“To RBP or not to RBP?” — that’s the question many employers face when trying to control healthcare costs. Too often, employers feel stuck between two extremes: traditional PPO plans with rising premiums or pure RBP plans that require employees to adapt to a completely new model of care.
The good news is that employers don’t have to choose one or the other. A dual-option plan design offers both — a PPO plan and an RBP plan under the same program — giving employees the freedom to choose their comfort level while enabling employers to balance cost savings with flexibility.
This guide explains how dual-option PPO + RBP plans work, their advantages and challenges, and how to implement them successfully.
What Is a Dual-Option PPO + RBP Plan?
A dual-option health plan allows employees to select how their medical claims are processed and paid — either through a traditional PPO network or through Reference-Based Pricing methodology.
The Two Options Explained
Option 1: PPO Network
- Employees access traditional national or regional PPO network (examples include networks from Aetna, Cigna, Blue Cross Blue Shield, MultiPlan, PHCS)
- Claims processed using PPO contracted rates (typically 300-450% of Medicare)
- Employees pay standard premium contributions and copays
- Familiar billing process with in-network and out-of-network distinctions
- No balance billing risk for in-network services
Option 2: RBP (Reference-Based Pricing)
- Claims repriced against Medicare or fair-market benchmark (typically 120-200% of Medicare)
- Employees pay lower premium contributions as incentive for selecting RBP
- Open access to any provider without network restrictions
- Potential for balance billing, managed by RBP vendor and TPA
- Greater price transparency and lower overall claim costs
Key Principle: Regardless of which option employees choose, the employer maintains full transparency, stop-loss protection, and the opportunity to retain surplus savings when claims run below projections.
How Dual-Option Plans Work Operationally
Understanding the mechanics of dual-option administration helps employers evaluate feasibility:
Plan Structure
- Single Self-Funded Plan – One underlying health plan with two claim processing methodologies
- Employee Election – Each employee selects PPO or RBP during annual enrollment
- Differentiated Contributions – RBP option priced lower to incentivize adoption
- Unified Benefits – Same deductibles, out-of-pocket maximums, and covered services (only repricing differs)
- Single Stop-Loss Policy – One aggregate and specific stop-loss policy covering both options
Claims Processing Flow
When Employee Uses PPO Option:
- Provider submits claim to TPA
- TPA identifies employee selected PPO option
- Claim repriced using PPO network contracted rate
- Standard PPO adjudication applied
- Provider accepts PPO payment as payment in full (no balance billing)
When Employee Uses RBP Option:
- Provider submits claim to TPA
- TPA identifies employee selected RBP option
- Claim repriced using Medicare benchmark (e.g., 150% of Medicare)
- RBP repricing applied through vendor platform
- If balance bill occurs, RBP vendor intervenes to negotiate and protect employee
Contribution Structure Example
| Plan Option | Employee Monthly Cost | How Claims Are Paid |
| PPO Option | $150/month | PPO contracted rates (300-450% of Medicare) |
| RBP Option | $100/month | Medicare benchmark (140-160% of Medicare) |
| Savings Incentive | $50/month ($600/year) | Lower contribution rewards RBP selection |
Note: Actual contribution differences vary by employer plan design and projected savings.
Why Dual-Option PPO + RBP Plans Are Growing in Popularity
Employers are increasingly adopting dual-option designs because they address the primary barriers to RBP adoption while still capturing significant savings.
Key Drivers of Growth
Employee Resistance to Change – Pure RBP requires complete shift in how employees think about healthcare billing. Dual-option allows gradual transition.
Risk Mitigation – Employers can test RBP performance without committing entire workforce to new model.
Improved Satisfaction – Employees appreciate having choice and control over their healthcare approach.
Measurable Savings – Even partial RBP adoption (30-40% of employees) delivers substantial cost reductions.
Competitive Advantage – Forward-thinking benefit design helps attract and retain talent.
Advantages of Dual-Option PPO + RBP Plans
Dual-option plans deliver value to both employers and employees through flexibility and choice.
