Employers across every industry face pressure from rapidly increasing healthcare expenses, often experiencing double-digit annual renewals. Those operating self-funded or level-funded plans have access to advanced strategies that help contain costs without reducing benefits or limiting provider choice.
Among the most effective of these strategies is Reference-Based Pricing (RBP) — a proven approach that brings transparency, fairness, and cost control back to employer-sponsored health plans.
This guide outlines how employers can successfully deploy RBP within self-funded or level-funded arrangements to achieve sustainable savings and improve plan performance.
What Is Reference-Based Pricing?
Reference-Based Pricing (RBP) redefines how medical claims are paid. Instead of relying on opaque PPO “discounts,” RBP ties payment to a transparent benchmark — most commonly a multiple of Medicare rates.
How RBP Differs from Traditional PPO Pricing
Traditional PPO Model:
- Hospital bills $75,000 for a procedure
- PPO “negotiates” to $42,000 (still 300-450% of Medicare)
- Employer believes they received a discount
- Actual savings are minimal compared to Medicare benchmark
RBP Model:
- Same hospital bills $75,000
- RBP reprices to Medicare benchmark (e.g., 150% of Medicare = $22,500)
- Employer saves $19,500 (46% reduction from PPO rate)
- Pricing is transparent and predictable
Historical Context
RBP emerged in the early 2000s when employers discovered that PPO networks were paying hospitals 300-450% of Medicare rates even after “discounts.” By setting a transparent benchmark, employers gained predictable, rational pricing and reclaimed leverage in healthcare negotiations.
Typical RBP Pricing Ranges
Most RBP plans reimburse facilities at 120-200% of Medicare rates, with common benchmarks including:
- 140% of Medicare – Aggressive pricing for competitive markets
- 150% of Medicare – Most common benchmark balancing savings and provider acceptance
- 180% of Medicare – Conservative approach for markets with limited competition
Pricing Comparison Table
| Service | Hospital Charge | PPO Allowed (56% “discount”) | RBP at 150% of Medicare | Employer Savings |
| Inpatient Knee Surgery | $75,000 | $42,000 | $22,500 | $19,500 (46%) |
| MRI Scan | $3,500 | $2,100 | $900 | $1,200 (57%) |
| CT Scan | $2,800 | $1,680 | $750 | $930 (55%) |
| Emergency Room Visit | $4,500 | $2,700 | $1,350 | $1,350 (50%) |
Note: Medicare rates vary by geographic region and are updated annually by CMS.
How RBP Works Within a Self-Funded Plan
RBP can be implemented in several configurations depending on employer size, claims mix, and risk tolerance.
Implementation Scenario A: Hybrid RBP (Hospitals Only)
Structure:
- Hospitals repriced using RBP (typically 140-180% of Medicare)
- Physicians and ancillary providers paid through leased PPO network (e.g., PHCS, Multiplan)
Advantages:
- Smooths smaller outpatient and physician claims through existing networks
- Focuses RBP on high-dollar hospital services where savings are greatest
- Reduces balance billing concerns for routine physician visits
- Easier employee transition and communication
Best For:
- Employers new to RBP
- Groups with employees concerned about provider disruption
- Markets with limited direct contracting opportunities
Implementation Scenario B: Full RBP (All Providers)
Structure:
- Both hospitals and physicians repriced to Medicare-based reference levels
- No PPO network leasing fees
Advantages:
- Maximizes savings across all claim types
- Eliminates network leasing fees
- Complete pricing transparency
- Full control over repricing methodology
Requirements:
- Comprehensive member education
- Robust balance bill protection
- Strong RBP vendor support
- Effective communication strategy
Best For:
- Employers seeking maximum savings
- Groups with engaged, informed employee populations
- Organizations comfortable with change management
Claims Adjudication Process Under RBP
Understanding how claims flow through an RBP system helps employers and members navigate the process:
Step-by-Step Process
- Provider Submits Claim – Healthcare facility bills the plan for services rendered
- RBP Repricing – Claim is repriced to Medicare-based benchmark by RBP vendor
- Plan Payment – Employer’s plan pays the repriced amount directly to provider
- Balance Bill Management – If provider bills member for difference, RBP vendor intervenes
- Negotiation & Resolution – RBP vendor negotiates settlement or provides legal defense
Member Protection Mechanisms
RBP vendors protect employees through:
