Emerging Considerations for Self-funded Plans and Employers

The self-funded industry has a long history of staying resilient in the face of unpredictable change. As such, the number of changes that have been required to address COVID-19 is not a shock to this sector. Now that we are in the throes of a global pandemic, the long-term consequences are only beginning to come to the surface. To date, the focus has been on prevention and immunizations, but do you know what a long hauler is?

Many of us know someone who has or had the rare and highly dangerous virus called COVID-19. Some of these people have gone on to acquire other problems that can’t be connected to the virus. This is the idea of being a long-hauler and it includes subsequent diagnoses that are potentially linked to COVID-19.

Many of us know someone who has been chronically ill for over 6 months. Imagine living your life with these symptoms for over 6 months. How would this impact your ability to work? Do you know if you’d still have access to health benefits or short-term disability benefits?

With the self-funded reference-based plan, employers can help you get out of the crisis and get you to have access to health benefits or short-term disability benefits.

How Can a Reference-based Plan Help?

Others, however, see reference-based pricing as a chance to alter the business for the better, and it has proven to be a helpful cost-containment tool for many. RBP is seen as a catalyst for systemic change by many proponents, rather than as a lasting solution by others.

Some companies believe that a reference-based plan is not the best solution and it’s not a substitute for the solution. The debate about the reference-based plan is far from over.

What Exactly is Reference-based Pricing?

Reference-based pricing is a form of payment that substitutes or enhances a health plan’s typical “usual and customary” price for non-contracted claims.

If you’ve got a health plan that uses reference-based pricing instead of traditional methods, you’ll be able to calculate your allowable amount for medical claims based on the metric you choose (typically Medicare rates, or some percentage above them), which is the price that the payor considers reasonable. Employers leverage the help of TPAs for the RBP that is performed through the Medicare claims repricing process by utilizing a SaaS-based Medicare repricing tool – CMSPricer.

Medicare reference-based pricing involves developing a formula based on a quantified objective value and adjudicating medical claims using a multiple of that value. In addition to Medicare pricing, third-party databases, provider’s reported costs, and average wholesale price are commonly used as reference-based pricing factors. Reference-based pricing is so named because the plan’s price is based on an existing reference.

Reference-based Pricing: How Does It Work?

In cases where stop-loss insurance is provided, reference-based pricing can be utilized to determine rates. The following are some of the basic and nearly universal principles:

Document harmonization. The Plan Document must set forth a health plan’s rights in order to be effective. In the Plan Document, reference-based pricing language must also be included; in addition, a percentage of Medicare must be included in the basic payment terms.

Claims repricing process. To be successful, an RBP program must derive its pricing accurately from the metrics defined in the Plan Document. Having reliable data to back up your pricing is vital when the plan is challenged.

Patient advocacy. So many reference-based pricing programs fail when patients have nowhere to turn for balance-billing assistance. A reference-based pricing program cannot be successful without providing resources for patients.

Escalation. When negotiations with a provider fail, the plan will require more options. Plan sponsors choose from many different options, and each one comes with different risk tolerance.

Is Reference-based Pricing a Good Option for Emerging Considerations?

Reference-based pricing restructures the very concept of Medicare insurance that has always been so familiar to most employees. It is a good idea to deal with the emerging changes in the healthcare industry. With the flexibility in RBP, employees can cope with the long-haul consequences as it will continue providing them healthcare support.

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