Reference-based pricing is an excellent and innovative cost-containment strategy that different health insurance plans use to control overall healthcare expenses. While using the reference based pricing model, insurers always try to set an ideal price for a particular service. This approach is even applied to some high-cost services with significant price variability.
Key features of Reference-Based Pricing
The insurer determines a benchmark or reference price for specific medical services. This price is often based on Medicare, average market rates, or a combination of data sources.
Patients and providers are informed about the reference price. This transparency allows patients to shop for providers offering services at or below the reference price.
When a patient receives care, the provider bills the insurer. If the charge is above the actual reference price, the insurer pays only up to the reference price. The patient is also responsible for paying any amount over the reference price.
Role of PC Pricer in Reference-Based Pricing
PC Pricer is an excellent software tool developed by different Centers for Medicare & Medicaid Services (CMS). It estimates the Medicare payments for various healthcare services based on the Medicare payment rules. The tool helps hospitals, healthcare providers, and insurers to:
PC Pricer even calculates the right amount that Medicare will pay for specified services under different payment systems, such as the Inpatient Prospective Payment System and even the Outpatient Prospective Payment System.
Providers and insurers use the PC Pricer to verify the accuracy of claims and reimbursements, ensuring the Medicare rules.
It provides accurate payment estimates, which can help in ideal budgeting and financial planning for different healthcare facilities.
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