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What is Reference-based Pricing in HealthShare?

Reference-based pricing (RBP) is a strategy used by HealthShare plans to contain healthcare costs while ensuring quality care for their members. RBP works by setting a pricing benchmark for certain medical services or procedures, typically based on Medicare rates or other established pricing standards. Here's how RBP saves members money on medical expenses:


What is HealthShare referenced based pricing
  1. Transparency and Cost Awareness: RBP promotes transparency by clearly defining the pricing for specific medical services or procedures. This transparency enables members to compare costs across different healthcare providers and make informed decisions based on value and affordability. With a clear understanding of the reference price, members can avoid unnecessary expenses and choose cost-effective options without compromising on quality.

  2. Negotiation and Competition: By establishing a reference price, RBP encourages competition among healthcare providers to offer services at or below the benchmark. Providers have an incentive to compete based on price and quality, driving down costs and offering members more affordable options. Additionally, RBP allows employers and health plans to negotiate directly with providers, leveraging their purchasing power to secure favorable pricing agreements and pass on the savings to members.

  3. Incentivizing Value-Based Care: RBP incentivizes providers to deliver high-quality, cost-effective care by aligning reimbursement with the reference price. Providers who offer efficient and effective care within the reference price are rewarded, while those who exceed the benchmark may face financial penalties or negotiation pressure. This encourages providers to focus on value-based care delivery, emphasizing outcomes and patient satisfaction while minimizing unnecessary tests, treatments, or procedures that drive up costs.

  4. Empowering Consumer Choice: RBP empowers members to take control of their healthcare decisions and seek out providers who offer the best value for their money. Members have the flexibility to choose healthcare providers based on cost, quality, convenience, and personal preferences, rather than being limited by narrow networks or restrictive reimbursement policies. This freedom of choice encourages members to actively engage in healthcare decision-making, leading to better outcomes and lower costs over time.

  5. Reducing Overutilization and Price Variability: RBP addresses the issue of overutilization and price variability by establishing a standard reference price for specific medical services or procedures. This helps mitigate the tendency for providers to order unnecessary tests or procedures, knowing that they will be reimbursed at a predetermined rate. By aligning reimbursement with the actual cost of care, RBP encourages prudent resource utilization and discourages unnecessary spending, ultimately resulting in cost savings for members and employers alike.


In summary, reference-based pricing offers a proactive approach to managing healthcare costs while promoting transparency, competition, and value-based care. By empowering members with cost information and incentivizing providers to deliver high-quality, cost-effective care, RBP helps save members money on medical expenses while ensuring access to quality healthcare services.


To learn more about better healthcare with HealthShare, join us at WhatIsHealthShare.com.

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