We have all heard jokes that begin with
“Three guys walk into a bar….”
I thought it might make sense to use that model to explain why “referenced-based pricing” and general consumer awareness in healthcare are important to consider. Here goes:
Three guys walk into a hospital to get the same procedure….
– THE FIRST GUY is covered by MEDICAID and the billed amount to the government is $60.
– THE SECOND GUY is covered by MEDICARE and the billed amount is $100.
– THE THIRD GUY is covered by PRIVATE INSURANCE and the billed amount is $250.
There are long and complicated reasons why this exists, but it does. One of the things that many people are talking about but still few are doing is called “reference-based pricing” (RBP). This is where an employer will agree to only pay a percentage above MEDICARE. It is still edgy and can create problems for members under this type of program, but it makes sense. Basically, the employer is saying “I understand that providers charge us more but we will only agree to a certain percentage above what you bill to Medicare.” The reason it is edgy is that it could pit the provider against the member or the provider may even turn the member away. Nonetheless, RBP is out there and will likely get more attention.
Although structural programs like referenced-based pricing may be too early to embrace, it is wise to know that better pricing is out there and consumers can take advantage by asking questions and comparing prices.
I know that “three guys walk into a bar” has a much better ring to it than “three guys walk into a hospital”, but it is important to know that you may be able to find a better deal on your costs.
This is something BBG is studying and we are gathering pricing differences for our clients.