- Pre-service provider outreach before scheduled procedures
- Member education on what to expect and how to respond to billing
- Balance bill negotiation to reduce or eliminate patient responsibility
- Legal support when providers pursue collection against plan terms
- Settlement services to resolve disputes quickly
Key RBP Vendors and Partners
These organizations specialize in repricing, negotiation, and member advocacy under RBP models:
RBP Repricing and Administration
- AMPS (Advanced Medical Pricing Solutions) – In-house repricing, audits, and balance-bill defense
- Payer Compass – RBP platform with analytics and support
- ClaimDOC – RBP administration with member education programs
- ELAP Services – Proprietary repricing algorithms and legal support
- The Karis Group – Patient advocacy and balance-bill resolution
- Viega Health / Imagine360 – Integrated RBP with navigation and member support
Direct Contracting and Transparent Networks
These organizations combine direct hospital contracts with RBP-style transparency:
- 6 Degrees Health – Direct contracting and RBP integration with clinical review
- OccuNet – National network with value-based hospital contracts
- Edison Healthcare – Centers of Excellence for major procedures
- Healthsmart Transparent Network – Data-driven, employer-focused network
- Tendo / KPP Select – Direct and bundled contracting for specific markets
Note: Vendor capabilities and market presence evolve. Employers should evaluate current offerings and service areas during selection.
Balance Billing: What Employers Need to Know
Balance billing occurs when providers bill patients for the difference between their charge and the RBP payment. This is the most common concern employers raise about RBP.
How Balance Billing is Managed
Proactive Prevention:
- RBP vendors contact providers before scheduled services
- Establish payment expectations upfront
- Educate providers on plan terms and patient protections
Reactive Resolution:
- Immediate response to balance bills received by members
- Direct negotiation with providers to reduce or eliminate balance
- Legal defense if providers pursue aggressive collection
- Settlement payments when appropriate to resolve disputes
State Balance Billing Protections
Some states have enacted laws limiting balance billing for emergency services or in-network facilities. Employers should understand protections available in states where employees reside.
Employee Communication is Critical
Successful RBP plans include:
- Clear explanation during enrollment of how RBP works
- ID cards with RBP vendor contact information
- Instructions on what to do if balance bill is received
- Regular reminders that employees should NOT pay balance bills directly
Why Employers Choose RBP
Financial Benefits
Transparent, Medicare-Based Pricing – Eliminates opaque PPO discount structures and provides predictable benchmarks
30-60% Lower Hospital Claim Costs – Significant savings on high-dollar facility claims compared to traditional PPO rates
No Network Leasing Fees – Eliminates monthly access fees charged by PPO networks (typically $3-8 per employee per month)
Improved Budget Control – Predictable repricing allows accurate forecasting and budgeting
Operational Benefits
Customizable by Provider Type – Employers can apply RBP selectively (e.g., hospitals only, all providers, specific geographies)
Claims Data Transparency – Clear visibility into actual costs paid versus charges billed
Stop-Loss Rate Improvement – Lower expected claims can reduce stop-loss premiums
Administrative Flexibility – Compatible with most TPAs and stop-loss carriers
Common RBP Concerns Addressed
“Won’t employees lose access to providers?”
RBP does not restrict which providers employees can see. Employees maintain complete provider choice. The difference is in how claims are repriced, not which providers are available.
“What about balance billing?”
Balance billing is managed through vendor intervention, negotiation, and legal support. Most balance bills are resolved without employee payment. Strong RBP vendors have established processes to protect members.
“Will stop-loss carriers cover RBP plans?”
Yes. Major stop-loss carriers cover RBP plans. In fact, many carriers offer improved rates for RBP plans due to lower expected claim costs. Memberly helps negotiate stop-loss terms that reflect RBP savings.
“How do employees know what to expect?”
Comprehensive employee education is essential. This includes enrollment materials, ongoing communication, clear instructions on balance bill handling, and accessible support from RBP vendor and HR team.
