Exciting announcement: Flume Health Raises $30M Series A To Redefine Health Plan Administration Learn more

Five myths about RBP (and how to respond)


You know that Reference Based Pricing is a great cost containment tool- if done right, we’ve seen huge savings. But there’s a lot of misconceptions out there about RBP, and that can make trying to have a real conversation very frustrating.


To help you stay on course, here are five common myths about RBP, and the facts and figures you need to disarm them.

Myth 1:

RBP has more balance billing than fully insured


Fact: Fully insured plans get just as much balance billing as Referenced Based Pricing. 16% of in-patient visits in 2018 got a balance bill, and 18% for ER. If Balance Billing is the problem, the major carrier networks don't offer as much coverage as people think. 


BB rates
One reason balance billing might be so high here is that 70% of
people surveyed did not know they were out of network...

Myth 2:

Balance bills are purely the patient’s responsibility


Fact: Maybe in the early days of RBP. But today, co-fiduciary partners typically indemnify patients from any harm, and provide services such as litigation support along with traditional bill auditing and pre-certification. Building the right “health stack” of re-pricer, medical manager, and member concierge gives all parties peace-of-mind. This is important because 8/10 medical bills contain at least one error, even with PPO plans where you can't audit them. 


Myth 3:

RBP is a fad, not a long-term solution


Fact: "High performance networks” are growing in popularity year-over-year. Key to any successful RBP launch is getting the C-suite, HR, and their advisor on the same page and committed to the change. Up front and continuous member education makes all the difference.


Usage Graph
From 2015 to 2016 the number of companies running them
grew by 50%. The number of companies that said they were considering
these plans grew by 16%

Myth 4:

Carriers have better negotiated rates


Fact: Hospital prices are made up, and so are BUCAH discounts. Don’t be fooled: 50% off of a 1,000% markup is still 450% overpriced. RBP prices are at least related to the cost of a procedure, rather than arbitrary numbers that hospitals and big insurers agree on.


Ratios graph
There is a huge range in the price that hospitals charge
related to Medicare- sometimes as much as 1600%!

Myth 5:

Only second rate doctors negotiate


Fact: Hospital quality and hospital billing practices aren’t related. According to data shared by 6Degrees Health, hospital quality shows little relationship to the billed price of various surgical procedures.


In this instance the most expensive - Temple University Hospital- is middle
quality, while the highest quality, UT Southwestern University Hospital,
is among the lowest bill rates


Thank you to the team at 6Degrees Health for helping us write this article. 6 Degrees Health is built to bring equity and fairness back into the healthcare reimbursement equation. Their solutions include everything from provider market analyses, reasonable value claim reports, claim negotiations, and referenced based repricing.