For Employers
Blended Cost Savings – Even if only part of the workforce opts for RBP, overall plan costs decline because high-dollar hospital claims shift away from PPO markups to transparent Medicare-based pricing.
Reduced Implementation Risk – Dual-option approach allows testing RBP without forcing change on entire employee population.
Improved Stop-Loss Rates – Lower projected claims (due to RBP repricing) can reduce aggregate stop-loss factors and overall premium.
Employee Buy-In – Providing choice increases acceptance and reduces resistance to cost containment strategies.
Data-Driven Decisions – After one year, employers can evaluate actual RBP adoption and savings to inform future plan design.
Flexibility to Evolve – Based on performance, employers can adjust contribution differentials to encourage greater RBP adoption.
For Employees
Personal Choice – Workers select the model that best fits their comfort level, healthcare needs, and financial situation.
Lower Premiums Available – Employees who select RBP pay significantly less in payroll contributions.
No Provider Restrictions – RBP option provides open access to any provider without network limitations.
Familiar Alternative – Employees uncomfortable with RBP can remain in traditional PPO structure.
Financial Incentive – Lower RBP contributions create natural motivation to learn about and adopt the model.
Expected Savings by Adoption Rate
Understanding potential savings helps employers set realistic expectations:
| RBP Adoption Rate | Projected Total Plan Savings | Primary Savings Source |
| 10-20% adoption | 5-10% total plan cost reduction | High-cost claims repriced through RBP |
| 30-40% adoption | 15-20% total plan cost reduction | Blend of PPO and RBP with significant facility claim savings |
| 50-60% adoption | 20-30% total plan cost reduction | Majority of hospital claims repriced; reduced network fees |
| 70%+ adoption | 25-35% total plan cost reduction | Approaching full RBP savings with minimal PPO dependency |
Savings assume typical claims mix with 60-70% of costs from hospital and facility services.
Implementation Challenges and Solutions
While dual-option plans offer significant advantages, successful implementation requires addressing operational challenges.
Challenge 1: Employee Education and Communication
The Issue: Employees must understand fundamental differences between PPO and RBP billing, including balance billing concepts and how to respond if it occurs.
Solutions:
- Comprehensive enrollment materials explaining both options clearly
- Decision support tools helping employees compare options based on their healthcare usage
- FAQ documents addressing balance billing, provider access, and cost differences
- Live enrollment meetings with Q&A sessions
- Ongoing communication throughout plan year, not just during enrollment
- Success stories from employees who selected RBP (if available)
Challenge 2: Provider Pushback and Balance Billing
The Issue: RBP claims may result in balance bills when providers reject Medicare-based payment as insufficient.
Solutions:
- Partner with experienced RBP vendor specializing in balance bill negotiation
- Include strong hold-harmless language in plan documents protecting employees
- Provide clear instructions to employees: “Do not pay balance bills; contact TPA/RBP vendor immediately”
- Proactive provider outreach before scheduled procedures when possible
- Legal support and settlement services when negotiation fails
- Track balance billing rates and resolution times as key performance metrics
Challenge 3: Stop-Loss Coordination
The Issue: PPO and RBP claim methodologies must align within stop-loss coverage to ensure complete financial protection.
Solutions:
- Work with stop-loss carriers experienced in dual-option and RBP plans
- Ensure stop-loss contract recognizes both PPO and RBP claim payments as valid
- Clarify whether specific stop-loss attachments apply to paid claims or billed charges
- Request aggregate factor calculations that reflect blended PPO/RBP savings
- Review lasering and exclusions to confirm dual-option design doesn’t create coverage gaps
Challenge 4: TPA Capability and Technology
The Issue: Not every TPA is equipped to handle both PPO and RBP claim processing within a single plan.
Solutions:
- Select TPA with proven dual-option experience and references
- Verify TPA technology can track employee elections and route claims correctly
- Confirm TPA has partnerships with qualified RBP vendors
- Establish clear claims processing protocols and service level agreements
- Test claims scenarios during implementation to verify system accuracy
- Require regular reporting on PPO vs. RBP utilization and savings
Challenge 5: Ongoing Plan Management
The Issue: Dual-option plans require continuous monitoring and adjustment to optimize performance.
