Tag: healthcare

What Is Reference Based Pricing?

As the cost of healthcare continues to rise, employers search for new ways to reduce those costs while maintaining the quality of care they want for their employees.

One approach that’s not so new to the scene but gaining in popularity as a cost containment strategy is Reference-Based Pricing (RBP).

RBP seeks to provide the true cost of care administered by a healthcare provider or facility by replacing the antiquated percent off billed charges that are based on an ambiguous chargemaster or fee schedules that beg the question of the source(s) for the procedural prices.

Reference-Based Pricing, also commonly referred to as Medicare Reference Based Pricing, Reference Based Reimbursement and Metric Based Reimbursement, is a strategic alternative to a traditional PPO network, replacing High Deductible Health Plans (HDHP).

RBP comes in many forms, basing the reimbursement amount on some type of Medicare-based rate, cost of charges or percent of savings, and it can be structured with or without a contract with a hospital and/or individual provider.

When an employer-sponsored, self-funded health plan transitions from its current PPO plan to an RBP plan, they will realize the benefits of lower provider reimbursements, increased plan savings, increased satisfaction, and possibly healthier employee populations with care being more affordable.

Before a self-funded group makes the move to this model, it’s important to understand how an RBP program works.          

There are several options for adopting an RBP plan, and depending on the partner you choose, such as Payer Compass, you will encounter different approaches to navigating this reimbursement strategy.

Through the support and guidance of a Third-Party Administrator or Benefit Advisor, a self-insured group can select their optimal RBP plan. Factors such as plan locale, RBP climate, and risk, among others, should be considered in determining the best RBP model:

  • Full PPO Replacement Model – RBP for all claims
  • OON Model – RBP for Out-of-Network claims only + PPO network for all other medical care
  • Hybrid Model – Narrow network or Direct Contracting + RBP
  • Carve-Out Model – RBP for specialty, carve-out services only

Approaches to RBP differ based on the parties involved – TPA, Benefit Advisor, Stop-Loss Carrier, RBP vendor, Employer – and their preferences.

Payer Compass’s turnkey RBP program, INNOVATE360, focuses on three pillars:

  1. Accurate Claim Pricing: Claim pricing encompasses not only pricing/repricing a healthcare claim, but also editing, gap-filling for claims that seem unlikely to price, and contract management.
  2. Proactive Patient Advocacy: Patient Advocacy includes education of the plan member and provider, gaining acceptance of the plan rate by the provider, balance billing communications and correspondence, and care coordination when needed.
  3. Effective Balance Billing Strategy: The balance billing strategy consists of upfront review and alignment of all plan docs, escalated balance billing support and the oversight of appeals determination and fiduciary responsibility.

Now that we’ve established what a comprehensive RBP program is, let’s see what it looks like from the eyes of the Plan Administrator and Plan Member.

For Example:

Let’s say Widgets, Inc. implements an RBP plan, replacing its HDHP. Widgets educates its plan members upfront to familiarize them with this new concept (your RBP partner should have education materials for use).

Jane Doe, who works at Widgets, needs a knee replacement. Jane asks her friends and family about reputable providers in the area and decides to contact Dr. Smith. Once Jane sets an appointment with Dr. Smith, she contacts her Patient Advocate to notify them of her scheduled visit.

If Dr. Smith’s office has questions about Jane’s RBP plan, the office can reach out to her Patient Advocate who can provide education and answers to Dr. Smith’s office to ensure they understand and accept the plan rate.

Jane successfully undergoes knee replacement surgery, and the claim is processed in line with her RBP plan, without any additional out-of-pocket expenses from Jane to Dr. Smith – this is the case for 99% of all scenarios experienced by Payer Compass clients.

Alternate Scenario Outcome:  

If the situation were different, and Dr. Smith sent Jane a bill for an amount over the agreed upon plan reimbursement rate, known as a balance bill, Jane would first notify her Plan Administrator.

The Plan Administrator would help Jane verify that the difference was a legitimate balance bill, and not an owed copay or deductible. If they found it to indeed be a balance bill, the Plan Admin would contact Jane’s Patient Advocate who would then go to work for her to address the outstanding balance with Dr. Smith.

In this case, additional balance billing strategy may be activated including appeals support and fiduciary responsibilities to resolve the scenario.

Reimbursement solutions like Reference-Based Pricing provide a valuable, sustainable method for employers to provide the benefits they want to give their employees, without crippling their budgets.

