If you are an employer enrolled in a PPO, did you know that you are likely paying at least three times what the largest payer in the country is paying for health-care services?
That’s because the so-called “negotiated” rates PPOs have set with health-care providers (primarily hospitals and health systems) are not truly negotiated at all–rather PPOs are offered a “discount” off of artificially inflated prices in the “price-master” (under terms that are kept secret). The result: “Preferred Provider Organizations” (PPOs) originally created to bring costs down by offering exclusivity to network providers in exchange for lower rates, today are nothing more than mini-monopolies.
The result: Employers in PPOs are left paying 300 percent more for a medical treatment than would be paid by the country’s single largest payer of health care: Medicare.
Today, Reference-Based Pricing (RBP) is helping employers with self-funded plans gain better control of health-care costs. Rather than accepting at face-value an arbitrary cost figure for a given medical treatment (which at “full retail,” is often five to seven times what Medicare pays), RBP plans use the Medicare rate as benchmark for what they will pay for that treatment.
It does not necessarily mean that an RPB plan will only pay what Medicare pays; rather these RBP models enable employers to negotiate payment levels that range from 120 to 160 percent of what Medicare will pay–which results in huge employer savings over what they would normally pay through a PPO.
For far too long, there has been NO TRANSPARENCY in the actual cost of health care service. And until employers (and the consumers they employ) begin to take responsibility, ask questions and behave as though it is their money being spent (because it is), this trend will continue.
The changes in healthcare and insurance are turning this tide, and self-funded plans are helping to make this happen. Employers who wish to gain a fairer advantage and better control over their health care costs (which often amount to the second- or third-highest expense category the business faces) should connect with a trained, qualified advisor who has experience in Reference-Based Pricing Plans.
Matt Byrne has made a career helping people find affordable health insurance. He is the founder of Spiralight Group Benefits, a Dublin Ohio-based brokerage providing comprehensive insurance, HR consulting and compliance solutions for small- to mid-size businesses. Matt has a Bachelor of Arts degree from Boston University and holds a life and health insurance license. He also serves on the executive board of Columbus chapter of the National Association Health Underwriters. Mr. Byrne is a subject matter expert speaking frequently about Health Care Reform, Employer Health Plans Affordability Programs, Self-Funded Solutions and is frequently quoted in national publications such as the Money Magazine, U.S. News and World Report and The Wall Street Journal. Matt can be reached at (614) 300-1316 (assistant) or https://www.grouphealthohio.com/