F.A.C.T. – A Reference-Based Pricing Model
IS A REFERENCE-BASED PRICING MODEL YOUR SOLUTION FOR AFFORDABLE HEALTHCARE?
Focused Average Cost Tracking or F.A.C.T.® is a reference-based pricing healthcare model for employers with self-funded medical plans that significantly lowers the cost of hospital and outpatient facility claims. Runaway healthcare costs may threaten a company’s long-term viability, but F.A.C.T.-based pricing focuses on capping hospital and outpatient facility charges based on average costs primarily tracked by Medicare.
F.A.C.T. REFERENCE-BASED PRICING REVERSES THE COST INFLATION TREND
Healthcare spending continues to increase year after year with hospital and outpatient facility services representing a significant portion of rising healthcare expenditures. Under the current private insurance system, hospitals and outpatient facilities can charge inflated prices that are discounted when services are received from in-network providers. Conversely, the Chernoff Diamond F.A.C.T.® reference-based pricing approach sets fair-and-reasonable rates for hospital and outpatient facility services, based on the average cost primarily paid by Medicare which pays significantly less than private insurance for the same services your employees receive. Ask yourself – why should employers pay retail prices for in-network private insurance coverage when the same service can be provided at Medicare-based wholesale costs under the F.A.C.T. ® reference-based pricing approach?
ADVANTAGES OF F.A.C.T. REFERENCE-BASED PRICING HEALTHCARE PLANS
- F.A.C.T. ® reference-based pricing helps address hospital and outpatient medical facility charges’ wide cost variations.
- Employers and employees pay much less with the F.A.C.T.® reference-based pricing models than with traditional private insurance plans.
- F.A.C.T.® reduces and contains rising healthcare expenses now and in the future – with the potential to initially save 15% – 30% or more on costly hospital and outpatient facility claims and limit the annual increase in your health benefit spending by 3% or less.
- F.A.C.T. ® can help eliminate the need to continually make plan design changes and/or shift more costs to your employees. In fact, many employers have found they’re able to enhance their plan design due to the savings under the F.A.C.T. ® reference based pricing model.
FIVE IMPORTANT FACTS YOU NEED TO KNOW
- F.A.C.T. ® is an open access model – there are NO networks when employees need services from hospitals and other outpatient facilities – employees can use any provider they choose.
- Medical claims experts carefully review all hospital and outpatient facility claims OR negotiate and agree to a Value-Based Payment for elective-type procedures UP FRONT BEFORE the costs are incurred and then typically pay the provider at 120% – 150% of Medicare reimbursement levels.
- Most hospitals and outpatient facilities accept the adjusted amount as PAYMENT IN FULL.
- In the rare event (2% – 15% of the time) that an employee ever receives a balance bill from a hospital or outpatient facility for costs beyond the plan’s normal cost-sharing requirements (i.e., deductible, copayment or coinsurance amount), professionals immediately step-in, advocate on the employee’s behalf and settle the claim with no further payment required by the employee.
- Employers with F.A.C.T. ® model plans self-insure the benefits, have more design flexibility and experience savings in the first year and beyond.
HOW DOES F.A.C.T. REFERENCE-BASED PRICING SAVE YOU MONEY?
F.A.C.T. ® reference-based pricing generally pays hospitals and outpatient facilities significantly less than private insurance by reimbursing the hospital or outpatient facility a percentage of Medicare (generally 120% to 150% of Medicare rates) which includes a reasonable profit margin for the provider. In some circumstances, the plan may pay the provider a reasonable profit margin over the actual cost for the service. 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.
IS F.A.C.T. REFERENCE-BASED PRICING RIGHT FOR YOU?
- Yes, if you are currently self-funding your medical plan or you are considering self-funding your plan in the near future.
- Yes, if you have 100 or more employees.
- Yes, if you are ready to reduce hospital and outpatient facility costs significantly.
IT’S TIME TO BEND THE HEALTHCARE COST TREND DOWNWARD
By switching to a F.A.C.T. ® reference-based pricing healthcare plan and reducing your hospital and outpatient facility costs by 15 – 30% or more, you can save your company money, improve your bottom line and mitigate steep cost increases in the future.
I HAVE ADDITIONAL QUESTIONS; WHERE CAN I GET MORE INFORMATION?
To learn more about F.A.C.T. ® Reference-Based Pricing, please visit our F.A.C.T. Reference-Based Pricing FAQs page. You may also contact one of our Health & Benefits Consultants today at 516-683-6100 or by email at FACT@ChernoffDiamond.com.