The cost of medical services is high and costs vary widely which is why most employers consider implementing a reference-based price model. This approach has proven effective in dealing with the high-cost variation of medical services and drugs. But before implementation, it is wise to understand what pharmaceutical reference based pricing entails.
Price referencing is applicable where the cost of similar diagnostics, procedures, and drugs vary widely. This emerging structure allows the insurer to set a limit on payment based on several factors. The insurer considers the minimum, median and other factors that determine prices in the sector or therapeutic class of drugs, procedure or diagnostic. For example, in cases where the product or service cost is below the referenced limit, a patient is required to settle a reasonable co-payment. For expensive services and products, the difference between the referenced price and cost of the preferred product is paid in full by the patients.
Reference-based pricing is not exceptional to challenges. In order to enjoy the many benefits this model offers, companies must spend a reasonable amount on customized support, ongoing education and communication. Employers need to educate their staff on how the process works and the importance of conducting their due diligence before selecting a service administrator.
Location is an aspect employer need to consider when implementing pharmaceutical price models. It is worth noting, this model does not work effectively in all areas. If the model fails to work in a specific location it causes headache to employees seeking cost-effective medical care. It is the role of employers to discuss limitations based on location to find effective solutions and enhance how the reference pricing works.
Plan ahead of time to come up with a realistic strategy. Consider the knowledge your employees have in terms of how the approach benefits them and how they will use it. Lack of understanding and the right strategies leads to increased balance-billed. To avoid such cases after settling claims, employers and providers establish a payment system and provide legal help to solve disputes, but the process itself is hectic and time-consuming.
It is normal to feel overwhelmed about this pricing model and the first thing that crosses the mind of employers is how the model will benefit them. Prior to implementing this model, employers need to consider how the model will be utilized. Keep in mind, price referencing is ideal for high-cost claims for inpatient and outpatient medical procedures. It is, therefore, important to research the market carefully to identify the right service providers.
Another factor to think of is a reimbursement method that suits your company. You can choose between defined contribution and defined contribution with negotiation. In defined contribution, you work hand in hand with an insurer to determine prices. Defined contribution with negotiation gives third-party administrators to define prices. However, they negotiate balance billed for prices considered too expensive until they come to an agreement with the provider.
Other factors employers need to consider include; pricing model and how stop-loss insurance impacts price referencing. To get the most out of this approach, weigh all the options at your disposal. You will also need to invest in continuous training and effective communication.
Price referencing is applicable where the cost of similar diagnostics, procedures, and drugs vary widely. This emerging structure allows the insurer to set a limit on payment based on several factors. The insurer considers the minimum, median and other factors that determine prices in the sector or therapeutic class of drugs, procedure or diagnostic. For example, in cases where the product or service cost is below the referenced limit, a patient is required to settle a reasonable co-payment. For expensive services and products, the difference between the referenced price and cost of the preferred product is paid in full by the patients.
Reference-based pricing is not exceptional to challenges. In order to enjoy the many benefits this model offers, companies must spend a reasonable amount on customized support, ongoing education and communication. Employers need to educate their staff on how the process works and the importance of conducting their due diligence before selecting a service administrator.
Location is an aspect employer need to consider when implementing pharmaceutical price models. It is worth noting, this model does not work effectively in all areas. If the model fails to work in a specific location it causes headache to employees seeking cost-effective medical care. It is the role of employers to discuss limitations based on location to find effective solutions and enhance how the reference pricing works.
Plan ahead of time to come up with a realistic strategy. Consider the knowledge your employees have in terms of how the approach benefits them and how they will use it. Lack of understanding and the right strategies leads to increased balance-billed. To avoid such cases after settling claims, employers and providers establish a payment system and provide legal help to solve disputes, but the process itself is hectic and time-consuming.
It is normal to feel overwhelmed about this pricing model and the first thing that crosses the mind of employers is how the model will benefit them. Prior to implementing this model, employers need to consider how the model will be utilized. Keep in mind, price referencing is ideal for high-cost claims for inpatient and outpatient medical procedures. It is, therefore, important to research the market carefully to identify the right service providers.
Another factor to think of is a reimbursement method that suits your company. You can choose between defined contribution and defined contribution with negotiation. In defined contribution, you work hand in hand with an insurer to determine prices. Defined contribution with negotiation gives third-party administrators to define prices. However, they negotiate balance billed for prices considered too expensive until they come to an agreement with the provider.
Other factors employers need to consider include; pricing model and how stop-loss insurance impacts price referencing. To get the most out of this approach, weigh all the options at your disposal. You will also need to invest in continuous training and effective communication.
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