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Should employers proceed with reference-based pricing?

Kayla Webster

WASHINGTON — A big problem in the healthcare industry is that most employees aren’t aware of the prices of certain medical services until they receive the bill.

But reference-based pricing can take aim at that problem head on — if done right, benefits experts said this week during the World Health Care Congress.

“There’s no cost transparency in our current healthcare system,” said Marty Joseph, president of HealthComp Holdings, a Fresno, California-based healthcare administration company. “Reference-based pricing is the solution because it uses Medicare as a basepoint, rather than a PPO discount.”

Some employers have been exploring the model as a way to combat rising healthcare costs while also increasing cost transparency. The method typically does not involve a traditional insurance carrier or provider network negotiating covered services for the plan. Instead, employers set a fixed limit on the amount a plan will pay for certain health services. This can help plan sponsors cut costs by capping what the plan covers for some medical procedures where fees can vary widely.

See also: The case for self-funded health benefit plans and reference-based pricing

Joseph said for-profit hospitals charge 700% more than Medicare prices, while non-profit hospitals charge 550% more. Traditional PPO plans offering a 50% discount may end up paying 300% more than the Medicare price. By contrast, RBP pays Medicare prices, plus an extra percentage, for medical services. Joseph estimates RBP saves companies 20%-30% more than PPOs.

Ryan Corwood, an operation department practitioner prepares a drip infusion in an operating theatre at the BMI Weymouth hospital in London, U.K., on Thursday, Sept. 2, 2010. BMI Healthcare Ltd opened the flagship hospital in August this year. Photographer: Chris Ratcliffe/Bloomberg *** Local Caption *** Ryan Corwood

“We’re still going to pay the provider a reasonable amount,” said Joseph, who works with brokers to help employers implement and manage this healthcare model, which is a variation of self-insured coverage. “And unlike the traditional PPO arrangement, there is no network of providers — [employees] can go anywhere they want for care.”


Matthew Lund, CEO and president of Fortune Management, a Seattle-based insurance company, said during the conference that it’s rare for medical providers to turn away RBP plans — but it can happen.

A few years ago, a Reno-based employer that adopted an RBP plan from Lund’s company called him to complain that one of the largest medical providers in the city refused to accept the RBP plan, he said. Lund’s company tried to work with the provider to find a solution, but after looking at their costs and treatment ratings, decided it was actually better to avoid this provider.

“We showed [the employer] that this large provider group had the highest costs in the area and the worst outcomes — other smaller providers in area had better prices and outcomes,” Lund said. “It was an opportunity to educate our clients that a bigger name doesn’t mean it’s the best choice.”

Although Joseph claimed employers reap savings, and workers avoid high-deductibles, through RBPs, the plan does have drawbacks for some employers. Chief among them, it requires constant vigilance in order to work efficiently. Sometimes after using medical services, employees on RBP plans receive bills for out-of-pocket expenses.

Joseph says these notices are mistakes by the medical provider; employees shouldn’t have any unbalanced bills on RBP plans. But if an employee ignores these erroneous notices, the medical provider could send them to a collection agency. But all it takes to avoid this situation is a phone call with the RBP provider, Joseph said.

“Collectors will call, it happens. But it’s not a reason to not consider an RBP,” Joseph said.

For this reason, employers who use an RBP model must be willing to provide a substantial amount of ongoing employee education and personal support.

“Lack of communication is the most common reason for RBP failure. Employees have to be educated to make a phone call when they need to, and we’ll take care of it.”

Kayla Webster

Associate Editor, Employee Benefit News

Chad Harris

Chief Executive Officer


Chad Harris serves as the CEO of HealthComp and is a value-driven healthcare leader with over twenty years of experience running business process and information technology businesses as a senior executive. Chad has a reputation for creating and controlling rapid growth by focusing on the intersection of customers, market dynamics, and the new digital world.


Chad has held many senior executive positions and led global teams of more than 10,000 people across dozens of counties. Chad has grown both large and small businesses, from those with less than $100M of revenue to those producing multiple billions of revenue, focusing on delivery, customer satisfaction, and innovation to create market leadership.


Chad's philosophy is to inspire change by doing what comes naturally, putting the needs of others before his own, working incredibly hard, and focusing on "how" to accomplish things, never "if they can be accomplished."

Thomas Martel

EVP of Partnerships and Strategic Accounts


Tom serves as the EVP of Partnerships and Strategic Accounts at HealthComp. In this role, Tom focuses on strategic initiatives aimed at accelerating HealthComp’s growth nationwide. His passion lies in assessing market and enterprise structures and creating efficiencies that enable teams to deliver best-in-class performance.


Previously, Tom led Cigna’s largest employer segment, largest region which was comprised of several health plans including the two largest health plans. He worked closely with Market Presidents and their leadership teams to develop and execute local market strategy and deliver growth for the enterprise. Tom earned his degree from Saint Anselm College and holds certifications from The Wharton School and the Darden School of Business at the University of Virginia. In his spare time, he enjoys sailing and holds a Master Captain’s license with the U.S. Coast Guard. He is also active in community outreach programs including local food bank and shelter services.

