Reference-Based Pricing (RBP)

What is Reference-Based Pricing?

Reference-Based Pricing (RBP) is a highly effective, widely used cost containment strategy for establishing optimal reimbursement rates for medical services. The current medical services reimbursement system uses a discount off of some negotiated dollar amount agreed to by the provider of medical services and a PPO or other organized network of providers, typically administered by a fully-insured carrier.

Reference-Based Pricing is a way for consumers to combat this highly flawed pricing model and to reduce the increasing cost of healthcare. Reference-Based Pricing establishes a maximum amount that an employer plan sponsor will pay providers for certain, specified medical or prescription services. It is not uncommon for medical services to have drastic cost variations between providers with no discernible differentiation in quality.

How it Works

Reference-Based Pricing reimbursement rates are established as a multiple of what Medicare pays based on the Medicare Fee Schedule. A traditional PPO network marks up healthcare services just so they can be marked down! Reference-Based Pricing is a more transparent and fair pricing system. An employer can see significant savings over a PPO plan while the provider still receives more than they would normally receive from Medicare.

What are the Benefits?

COST SAVINGS – Both employers and employees can save significantly with Reference-Based Pricing strategies. By basing reimbursements on actual costs of facility services, payments with an RBP plan verses a traditional PPO plan are consistently lower, often times as little as half the cost.

Transparency – With RBP, patients know the costs of procedures in advance, giving them a chance to evaluate and select the facility that best suits their needs. By empowering consumers, overall employer costs for healthcare is driven down and the cost to the patient is dramatically reduced.

Patient Support – 90 Degree Benefits’ Member Services team is there to help members navigate their RBP plan. We are experts at dealing with balance billing and are able to help reduce or eliminate unnecessary member expenses.

Seven Reference-Based Facts to Know


You can establish the multiples of the Medicare fee schedule your health plan will pay.


A good Reference-Based Pricing (RBP) administrator will contact doctors and other medical service providers utilized by your plan participants at plan inception. Coverage, coding values, eligibility and verification that your plan participant’s new plan is noted in the medical provider’s computer.


RBP balance billing problems occur with about 2% of all claims using a good RBP administrator. This is about the same percentage as a PPO plan with hospital-based physicians: anesthesiologists, radiologists, pathologists and emergency department doctors who are not in the PPO network.


RBP repricing vendors provide legal advice and assume health plan fiduciary responsibilities on problematic claims.


Health plans have flexibility to invent utilization of high-quality, low-cost providers. When needed plans can negotiate unique payment arrangements with specific medical providers.


RBP requires more time and effort from HR departments and plan administrators because employees must be educated on plan usage for the best results. However, the value RBP brings far outweighs the extra time spent.


Some medical providers may demand payment at the point of service. Alternate providers and one-time payments can be applied to mitigate disruption.

The Decision Tree

The Decision Tree can help employers define the pros and cons of implementing RBP. Assign a number to the branches that are most important to your company and add up the total.

90 Degree Benefits is an expert in RBP administration — contact us today to design a plan that works for you and your employees.



Dramatic Cost Reduction Year Over Year

  • Savings of 25% to 30% on your health plan costs and cost transparency.
  • Reclaiming EBITDA from the health plan and returning it to the bottom line.
  • Health plan sustainability-flat or marginal risk charge renewals.
  • Opportunity to add benefits or increase existing ones.
  • Increase in employee take-home pay through lower health plan payroll deduction requirement.
  • Employee proportion (coinsurance) of health care cost is less under RBP.


Noise and Disruption

  • More work for HR department employee education required.
  • Balance Billing
  • Plan participant may have to pay some medical providers up front or choose another provider.
  • Possible debt collection or credit impairment if employees are not educated on RBP plan.
  • Possible employee perception that health plan is no good if RBP is poorly administered.
  • Although rare, health care payment dispute may devolve into litigation.