AEE17: Employers and Reference-Based Pricing—David Contorno's Latest Thinking

Reference-based pricing, the way that most employee benefit consultants use the term anyway, refers to a methodology used by employers to pay providers for services. Usually we're talking within a fee-for-service (FFS) environment here.

The way it typically works ... there are different flavors, but how it typically works is this: Reference-based pricing (RBP) means that an employer starts with some reference-based price. Many times, it's the Medicare rate. Medicare will pay X dollars for something. The employer—and when I say employer, I mean the vendor/company the employer is using to run this whole thing mainly—but the employer will decide that they're willing to pay some percent over the Medicare rate to providers who render that service to the employee. Maybe it's 10% over the Medicare rate or 20% to 50% as David Contorno talks about in this healthcare podcast.

One of the biggest pushbacks against RBP schemes has been that it results in balance bills for employees, meaning that an employee goes to the hospital, the employer decides to pay some RBP amount for that service to the hospital, but the hospital hasn't necessarily agreed to accept that amount. There's no contract in place. So, the hospital decides to bill whatever their chargemaster rate is—which, as we all know, is redonkulous—and the employee gets a giant out-of-network balance bill.

For the most part, this doesn't have to happen if you do it right; and David Contorno discusses all of this and more on this An Expert Explains.

You can learn more at epoweredbenefits.com. You can also connect with David on LinkedIn.  

David Contorno is founder of E Powered Benefits. As a native of New York, David began his career in the insurance industry at the age of 14 and has since become a leading expert in the realm of employee benefits over the last 22 years.

David was Benefits Selling magazine's 2015 Broker of the Year, and in March 2016, Forbes deemed him "one of America's most innovative benefits leaders." More recently, he received the 2017 Leadership Award at ASCEND, the annual conference of The Association for Insurance Leadership, which recognizes those whose leadership in support of improving the value and performance of employee benefits has significantly advanced the industry.

David is a member of the board of directors for both the Charlotte Association of Health Underwriters and HealthReach Community Clinic. He served on the NC Insurance Commissioners Life and Health Agent Advisory Committee, as well as participated in the Technical Advisory Group that helped with the market reforms required under the Affordable Care Act in North Carolina. He is a longtime member of the Lake Norman and South Iredell Chambers of Commerce as well as the National, North Carolina, New York, and Long Island Associations of Health Underwriters. David contributes to numerous publications, including Forbes, Benefits Selling magazine, Business Leader magazine, and Insurance Thought Leadership.

David is committed to giving back to his community and actively participates in the membership drive for the United Way, assisting the local chapter of Habitat for Humanity, and supporting The Dove House Child Advocacy Center. When he is not working, he enjoys boating and traveling.

01:37 What does good reference-based pricing look like?
01:57 What is the pricing methodology that 97% of healthcare is using?
04:25 How has E Powered Benefits minimized the noise around reference-based pricing?
04:55 "You're getting what we view as balance bills all the time."
06:47 "What very few people really recognize is that hospitals have multiple revenue streams."
07:36 "Which is the highest price? The answer is, commercial."

You can learn more at epoweredbenefits.com. You can also connect with David on LinkedIn.  

@dcontorno discusses #employers and #referencebasedpricing on our #healthcarepodcast. #healthcare #podcast

What does good reference-based pricing look like? @dcontorno discusses #employers and #referencebasedpricing on our #healthcarepodcast. #healthcare #podcast

What is the pricing methodology that 97% of healthcare is using? @dcontorno discusses #employers and #referencebasedpricing on our #healthcarepodcast. #healthcare #podcast

How has E Powered Benefits minimized the noise around reference-based pricing? @dcontorno discusses #employers and #referencebasedpricing on our #healthcarepodcast. #healthcare #podcast

"You're getting what we view as balance bills all the time." @dcontorno discusses #employers and #referencebasedpricing on our #healthcarepodcast. #healthcare #podcast

"What very few people really recognize is that hospitals have multiple revenue streams." @dcontorno discusses #employers and #referencebasedpricing on our #healthcarepodcast. #healthcare #podcast

"Which is the highest price? The answer is, commercial." @dcontorno discusses #employers and #referencebasedpricing on our #healthcarepodcast. #healthcare #podcast

Recent past interviews:

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David Contorno (EP339), Nikki King, Olivia Webb, Brandon Weber, Stacey Richter (INBW30), Brian Klepper (AEE16), Brian Klepper (EP335), Sunita Desai, Care Plans vs Real World (EP333), Dr Tony DiGioia, Al Lewis, John Marchica, Joe Connolly, Marshall Allen, Andrew Eye, Naomi Fried, Dr Rishi Wadhera, Dr Mai Pham, Nicole Bradberry and Kelly Conroy, Lee Lewis, Dr Arshad Rahim, Dr Monica Lypson, Dr Rich Klasco, Dr David Carmouche (AEE15), Christian Milaster, Dr Grace Terrell, Troy Larsgard, Josh LaRosa