reasonable and market-based costs for medical claims. When a referenced based pricing plan is in place versus a traditional Preferred Provider Organization (PPO) model of percentage discounts off bill charges, Mazzella Companies is able to pass savings to its team members.
2. Using this average 40%-80% above Medicare rate pricing creates a cap on costs, resulting in a reduction of Mazzella Companies’ healthcare costs.
When using the objective, industry-accepted metrics rather than a baseline of potentially arbitrary, unchecked, and often exorbitant provider billing, prices are set and followed. Prices per a May 2019 report by the RAND Corp. here found that providers are sometimes charging upwards of 241% of what Medicare would have paid. This cost containment method can reduce an employer’s contribution by up to 30% without changing the benefits available to a team member. All these savings get passed on to the team members.
3. Plan participants will be able to utilize the medical providers of their choice, without the restrictions of a medical provider network.
This means that the choice of medical provider, hospital, doctor, and lab are up to the plan participant – not dictated by your healthcare plan. You can keep seeing your existing medical providers, or you can choose new ones – either way your benefits won’t be impacted. The Reference-Based Pricing plan gives you the opportunity to freely shop for the combination of the best quality and most efficiently priced healthcare services.
What are the challenges?
A possible challenge for a plan participant using this system is that they may be sent a balance bill for a cost that exceeds their out-of-pocket responsibility. Proactive preparations are ensuring balance bills from ending up in team member’s hands, “EGP is continuously trying to reach agreements with providers in different areas”, says Emily, “EGP also offers a green light provider list and they also offer patient advocates to help find covered providers”.
Ultimately, you are not responsible to pay a balance bill unless EGP finds that an amount in the bill is related to co-pays, deductibles, or coinsurance that may be your responsibility. Anything owed by plan participants will be on the Explanation of Benefits sent by EGP after services are provided.
Another combatant to balance bills being sent to patients comes from legislators. As of January 1, 2022, the No Surprises Act took effect. The act offers patients federal protection from charges related to emergency services and requires that health plans cover emergency services without requiring authorization. This means that EGP will reimburse the medical provider the greater of the median in-network rate, which is the usual and customary rate otherwise known as the Medicare rate.
Medical providers are not to send you a balance bill for any emergency services. If you do receive a balance bill, contacting EGP will be your first step. EGP will review the bill to ensure that it’s a true balance bill and not co-pays, deductibles, or coinsurance that may be your responsibility. EGP will then coordinate with your Patient Advocate to contact the medical provider on your behalf. Your assigned Patient Advocate may send a letter to the medical provider, with a copy sent.
Frequently Asked Questions
How do I use it?
First, you’ll present your ID card to your medical provider. EGP will communicate the reimbursement schedule and confirm acceptance prior to your appointment. The medical provider will submit the bills directly to the benefits provider for processing. If the medical provider will not accept the payment schedule as payment in full, you’ll need to contact EGP.
Will my physician understand this plan?
The reimbursement schedule for a Reference-Based Pricing plan is communicated at the point of eligibility and benefit verification. Pre-treatment medical provider communications by EGP are essential to avoiding post payment balance billing. The pre-certification process provides for an additional opportunity for referral to EGP for reimbursement schedule communication. Our benefits provider will address all provider negotiations, appeals, and balance billing.
Is there a network or list of medical providers that I can choose from?
While EGP does have a list of “green light” providers, meaning providers they have negotiated pricing with already, you are free to go to any medical provider you choose. There are no restrictions on which medical providers you can access. Therefore, there is no network or medical provider list to choose from.
Can I still go to my current physician?
Yes, you can still go to your current physician. Present your new ID Card the next time you visit your physician’s office and request that they contact EGP as listed on the card if they have any questions. Please remember that you can also call your Patient Advocate at EGP to contact your physician on your behalf prior to your next appointment.
If my physician’s office tells me they will accept the plan reimbursement, is there anything else I need to do?
There is nothing else you need to do with your physician. However, you will have the Patient Advocacy Line to let them know that your provider will accept your plan and get any further questions answered.
What if my physician won’t agree to accept the Reference-Based Pricing reimbursement?
Contact the EGP Patient Advocacy Line for assistance. Patient Advocacy can help by reaching out to your physician or by locating another physician for you that will accept the plan. In most cases, after speaking to your Patient Advocate, the provider will agree to the reimbursement.
What does the Assignment of Benefits provision on my ID card mean?
Assignment of Benefits means that you’re giving the insurance company the right to pay your provider directly on eligible plan benefits, less your personal responsibility in accordance with your plan benefits, such as a deductible, co-pays, and/or coinsurance. If your provider accepts the Assignment of Benefits, their rights to receive benefits from the plan are the same as yours, no more and no less. If your provider accepts Assignment of Benefits, instead of billing you directly, they are not to balance bill you for any amounts other than your co-pays, deductible or coinsurance.
What is Patient Advocacy?
The Patient Advocacy program has been designed to accommodate both you and your providers with support and guidance for your Reference-Based Pricing Plan. Here are a few of the services that your Patient Advocate can provide:
- Help you understand your plan and how it works
- Educate your physician on your plan and how it works
- Assist you in confirming if your current physician will accept your new plan
- Locate a physician that accepts the plan
- Provide support for you if you receive a balance bill from your medical provider
RBP Wrap Up
The quality and cost of your benefits is important at Mazzella Companies. Team members who have affordable and adequate coverage are less likely to miss workdays and more likely to stay here with us for the work ahead. When you sign up for benefits this year, if you work at a Mazzella Companies location that offers a choice, ask yourself if choosing the RBP plan will work for you.
At the end of the day, Mazzella Companies wants its team members to lead fulfilling lives both on and off the clock. Through Reference-Based Pricing, Mazzella Companies is ensuring that insurance keeps you a healthy member of yours and our family.
