Reference Base Pricing
Reference-based pricing sets fair-and-reasonable rates for hospital and outpatient facility services, based on the average cost primarily paid by Medicare. F.A.C.T. typically pays providers between 120% and 150% of Medicare reimbursement levels which is considerably less than carrier network pricing for the same services your employees receive. Under certain arrangements, a Value-Based Payment may be negotiated up front before costs are incurred for elective-type procedures. Paying hospitals and outpatient facilities more than Medicare reimbursement levels, ensure these providers receive a fair price for the services they provide to covered employees. Hospitals can charge more than 20 times the actual cost for certain procedures to maximize revenue. Insurance carriers negotiate a “discount” off these inflated prices and pay this discounted “retail” price when employees seek services from in-network providers. These discounted in-network costs are still 15% – 30% higher than what Medicare pays for the same services. By using a reference-based pricing strategy, employers and employees save money by paying a reduced “wholesale” amount based on a percentage of what Medicare reimburses these providers, truly helping to bend the healthcare cost trend downward. Not only are there savings on actual claim costs, but other fixed costs such as stop-loss premiums are reduced, as well because fewer high-cost claims are expected.