If you are looking for an innovative way to add much-needed transparency to your health care plans and offset fast-rising healthcare costs, then Value-Based Pricing (VBP) is worth consideration. Our journey into VBP is just a few years in, but it has helped us realize significant savings, both for our associates and the company. We are sharing some background and tips for implementation based on what we’ve learned.
How It Works
Simply put, VBP sets pricing outside of the pre-determined or negotiated discounts offered by traditional networks. You may have also heard of Reference-Based Pricing in the same breath. However, we see them differently. VBP does not balance bill consumers, while Reference-Based Pricing may pass a balance bill onto plan members. Our current goal is to cover any balance bill for members using all the resources we have through a patient advocacy team. VBP reimbursement is based on a percentage of what Medicare would typically pay the provider. According to the Society for Human Resources Management (SHRM), VBP plans usually pay more than the Medicare rate, typically somewhere between 120 and 300 percent of the Medicare pricing for a given service. (Our goal is between 140 and 200 percent for our plan.) For reference, most hospitals are billing at least 500% above Medicare reimbursement on a traditional plan as their in-network discount.
Three Points to Consider for a Successful Launch
1. Establish a Patient Advocacy Team
While medical providers will be paid for the negotiated price, they still may balance bill the patient for what the provider considers the rest of its fee. The patient care advocacy team is set up to help resolve the balance bill. Most often, the provider ends up accepting the VBP amount as payment in full. In those instances where providers won’t accept the VBP rate, the plan will negotiate a settlement or pay the outstanding bill. The patient advocacy team manages billing support and liaises between the member and the medical provider. Our goal is to not balance bill any employee. The patient advocacy team is essential to helping consumers and us.
2. Don’t Do It Alone
To successfully implement a VBP, it is essential to have strong partnerships with your insurance broker, benefit concierge service, and third-party administrator. Our broker brought us innovative ideas and helped us build the plan and make adjustments in these first two years. Our third-party administrator has been critical in efficiently and accurately processing claims within this new approach. A health care concierge service (Care Coordinator) is also key in managing the relationships with our members as well as medical providers. The administrators in doctor’s offices and medical facilities are unfamiliar with the VBP approach, and the Care Coordinators can help educate them, so the patient doesn’t have to.
3. Help Your Consumers Understand VBP
Each year the benefits and communications team partners to educate employees about the Value-Based Pricing plan through a few communications outlets, including a bi-monthly newsletter, in which we share information about balance billing, how to communicate with a provider, and emphasize using the patient care advocates when there are questions or concerns. As another example, we adjusted the language on the benefits card for the VBP members to instruct providers to call rather than tell a patient they were not covered. Our health care concierge partner is also available to help answer consumer and provider inquiries. Our annual enrollment presentation allows employees to ask questions. And finally, we also take our annual enrollment presentation on the road across the country to offer more face-to-face opportunities to discuss our different medical plans. Our associates can raise any questions or concerns they have as they consider switching from a traditional plan to a VBP.
"VBP sets pricing outside of the pre-determined or negotiated discounts offered by traditional networks"
Benefits of VBP:
• Offers cost transparency for employer and consumer
• Relies on Medicare costs, which trend at a lesser rate than traditional network costs
• Open access model helps consumer and provider get out of the in-/out- of network struggle
• Reduces employer and member risk of paying excessive costs for medical services that could be completed inexpensively
• Improves employee plan renewals
• Reduces claims expenditures by 15-20 percent
All of these benefits can translate to fewer cost increases and lower costs for employees and their families.
Our team is focused on innovation and agility, so we were drawn to VBP for a few reasons: attracting top talent, providing cost-efficient coverage for our associates and, of course, the savings we see as a business. We are pleased to see a significant number of associates continue to enroll in VBP and are saving on their medical costs. As time goes on, we hope our employees will increasingly see the benefits of a value-based plan.
Every day more forward-thinking employers are going with VBP. For now, we will continue to offer both a traditional plan with a high deductible and our VBP plan. We expect to migrate more associates to our VBP as we all feel more comfortable and confident with the plan.