Healthcare costs in the United States are continuing their upward spiral in 2024, with inflation, higher labor costs and rising drug prices expected to push the total cost of care up by 7% this year. These increasing costs are putting financial pressure on payers and employers alike, but self-funded employer groups (representing 65% of U.S. workers) are particularly challenged to bear the burden. Many fear that they will have to stop offering healthcare coverage to their employees if they cannot find a new and better way of controlling costs.

Reference-based pricing (RBP) is a very promising cost-containment strategy, but it’s currently under-utilized. This reimbursement model, in which prices for medical services are established based on a set reference point, such as a multiple of the Medicare reimbursement rate, encourages pricing transparency among providers. RBP has the potential to drive down claims costs for many employers when supported by robust member advocacy services.

To better understand the factors that are inhibiting RBP’s adoption — as well as what’s needed for success — Zelis recently partnered with Healthcare Dive to survey 100 decision-makers in insurance brokerage firms and third-party administrator (TPA) organizations about their experiences with this alternative pricing strategy. We discovered that although there’s a strong need for the benefits that RBP can bring, there’s also a need for effective supports if brokers, TPAs and self-funded employers are to overcome the potential drawbacks that can come with its adoption.

Overcoming obstacles to RBP success

Survey participants voiced near-universal interest in the benefits that RBP can bring. A full 95% of the decision-makers we surveyed said that finding ways to control claims costs — to maximize member benefits while reducing out-of-pocket expenses — was among their organization’s very highest priorities.

Brokers and TPAs are also very interested in several other benefits of successful RBP adoption, including:

  • Improving healthcare utilization among members
  • Increasing pricing consistency for healthcare services
  • Reducing premiums paid by employers
  • Increasing cost transparency by offering greater visibility into claims data
  • Freeing patients from network limitations

However, only a small percentage of survey participants’ organizations (8%) are supporting a significant number of employer groups (more than 7% of the groups they serve) that offer RBP to members.

Many respondents believe that multiple challenges are commonly encountered by members and employer groups when RBP is offered. These include:

  • Difficulties negotiating long-term acceptance agreements with providers
  • Excessive operational complexity
  • Legal escalation of settlement processes
  • Member dissatisfaction with RBP because of balance billing or for other reasons

These challenges can be overcome, but doing so requires access to the right resources, including patient advocates who can help members access the providers of their choosing, can help explain and negotiate balance bills, and can educate members on how to navigate their care. Legal escalation support is also important.

How Zelis Open Access PricingSM can help

Relatively few organizations have access to these resources in house. Partnering with a member-centric RBP solution provider like Zelis can fill in the gaps. This allows brokers and TPAs to offer an open access health plan that gives members freedom of choice when it comes to providers, lower healthcare costs, increased pricing transparency and customizable benefit and plan designs. At the same time, best-in-class supports improve member experience.

With Zelis Open Access PricingSM, members have access to:

  • Pre- and post-visit support, including with balance billing
  • Education about RBP
  • A technology platform that helps them find providers and navigate their care
  • Legal escalation support

All these supports are delivered within a holistic, platform-based approach that combines advanced technologies with exceptional member advocacy. The result is an RBP solution that helps contain rising claims costs so that members can have better access to care and live longer, healthier lives.

To learn more about what our research revealed, download the full survey report here.