Tom's Take Blog

January 11, 2019

What are some lessons learned now that reference-based pricing has become so popular with health plans?

Tom’s Take: I think it’s safe to say that reference-based pricing (RBP) – also known as value-based pricing or payment (VBP) – isn’t in the “fad” stage anymore. This strategy has graduated to here-to-stay status as it’s being implemented all across the country with large numbers of employers integrating it into their health plans.

 

But, as with any new concept, RBP/VBP has had its challenges. And it’s important for employers to understand what these are before jumping in. Why? Because the more educated they are upfront, the better the likelihood for success with RBP/VBP.

 

Here are some lessons that come to mind:

  • Build relationships – Employers, TPAs and RBP/VBP partners need to function as a team, so always be sure there is good conversation and communication among all parties.
  • Educate employees – If they don’t understand the how, what and why behind the RBP/VBP program, employees may not be overly supportive. Keep them informed with instructions and examples they can easily relate to on a personal level!
  • Be prepared for pushback – Members may want to use certain providers and providers may question payments. Are you ready to have the hard conversations that can come with RBP/VBP?
  • Have the right staff in place – Who will field employee questions or handle calls when providers request additional payment? This staff will be key with RBP/VBP, especially as you make the transition.
  • Don’t try to use a template RBP/VBP plan – There are no two RBP/VBP plans that will look or function exactly the same. Fine-tune the individual details for yours instead of trying to implement a cookie-cutter template.
  • Pay attention to language used in plan materials/communications – Consistency and clarity are huge here. Whatever your coverage allows should be explained in easy-to-understand language.
  • Be prepared to negotiate – Some providers will accept your Medicare percentage without issue, but some will argue the amount. Have a strategy for negotiating the numbers.

 

We’ve seen tremendous growth – and change – as RBP/VBP has become more widely adopted by health plans in the last few years. Employers who are considering this structure often look forward to the many positives it can bring, but they should also be aware of the hurdles that can arise and how to handle them.

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