Every year, health insurance takes a bigger bite out of your budget, and you're left wondering what exactly you're paying for.

Premiums keep rising, yet your coverage doesn’t seem to get any better. Sound familiar?

There’s an alternative strategy to traditional health plans. It’s called Reference-Based Pricing (RBP), and it’s helping organizations take back control of their health benefits by cutting out inflated costs and putting transparency back on the table.

What Is Reference-Based Pricing?

RBP flips the traditional health plan model. Instead of paying whatever a hospital decides to charge, you set a fair price - typically tied to a benchmark like Medicare rates plus a margin. That means you're no longer paying 300% markups without explanation. You're paying for value. And you're done overpaying just because a provider said so.

Why Consider Reference-Based Pricing?

Traditional health plans are often structured around the needs of the insurance carrier, not the employer or the people covered. That can leave organizations stuck with unclear rules, unpredictable costs, and limited flexibility.

RBP offers an alternative with the potential for:

• Lower costs for high-dollar services like surgeries and hospital stays
• Clearer pricing and insights into what you're paying for
• More control over your benefits strategy, budget, and vendor relationships

Here’s How Reference-Based Pricing Works

• Employers set a reference price (say, 140% of Medicare).
• Employees choose providers - ideally ones who accept that rate.
• If a provider bills above that amount, your RBP partner negotiates - or helps your employee handle a “balance bill.”

This strategy can be applied selectively to expensive services or used as the foundation for an entire health plan. Organizations using RBP often see:

• Save 20-30% on big-ticket medical costs
• Plan your employee benefits budget with more predictability
• Upgrade your benefits offerings based on what your employees value most or lower employee premiums with the savings
• Stay competitive by offering robust health coverage - without paying more

Yes, Balanced Billing Is Real. Here’s What to Know.

The biggest concern with RBP is balance billing, where a provider charges the patient for the difference between the plan’s payment and the provider’s bill.

With the right support, this doesn’t have to be a dealbreaker. A strong RBP partner will:

• Help individuals find providers that accept reference pricing
• Pre-negotiate rates when possible
• Assist in resolving disputes and protect members from aggressive billing
• Educate employees so they understand how the plan works

Many plans also include caps on balance billing, similar to traditional out-of-pocket limits.

Is Reference-Based Pricing Right for Your Business?

It could be - especially if:

• You’re already self-insured or exploring self-funding options
• Your team lives in areas with high or inconsistent health care pricing
• You’re frustrated with rising premiums and no explanation
• You want to reinvest savings into your people - not into an insurance carrier’s profit margin

Clearing Up the Most Common Reference-Based Pricing Misconceptions

Reference-Based Pricing is gaining traction - but like anything that challenges the status quo, it comes with a few myths that deserve a second look. Let’s break down the most common ones:

• “People will end up paying more out of pocket.” Not always. With the right tools, support, and access to provider cost data, individuals can often find quality care within the plan’s price guidelines. In many cases, they end up paying less.
• “This only works for large companies.” RBP is scalable and adaptable. Smaller and mid-sized organizations often see the most dramatic savings because they’re typically more agile in how they implement and manage change.
• “Employees won’t like it.” When done right, employees tend to value the clarity and transparency RBP offers. With proper communication and support, RBP can lead to more informed choices and greater satisfaction.

Build a Smarter Health Plan Strategy

You don’t need to keep overpaying for unclear coverage. With Reference-Based Pricing, you can build a plan that works smarter - for your people and your bottom line.

At OneDigital, our team can help you:

• Design a customized plan that balances cost and care
• Identify and evaluate the right vendor partners
• Provide education and support so members understand how to use their benefits
• Ensure compliance and assist with claims when needed

Connect with our team today to learn more about how RBP can fit into your benefits strategy.