The 2016 Glassdoor survey states that a company’s health insurance has a considerable impact on how employees rate their benefits. If we talk about the healthcare costs of US in 2016, it came out to be 43.3 trillion or $10,348 per person.
But it is not the employees who are facing the thrust of this cost. Businesses all across the country know the pain from the continuous increase in the healthcare costs. Therefore, as a business how are you supposed to keep a check on the insurance costs? With every passing year, the healthcare costs are sky-rocketing and on the other hand, employees value health insurance now, more than ever. So keeping all the aspects in mind, could reference-based pricing be your company’s secret healthcare weapon?
What is Reference-Based Pricing?
Reference-based pricing healthcare controls the cost by setting up a fixed amount your health insurance will pay for some particular healthcare services, which might have considerable cost variations. Through reference-based pricing, employees can overshadow the traditional insurance contracts and pay the hospitals directly. Avoiding such contracts enables the employees to receive more transparent and cost-effective care.
Advantages of Reference-Based Pricing
✅ Decreased Overall Healthcare Expenditure for Employers
On an average, businesses save up to 30% of their total healthcare costs in the very first year of using the reference-based pricing. You can easily shave your total healthcare spending when you have analyzed what hospitals are currently charging when compared to Medicare. Importantly, reference-based pricing gives employers a better control over their healthcare costs.
✅ Diminished Employee Out-of-Pocket Expenditure
Through reference-based pricing healthcare plans, both the employees and employers can save money. With increased savings to employers from reference-based pricing, can help control the overall out-of-pocket spend of the employees. Moreover, a decrease in the healthcare costs provides employers with more flexibility with their total benefits package. Through reference-based pricing, businesses can also make use of cost savings to reinvest in their employee benefits.
✅ Protection for Employees
Any employer who is looking to execute reference-based pricing must have a self-insured health plan. This is why most employers using reference-based pricing also have stop-loss insurance. This insurance shields against unpredictable losses in a self-funded health plan. Moreover, most of the reference-based pricing plans come furnished with resources to assist both the employers and employees.
✅ Price Transparency
For a reference-based pricing plan, both the employers and employees must know the average cost for any given medical treatment. This information forms the basis for operating a full-fledged reference-based pricing plan. Reference-based pricing is largely dependent on flipping the traditional model and injecting transparency into the process.
How to do it?
If you are interested in rolling out a reference-based pricing option for your employees, here are few steps that can help:
Almost everyone spends more time planning their vacation instead of researching about the medical care. So make sure that you teach your employees how to shop intelligently for the healthcare.
✅ Interim Launch
Look to introduce the ides of reference-based pricing quite early, probably a good six months before you plan to actually launch the reference based pricing. Explain how exactly it works and the reasons behind it being a good fit.
Allow the transition go easy by providing transparency tools to your employees, so that it can help them check out the pricing at different locations based on the real data.
✅ The Feedback Circle
Make sure that you adjust the communications and systems hinged on real results and feedbacks. Else, the system could easily fail over time.
So if you are tired of your medical and insurance costs eating your company’s revenue and the salaries of the employees; reference-based pricing might be for you only. If we talk about America; Americans pay 2-5 times what other developed nations pay for their healthcare services. Reference-based pricing healthcare plans will serve as a secret healthcare weapon for your company.