Solutions:
- Quarterly review of adoption rates, claims costs, and balance billing incidents
- Annual analysis of contribution differentials to ensure appropriate incentive
- Regular employee communication reinforcing RBP benefits and protections
- Adjustment of RBP benchmark (e.g., 140% vs. 160% of Medicare) based on market response
- Evaluation of whether to continue dual-option or transition to RBP-only based on results
Who Are the Right Candidates for Dual-Option Plans?
Dual-option PPO + RBP plans work best for specific employer profiles:
Ideal Employer Characteristics
✓ Self-funded or level-funded health plan structure (dual-option doesn’t work with fully insured)
✓ 50+ employees for administrative efficiency (though smaller groups can implement)
✓ Open to innovation but cautious about forcing change on employees
✓ Strong communication capabilities to educate workforce effectively
✓ Significant hospital/facility claims where RBP delivers greatest impact
✓ Geographically concentrated workforce (easier to communicate and support)
✓ Engaged HR team willing to manage questions and support employees
Less Suitable Scenarios
- Fully insured plans (no access to self-funded cost containment strategies)
- Very small groups (<25 employees) where administrative complexity may outweigh savings
- Organizations with extremely risk-averse cultures resistant to any change
- Employers unable to invest in comprehensive employee education
- Groups with minimal hospital claims where RBP impact would be limited
Financial Modeling: What to Expect
Understanding financial projections helps set realistic expectations:
Year 1 Projections
Most employers see 15-25% RBP adoption in the first year as early adopters and cost-conscious employees select the lower-cost option.
Expected Outcomes:
- 5-12% reduction in total plan costs
- Lower aggregate stop-loss factors
- Minimal balance billing incidents (typically <5% of RBP claims)
- High employee satisfaction among RBP adopters
- Valuable data on claims patterns and savings
Year 2-3 Projections
As employees gain confidence in RBP protections and hear positive experiences from peers, adoption typically grows to 30-50%.
Expected Outcomes:
- 15-25% reduction in total plan costs
- Increased savings as more high-cost claims repriced through RBP
- Further stop-loss premium reductions
- Established balance billing resolution processes
- Potential to adjust contribution differentials to encourage greater adoption
Long-Term Strategy
After 2-3 years of dual-option experience, employers can make strategic decisions:
Option A: Continue Dual-Option – Maintain both choices if PPO option serves specific employee needs or geographic requirements
Option B: Transition to RBP-Only – If adoption reaches 70%+ and balance billing is well-managed, consider eliminating PPO option for maximum savings
Option C: Enhance RBP – Add direct contracts or bundled pricing alongside RBP benchmark to further reduce costs
Key Success Factors
Based on employer experiences with dual-option plans, these factors drive success:
1. Leadership Commitment
Executive and HR leadership must support the strategy and champion employee education efforts.
2. Transparent Communication
Honest explanation of both options, including RBP balance billing realities and protections, builds trust.
3. Strong Vendor Partnerships
Experienced TPA and RBP vendor are essential for seamless administration and employee support.
4. Appropriate Incentives
Contribution differential must be meaningful enough to motivate RBP selection without seeming punitive to PPO choosers.
5. Continuous Improvement
Regular review of results, employee feedback, and plan adjustments optimize performance over time.
Dual-Option Plan Design Variations
Employers can customize dual-option structures based on specific needs:
Variation 1: Full Dual-Option
- PPO option: All providers accessed through network
- RBP option: All providers repriced to Medicare benchmark
- Most comprehensive choice but highest administrative complexity
Variation 2: Hospitals-Only RBP
- PPO option: All claims processed through network
- RBP option: Only hospital/facility claims repriced; physicians remain in PPO network
- Simpler administration; focuses RBP where savings are greatest
Variation 3: Geographic Split
- PPO option: Available nationwide
- RBP option: Available in primary employment locations only
- Accommodates remote/traveling employees while capturing savings for main workforce
Variation 4: Tiered Contributions
- PPO Standard: Higher contributions, full network access
- PPO Value: Moderate contributions, narrow network
- RBP: Lowest contributions, Medicare-based repricing
- Three-tier approach for maximum flexibility
How Memberly Helps Implement Dual-Option Plans
Memberly specializes in building dual-option health plans that integrate PPO access and RBP savings seamlessly.
