What Is Reference-based Pricing?

Significant Savings with Reference-based Pricing

Reference-based pricing is an innovative way for employers to help control healthcare spend and give their members the freedom to see the provider of their choice under their self-funded health benefit plan.

With reference-based pricing, reimbursement is based upon a fair percentage (typically 150% or 200%) of a cost-based metric or what Medicare pays for a particular service instead of a discount off of the medical facility’s Chargemaster price, which is what happens with a PPO plan.

Because there’s no PPO network with reference-based pricing solutions, members can go to any provider of their choice for the care that is subject to reference-based pricing under their plan.

Saving Success Stories

Making the switch to reference-based pricing can bring big savings. Here’s a look at three of our clients who saw significant savings when they switched to a hybrid RBP option.

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Industry: Food prep
Location: Pennsylvania   
Members: 500

Reduced claim costs by over 30%, or $300 per employee per month

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Industry: Transportation
Location: Kansas
Members: 300

Reduced claim costs by 20%, or $150 per employee per month

Reference-based Pricing

Industry: Insurance
Location: Illinois 
Members: 500

Reduced claim costs by 30%, or $200 per employee per month

Reference-based Pricing Models

As with all Luminare Health's solutions, there’s not a one-size-fits-all solution when it comes to reference-based pricing. We offer flexible options so our clients can choose the model that’s right for them.

Hybrid

This is the most popular model. In the hybrid model, the employer’s benefit plan uses a PPO for medical professional charges, such as primary care physician visits, and a reference-based pricing solution only for medical facility charges, such as inpatient surgeries, which are often the big-ticket items which drive up healthcare spend.


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Full Reference-Based Pricing

In a full reference-based pricing model, all charges are subject to a reference-based pricing solution. Many employers choose this model after successfully utilizing the hybrid model. It’s not as common for an employer to completely switch over to a reference-based pricing solution directly from a traditional PPO model.

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Dual choice PPO & Reference-based Pricing

This dual choice option is new to the marketplace for 2020. With this solution, the employer can offer a PPO plan alongside a reference-based pricing plan and allow the member to choose the best option for their needs. Employers save on claims cost spend while allowing their members to be more active in decisions about their health benefit plan.
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Out of Network

This model focuses only on out-of-network charges. Using this strategy, in-network medical facility and medical professional charges are repriced through the plan’s PPO, and only out-of-network charges are subject to reference-based pricing. As with the hybrid model, this model still allows clients to manage higher out-of-network charges.


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Best-in-Class Vendors

In addition to these different models, Luminare Health has built relationships with some of the biggest names in the reference-based pricing industry to give our clients the specific solution that meets their needs. Our vendors can give our clients and their members support and protection.

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Co-Fiduciary

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Legal Support

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Balance Bill Advocacy

Connect with a Luminare Health sales executive to learn more.













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