Sanoj Balakrishnan

Chief Technology Officer


Sanoj Balakrishnan serves as the Chief Technology Officer at HealthComp. In this role, he oversees the company’s overall technology strategy and architecture, building secure and highly scalable distributed systems.


Most recently, Sanoj served as Head of Healthcare Digital Business and Technology at Cognizant, working with payers and providers in developing solutions that reduced healthcare costs and provided a best-in-class experience for members. Earlier in his career, he worked at technology organizations in a variety of software engineering and architecture roles. Sanoj earned his B.S. from University of Mumbai and Computer Systems Management from National Institute of Information Technology.

Justin Tran

Chief Growth Officer and EVP of Product Strategy


Justin serves as the Chief Growth Officer and EVP of Product Strategy at HealthComp. He has 8 years of experience in developing and delivering solutions that reduce health care costs, improve quality, and provide a best-in-class experience for members. Most recently, Justin was an Associate Partner and business unit leader at McKinsey & Company where he helped large carriers and healthcare technology companies build new clinical services and solutions for fraud, waste, and abuse. Justin earned his B.S. in Accounting and Data Informatics from Indiana University, Bloomington.

Tucker Stein

Chief Financial Officer


Tucker serves as the Chief Financial Officer of HealthComp. Tucker previously worked for The Boeing Company in a number of finance and strategy roles, most recently as a finance lead for the Transactions and New Business Development group. In this role, Tucker led investments and strategic partnerships for Boeing’s Space and Communications portfolio. Tucker earned his MBA at Stanford’s Graduate School of Business and his Bachelors of Science at the University of Redlands.

Tom Georgouses

General Counsel


Tom is involved in multiple areas of HealthComp including Operations, Compliance and Legal Affairs. Tom was admitted to the California Bar in 1990 and started his legal career with Stammer, McKnight, Barnum and Bailey, LLP. When he left the firm to join HealthComp in 2014, he was the Managing Partner (he had represented HealthComp since 2003). In private practice, Tom’s areas of focus included healthcare and transactional work. Tom holds a Bachelor of Science Degree in Business Administration-Finance from California State University Fresno and received his Juris Doctorate from San Joaquin College of Law.

Rishab Bansal

Chief Transformation & Operations Officer


Rishab serves as the Chief Transformation & Operating Officer at HealthComp. Rishab focuses on transforming and modernizing HealthComp’s operations to provide delightful and distinctive experiences to its members, providers, and clients. His agenda includes integrating all entities towards a One HealthComp vision, driving profitable growth, and delivering value and business outcomes.


In his former work over the last 2 decades, he has helped clients across industries to transform themselves by bringing industry-leading practices and digital and data-led disruption. As the trusted advisor to the C-suite, Rishab helped his clients leapfrog on their transformation journey to accelerate business outcomes and helped them unlock new opportunities to drive profitable growth, profitability, and enhanced experience for their employees and clients.

Elaine Davis

Chief Human Resources Officer


Elaine Davis is a seasoned executive with deep experience in human resources, mergers and acquisitions, divestitures and transformation in large and small companies. Elaine has over 25 years of experience in human resources, marketing and communications in a range of industries that include information technology/business process services, life sciences/medical devices and financial services. Elaine brings focused expertise in governance, leadership coaching, branding and messaging with a focus on supporting female and minority leaders and emerging leadership talent.

Judy Schott

Chief Operating Officer


Judy Schott serves as the Chief Operating Officer and is a customer-focused healthcare leader who transforms operations to simplify the experience and deliver excellence. With deep knowledge of third-party administration, claims, eligibility, customer service centers, and compliance, Judy’s focus will include integrating all entities of HealthComp while driving profitable growth.

Kim Randazzo

Chief Customer Officer


Kim Randazzo serves as the Chief Customer Officer. In this role, she oversees account management for all divisions and HealthComp clients. Kim brings a wealth of strategic experience in account management to the HealthComp executive team, along with a practical understanding of the insurance business and what it takes to be the nation’s leading TPA.

Prior to joining HealthComp, Kim oversaw sales, account management, wellness, marketing, and implementation teams for Gilsbar LLC’s self-funded, association and affinity clients, and worked as an underwriter with Ochsner Health Plan and as an account representative with USI Services, Inc. She has over 26 years of experience in the healthcare insurance industry. A graduate of the University of New Orleans, she received her Bachelor of Science in Management in 1997 and her Master of Business Administration in 2002.

John McGurk

Chief Information Officer


John is a global business, operational, and technical leader with more than 35 years of enterprise IT services experience. He has proven successes in IT strategy and transformations, coupled with successful operating results for Fortune 500 companies worldwide. John has worked for some of the largest IT services firms in the world and has delivered enterprise solutions to the healthcare market for many years. He is a creative problem solver with the ability to work in multiple disciplines and cultures with positive customer outcomes. John is responsible for IT services and Security at HealthComp, supporting all aspects of the business. A graduate of Louisiana State University, he received a BGS in 1992.