Our Implementation Process
Plan Design & Strategy – We design dual-option structures that balance savings with member choice, including contribution differentials, benefit alignment, and RBP benchmark selection.
TPA & Vendor Selection – We identify and coordinate with TPAs capable of supporting both PPO and RBP claim administration, ensuring technology and processes align.
RBP Vendor Partnership – We evaluate and select RBP vendors based on repricing methodology, balance bill protection, member advocacy, and service quality.
Stop-Loss Optimization – We negotiate stop-loss coverage that recognizes dual-option design and captures aggregate factor reductions from RBP savings.
Employee Education Programs – We develop comprehensive communication materials, decision support tools, and ongoing education to help employees understand options and make informed choices.
Financial Modeling – We project savings based on anticipated adoption rates, claims mix, and RBP benchmark to set realistic expectations.
Implementation Support – We manage vendor coordination, technology integration, and employee enrollment to ensure smooth launch.
Ongoing Plan Management – After implementation, we monitor adoption rates, balance billing incidents, claims savings, and employee satisfaction — continuously optimizing plan performance.
Why Work With Memberly
Independent Advisory Model – We represent employer interests, not carrier or vendor interests, ensuring unbiased recommendations.
Dual-Option Expertise – Extensive experience designing and implementing hybrid PPO/RBP plans across industries and company sizes.
Vendor Relationships – Established partnerships with leading TPAs, RBP vendors, and stop-loss carriers who specialize in innovative plan designs.
Data-Driven Approach – We use claims analytics to project savings accurately and measure actual results against projections.
Communication Excellence – We provide employee education materials, messaging guidance, and ongoing support to maximize adoption and satisfaction.
Risk Management Focus – We structure plans to protect both employers and employees, including robust balance billing protections and stop-loss coverage.
Is a Dual-Option Plan Right for Your Organization?
Consider a dual-option PPO + RBP plan if your organization:
✓ Wants to reduce healthcare costs without forcing change on all employees
✓ Values employee choice and satisfaction alongside savings
✓ Operates a self-funded or level-funded health plan
✓ Has significant hospital and facility claim costs
✓ Is willing to invest in employee education and communication
✓ Seeks a gradual, low-risk approach to RBP adoption
✓ Has leadership support for innovative benefit design
Next Steps
If your organization is ready to explore dual-option PPO + RBP plans:
- Evaluate current claims data – Identify hospital and facility costs where RBP would have greatest impact
- Assess employee demographics – Consider healthcare utilization patterns, geographic distribution, and likely adoption rates
- Contact Memberly – Schedule consultation to discuss dual-option feasibility and design options
- Model financial projections – We’ll project savings based on various adoption scenarios and RBP benchmarks
- Develop implementation roadmap – Create timeline for vendor selection, employee education, and plan launch
Ready to offer employees choice while reducing healthcare costs?
📍 Learn more about RBP strategies: memberlybenefits.com/rbp-plans
📞 Contact Memberly
Schedule a consultation to explore dual-option plan design for your organization.
Dom Maggiore
(631) 905-6555
dom.maggiore@memberlybenefits.com
About Memberly
Memberly is an independent employee benefits advisory firm specializing in self-funded health plan design, Reference-Based Pricing implementation, and innovative cost containment strategies. We help employers reduce healthcare costs while maintaining or improving employee benefits and satisfaction.
This guide is for informational purposes only and does not constitute legal or medical advice. Employers should consult with legal counsel and benefits advisors when implementing dual-option plans or making changes to health plan design.
