RBP Benefit 5: Protect your employees from high insurance costs
As healthcare expenses continue to rise, both employers and employees are becoming increasingly wary of how much health coverage costs. Solutions like reference-based pricing that offer cost savings hold a lot of promise for both employers and employees. These aren’t the only parties who benefit from the savings provided by reference-based pricing, though. Human resources representatives also benefit.
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(This is the fifth installment in a seven-part series on how reference-based pricing benefits human resources representatives.)
The Old Way: Traditional Health Insurance Offers Little Protection from High Costs
Traditional health insurance policies offer employers and employees little protection from high costs.
Employers may know how much the policy they offer will cost for a year, but there’s almost no way to accurately predict how much premiums will increase when a policy’s up for renewal (and premiums nearly always increase).
Employees, meanwhile, often don’t know how much they’ll end up paying for a procedure. In some cases, they don’t even know if a procedure is covered until their provider submits a bill to their insurer.
The New Way: Reference-Based Pricing Offers Upper Limits on Expenses
One of the ways reference-based pricing save employers and employees money is by placing upper limits on how much employers and employees spend on health coverage.
When setting up a reference-based pricing plan, employers determine the reimbursements they’ll provide for various medical procedures. Not only are they in control of how much they might pay in the current year, but they also get to decide whether to increase, decrease or maintain their reimbursements in coming years. Employers are in control of their own financial costs and not subject to the decisions of a health insurance company.
Employees, meanwhile, can be protected from providers who would overcharge for medical services.
Well-designed reference-based pricing plans often include contracts that prevent providers from “balance billing” employees for charges above an employer’s reimbursement rate. With such agreements in place, employees still have to pay all required copayments and coinsurances, but they aren’t subject to exorbitant fees beyond what the contract allows for. Moreover, it’s clearly stated what a provider’s charges and employee’s responsibilities are.
The Result: Reducing Costs Benefits Human Resources Representatives
Reducing health coverage expenses by switching to a reference-based pricing model, obviously, benefits the two parties that pay for health coverage. It also has advantages for human resources representatives, though. Executives will be pleased anytime a human resources representative is able to save their company money. Employees will also be happy, which will lead to fewer complaints and questions directed at human resources representatives who are responsible for explaining a company’s health coverage.
