Reference-Based Pricing: A Cost Containment Model Disrupting the Health Care Market

Reference-based pricing is a health care cost containment model that limits what a payor will pay a provider for health care goods and services. Most insurers these days use RBP for certain out-of-network benefits. However, this becomes problematic when a plan foregoes a PPO network for hospital services altogether and pays all services, including emergency services, using an unsupportable benchmark rate, typically based on a percentage of Medicare fee-for-service or the provider’s cost plus a minimal mark-up. The plans usually keep a PPO network...