F.A.C.T.™ Reference-Based Healthcare Pricing FAQs
WHAT IS REFERENCE-BASED HEALTHCARE PRICING?
Reference-based pricing is a healthcare cost containment model that limits what a group health plan will pay for certain high-cost services including hospital and outpatient facility charges. There are a variety of reference-based pricing strategies employers can implement.
HOW DOES REFERENCE-BASED HEALTHCARE PRICING WORK?
One reference-based pricing approach has the group health plan set spending limits on certain high-cost healthcare procedures such as knee and hip replacements and identifies providers who accept the spending limit as payment-in-full. Employees who seek treatment from non-participating providers will be responsible for paying the additional charges beyond the reference price set by the group health plan.
HOW DOES CHERNOFF DIAMOND’S REFERENCE-BASED HEALTHCARE PRICING STRATEGY WORK?
Focused Average Cost Tracking or F.A.C.T.™ is a reference-based pricing healthcare model that significantly lowers the cost of hospital and outpatient facility claims. F.A.C.T. 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 private insurance 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 employees covered by a F.A.C.T. group health plan.
CAN EMPLOYEES ALSO SEE ANY DOCTOR OR USE ANY PHARMACY UNDER F.A.C.T.?
Typically, the group health plan will offer a network of doctors that provide services at discounted prices, like today’s plan design. Prescription drug coverage is also comparable to the plans we see today with a network of participating pharmacies dispensing prescription drugs in accordance with the plans’ drug formulary having different cost-sharing requirements for generic, brand and other specialty drugs.
SO HOW DOES F.A.C.T. SAVE EMPLOYERS AND EMPLOYEES MONEY?
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 F.A.C.T. 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.
WHAT ELSE CAN YOU TELL ME ABOUT CHERNOFF DIAMOND’S F.A.C.T. REFERENCE-BASED HEALTHCARE PRICING SOLUTION?
Unlike today’s typical plan designs limiting employees to seek care from in-network providers, there are no networks when employees utilize hospital and outpatient facility services, offering employees more choices to seek quality care. Expert re-pricing specialists review every hospital and outpatient facility claim line-by-line, eliminate erroneous charges that often appear on these bills and then reimburse the provider between 120% – 150% of what Medicare will pay. Most hospitals and outpatient facilities accept this as payment-in-full however; should an employee ever receive a bill from the hospital or outpatient facility for additional payment beyond the plan’s cost-sharing requirements, professionals immediately step in to negotiate a fair settlement with the provider.
IS F.A.C.T. REFERENCE-BASED HEALTHCARE PRICING THE RIGHT SOLUTION FOR MY BUSINESS?
If your company has a self-funded medical plan or you are considering self-funding your medical plan, and you have at least 100 employees, you may wish to explore F.A.C.T. as an option to save money and help control escalating medical plan costs. If your business is struggling under the burden of ever-increasing healthcare costs, if your bottom line continues to shrink, if your employees are avoiding necessary care because of high deductibles and out-of-pocket costs, now may be the time to explore a F.A.C.T. reference-based pricing solution.
I HAVE ADDITIONAL QUESTIONS; WHERE CAN I GET MORE INFORMATION?
Please visit our F.A.C.T. Reference-Based Pricing page to get all the FACTS on strategic benefit planning and Chernoff Diamond’s Focused Average Cost Tracking reference-based pricing approach. You may also contact one of our Health and Benefits Consultants today at 516-683-6100 or by email at FACT@ChernoffDiamond.com.