3 game-changing reference-based pricing trends 

It’s no secret that health care costs are rapidly rising, putting pressure on employers to seek relief for both their business and employees. According to the Peterson-KFF Health System Tracker, total national health expenditures in the United States grew by $111 billion in 2021 compared to 2020. Additionally, the last decade saw a 114% rise in premiums, further compounding the financial strain on employees and employers. 

Health plans with reference-based pricing (RBP) are an effective cost containment strategy that is gaining momentum, with options becoming more sophisticated. Here are three next-evolution solutions to keep an eye on.

Using predictive analytics to improve member satisfaction

For years now, implementing machine learning solutions to analyze member data has enabled more personalized, high-quality care and treatments. And recently, we’ve seen a huge opportunity for RBP to harness the power of predictive analytics to reduce member disruption.

Predictive analytics offer the ability to foresee provider disputes before they occur. When employers have implemented RBP solutions with predictive analytics, lingering balance bills are cut in half. By identifying and significantly reducing billing challenges, the use of predictive analytics can help improve member satisfaction. 

More demand for total health plan solutions

In the past, reference-based pricing was generally seen as a bolt-on solution. However, as the demand for more affordable solutions grew alongside the desire for better patient outcomes, comprehensive total health plan solutions began taking center stage. 

Comprehensive solutions offer the ability for employers and their benefits advisors to create a customized plan based on their unique needs, and ultimately, reduce health care expenses. Large employers, in particular, are increasingly adopting reference-based pricing as part of their health plan solution. Some employers opt to begin with an RBP plan offered side-by-side with a traditional PPO, giving members the choice between a traditional plan and a more affordable RBP plan. This dual offering allows for a smoother transition while still reducing costs with RBP.

Many employers are also opting to integrate with key partners to help members navigate their health care journey. These navigation specialists guide members in understanding their coverage, ensuring they can access the right providers and resources and make better informed care decisions. Ultimately, this helps members feel more confident in transitioning to a new solution.

Additionally, there is rising demand for a single partner that can roll RBP, third-party administration, pharmacy benefits management, and telehealth services into a total health solution to create a more streamlined member experience. 

Case Study: MV Transportation

In 2021, MV Transportation – the largest privately owned passenger transportation contracting services firm in North America — was exceeding their benefits budget by $6.5 million.  The company recognized that traditional health care models were no longer effective and sought a better plan for employees, as well as an RBP provider that could not just save money, but would offer a comprehensive, concierge experience for members.

After making the move,  the company and its employees reported significant cost savings and higher satisfaction. In fact, one employee reported saving more than $7,700 in premiums and deductibles compared to what would have been paid the prior year. Overall, MV Transportation saw a 41% savings compared to their previous PPO plan spend.

“Switching to an RBP solution was a big shift for MV Transportation employees, but they quickly saw that costs savings weren’t just absorbed by the company – rather, they were passed through to workers along with even better benefits,” said Joella Mullin, Senior Vice President of Employee Benefits at USI, MV Transportation’s health plan broker. 

Mullin continued, “MV Transportation operates in 25 states and needs a wide network of high-quality providers and physicians that are accessible to employees across different locations. An RBP solution enabled broad access to a range of providers, provided concierge support for members and delivered significant savings for the company and its employees.”

Evolving physician alternatives

Pairing RBP with health systems and direct contracts offers a better member experience – broadening and easing access. Today, brokers work with these non-traditional plan providers to build customized solutions for employers that can deliver over 1 million health care professionals and health systems with a mix of RBP, direct contracts, virtual care options, and more. 

In addition to savings up to 30% over traditional PPO plans, employers providing these health plans now find their workers have significantly reduced friction resulting in an improved member experience. 

The evolution of reference-based pricing solutions holds immense potential for transforming the health plan experience for members. By embracing predictive analytics, meeting the demand for total health plan solutions and improving access to quality physicians and care options, employers can see more than just cost savings – they’ll see happier employees, too. 

Woody Waters helped pioneer reference-based pricing in 2003. He brings expertise to Imagine360 in health care, insurance, liability compliance and risk management that is key to his consultations with employers, advisers and health plan administrators across the United States.

Scott brings more than 25 years of experience in Employee Benefits to his role as the Director of Compensation and Benefits for MV Transportation, Inc., the largest privately owned passenger transportation contracting services firm in North America.