What is reference-based pricing? Some employers are moving away from offering conventional health coverage with a provider network and instead are using reference-based pricing for some or all of services they cover. Under reference-based pricing, the employer (supported by a third party administrator [TPA] or other vendor) pays a set a price for each health care service instead of negotiating prices with providers. When a provider bills for the service, the payer remits the set amount.

Some payers use reference-based pricing software to determine the price they will pay for a health care service. Although reference-based pricing software programs vary, the methodology includes collecting data on prevailing costs for medical services from CMS’s HCRIS (Healthcare Provider Cost Reporting Information System), benchmarking it against relevant types of hospitals and settings, further calibrating by severity level, and applying a margin factor.

Will reference based pricing help your organization reduce your health insurance costs? Ask your Total Benefit Solutions, Inc health insurance specialists today (215)355-2121