Some self-insured groups are hesitant to migrate to this type of model, mentioning fears of risk, upsetting plan members with a new concept, and lacking knowledge of industry partners. However, with education and building trusted partnerships, the outcome is bright.

Still have questions? Contact Payer Compass for the answers, and also check out our RBP Readiness Checklist

Recapitalization for Our Company and What it Means

Payer Compass is known as a leading provider of healthcare reimbursement technology and and cost containment solutions. Recently, our company received an investment from Spectrum Equity and Health Enterprise Partners through recapitalization.

This investment allows us to continue our rapid growth, while making substantial progress in extending our services to brokers, health plans, third-party administrators, and self-insured employers.

What drove us to recapitalize?

We took this route for several reasons. First, we felt the movement of the competitive landscape and wanted to secure our place as a continued leader.   We’re also set to enhance infrastructure, expand product offerings, and grow our footprint in current and new markets. Additionally, we’ve been in business nearly six years, it’s about time we grow up, at least a little, and build our leadership team, and this will allow us to do so.

When we first considered recapitalization, we had to stop and consider both the mid- and long-term. Recapitalization is beneficial for expansion, something we’ve wanted to do. As funding comes into the picture, it accelerates the company’s progress as a whole. Essentially, Payer Compass is using this opportunity to grow and further bridge the gap between payers and providers, in order to ultimately help more people in need of affordable, quality healthcare. These opportunities wouldn’t be possible without this new partnership.

We want to build a strong company

Our new partners are successful in helping companies like ours integrate the pieces needed to maintain a substantial business, increase value, and construct a solid infrastructure, with the right resources and market strategy.  

We want to fulfill our potential

Though Payer Compass is still in somewhat of a nascent stage, we’ve made a huge, positive impact in the healthcare industry. We are proud to have grown the company to serve over 125 customers, representing nearly 1,000 employer groups, and over 2 million covered people.  We have also grown as an organization from two to 70 team members in under six years. But we don’t want to stop there or simply maintain, we want the ability to scale the business and break barriers that were preventing us from entering specific markets and gaining more opportunities. Our partnership with Spectrum and HEP allows us to continue to invest both in our team and in our assets – new technologies, new companies.

Why did we choose these partners? What do they do?

We took our time and vetted candidates carefully, looking to partner with firms who feel as passionate about healthcare affordability as we do, share our vision for growth, and share the same ideals about corporate culture. In the end, it came down to a feeling – choosing Spectrum Equity and Health Enterprise Partners (HEP) just felt right. Spectrum is a growth equity that provides capital and strategic support. This firm builds great value for market-leading software, information services, and internet companies. HEP invests in private, mid-market companies in healthcare services and health care information technology. HEP strives to improve quality in patient experience, increase accessibility and reduce overall costs of healthcare. Both firms possess extensive experience in scaling leading healthcare technology companies.

In our case, Payer Compass possesses the services and noticeable scale in the cost containment landscape that interests Spectrum. With pricing solutions such as our core platform, VISIUM, which focuses on the complexities of Medicare, Medicaid and Commercial healthcare claims, we  can address the rising costs of healthcare faced by self-insured employer groups and health plans, as well as the fundamental need for greater healthcare transparency. With the support we are receiving from Spectrum and Health Enterprise Partners, we will be able to further impact cost containment innovation.

Recapitalization will not cause our company culture to change

We’ve tried to cultivate a productive, hospitable culture that keeps our team members engaged. And while our recapitalization efforts mean a seismic shift in our business, we didn’t want to disrupt the culture. Our team is like a family, and we respect every individual’s skills, intelligence and uniqueness. Which is why we’re making every effort to maintain the same work environment we’ve always enjoyed.

While still maintaining operational and cultural control of our business, our solutions will continue to be implemented across key markets, as indicated by the growth of government-sponsored healthcare and reference based pricing.

Overall, these partnerships have bolstered the presence of  Payer Compass and are taking us in the right direction, with new strategies and capital for growth.

Finally, we’re excited to welcome Jeff Haywood, Steve LeSieur, and Michael Radonich from Spectrum Equity, along with  David Tamburri from HEP, to the Payer Compass family’s Board of Directors.

If you would like more information about this healthcare initiative, please contact Ginger Barrientez, Director of Marketing at 469.215.2654 or email at

payer compass-spectrum-recapitalization
Spectrum Equity