A more cost-effective way to pay for healthcare
Reference-based pricing is a new payment model for employer-sponsored healthcare. Through reference-based pricing, self-insured employers forgo the traditional insurance contract. Instead, employers pay employee claims directly to hospitals and providers, typically in excess of Medicare. In other words, employers pay the hospital 140 percent of what Medicare would reimburse for the same service.
This strategy can save employers thousands of dollars per year—below is a case study of one of our clients who saved $100,000 on premium and plan costs by transitioning to this strategy.
But why would an employer want to forgo the traditional insurance contract? A piece of the Affordable Care Act is the reason why.