Implementation Considerations
Prerequisites for RBP Success
✓ Self-funded or level-funded plan structure (RBP does not work with fully insured plans)
✓ TPA capable of RBP administration or willingness to partner with RBP vendor
✓ Strong communication strategy to educate employees before and after launch
✓ Balance bill protection through qualified RBP vendor
✓ Executive commitment to support employees through transition
Timeline for Implementation
- 3-6 months before renewal: Evaluate RBP feasibility and vendor selection
- 90 days before renewal: Finalize TPA and RBP vendor contracts
- 60 days before renewal: Begin employee education campaign
- 30 days before renewal: Distribute plan materials and ID cards
- Renewal date: Go live with ongoing support and monitoring
Ongoing Management Requirements
Successful RBP plans require:
- Regular employee communication and education reinforcement
- Monitoring of balance billing incidents and resolution rates
- Quarterly review of repricing results and savings analysis
- Annual evaluation of RBP vendor performance
- Continuous improvement based on claims experience
RBP Performance Metrics to Track
Employers should monitor these key indicators:
Financial Metrics
- Average repricing percentage – Actual payment as % of billed charges
- Total plan savings – Comparison to projected PPO costs
- Per-employee-per-month (PEPM) costs – Trending over time
- Stop-loss savings – Premium reductions due to lower aggregate factors
Operational Metrics
- Balance bill rate – Percentage of RBP claims generating balance bills
- Balance bill resolution rate – Percentage successfully negotiated to $0 patient responsibility
- Average resolution time – Days from balance bill receipt to resolution
- Member satisfaction – Survey results on RBP experience
How Memberly Helps Employers Implement RBP
Memberly partners with employers to design RBP-based self-funded health plans that deliver lasting savings and member satisfaction.
Our RBP Implementation Process
TPA Selection & Fit Analysis – We identify TPAs best suited for RBP plans based on claims experience, repricing capabilities, and funding structure.
RBP Vendor Evaluation – We help employers select the right RBP partner based on repricing methodology, balance bill protection, and service capabilities.
Stop-Loss Negotiation – Memberly secures lower stop-loss rates that reflect true RBP savings, not outdated PPO pricing models.
Employee Education & Training – We guide HR teams and employees to understand how the plan works, how to access care, and what to expect, reducing confusion and building confidence.
Plan Design Optimization – We structure RBP implementation (hybrid vs. full) based on employee demographics, claims patterns, and risk tolerance.
Ongoing Plan Oversight – After launch, Memberly tracks performance, repricing results, and member satisfaction — continuously improving plan outcomes.
Why Work With Memberly
- Independent advisory model – We represent employer interests, not carrier or vendor interests
- RBP expertise – Extensive experience implementing and managing RBP plans across industries
- Vendor relationships – Established partnerships with leading RBP vendors and TPAs
- Data-driven approach – We use claims analytics to project savings and measure results
- Communication support – We provide employee education materials and messaging guidance
Is RBP Right for Your Organization?
RBP works best for employers who:
✓ Currently operate or are considering self-funded or level-funded plans
✓ Experience high hospital claim costs (even one large claim annually can justify RBP)
✓ Value transparency and control over healthcare spending
✓ Are willing to invest in employee education and communication
✓ Have leadership support for innovative cost containment strategies
Next Steps
If your organization is ready to explore Reference-Based Pricing:
- Review your current claims data – Identify hospital and facility claim costs
- Assess employee readiness – Consider communication needs and change management
- Contact Memberly – Schedule a consultation to evaluate RBP feasibility
- Model potential savings – We’ll project RBP savings based on your claims experience
- Develop implementation plan – Create timeline, vendor selection, and communication strategy
Ready to take control of healthcare costs with Reference-Based Pricing?
📍 Learn more: memberlybenefits.com/rbp-plans
📞 Contact Memberly
Schedule a consultation to see how RBP can transform your health plan strategy.
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 cost containment strategies. We partner with employers to reduce healthcare costs while maintaining or improving employee benefits.
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 Reference-Based Pricing or making changes to health plan design.
