Searching for a solution that would offset fast-rising healthcare costs and provide more savings than a traditional PPO discount, Custom Design Benefits introduced a reference-based pricing (RBP) program for its self-funded plans that is returning great results. When compared to traditional PPO plans, the third party administrator (TPA) reports fixed cost savings of 15-20%, and 20-30% savings for the cost of actual health claims. The copay-only plan design results in fair, transparent pricing for members, which can encourage participation. In one employer’s case, introducing the RBP option increased employee participation from 30% to 80%, helping them avoid ACA penalties. Read more about why RBP and self-funding work so well together in the article below.

For more information or to contact Custom Design Benefits, visit or call (800) 598-2929 or 513-598-2929.


How Self-Funded Employers Are Saving Up to 30% with Reference-Based Pricing

Combatting the Constant Climb of Healthcare Prices
As they try to endure the non-stop increases related to health plan costs, employers often contemplate different plan designs and what will produce the most savings. They consider PPOs as a factor and are hopeful that incorporating one with their plan will be a winning solution as claim charges will look better on paper once network discounts are applied.

What they soon realize, though, is that the root of the problem is this: care costs just keep going up at an unprecedented pace. In many cases, the PPO discounts aren’t enough to offset the extreme pricing inflation over time.

At Custom Design Benefits, we’re working with employers to find a practical solution to this. We’re seeing more and more of them take control of the issue by making the move to a reference-based pricing (RBP) program. They’re eager to learn how the concept works … why it’s so effective.

So what exactly is the thinking behind RBP?

Determining Fair Prices by Procedure
With our TrueCost RBP program and others like it, certain medical services are billed at a single, standard price based on negotiations between the TPA and hospitals/care facilities. Think everything from rotator cuff repair to hip arthroscopy.

These prices are determined after considering Medicare reimbursement rates and factoring the actual cost by procedure, as well as a sufficient profit rate for the provider. Like the name implies, RBP gives employers and employees a reference point for what a service will cost and eliminates the guessing game that has long been associated with what charges might actually appear when the health claim arrives.

RBP programs like ours are inspiring partnerships among multiple parties in the health care world (a good thing!) and creating some big-time savings in the process as they’re all about establishing fair prices for everyone. They are creating a level of consistency that hasn’t been seen before and preventing prices from fluctuating every time someone else receives the same service at the same facility.

Along with this clearer pricing, another advantage members are experiencing is the fact that plan design is usually much simpler under RBP. In our case, coinsurance and large deductibles have been eliminated and the RBP program follows a set copay structure depending on visit type. This encourages people to seek out primary care instead of going straight to the costlier urgent care alternative. Plus, since fees by service are negotiated with a network of hundreds of practitioners upfront, patients have avoided balance billing in nearly all cases.

RBP Participation on the Rise
At Custom Design Benefits, we’re seeing RBP participation skyrocket. The number of employers adopting the TrueCost program has increased by 750% since it was first introduced in 2012. Employees appreciate the value and transparency of the RBP program, too. In one example, a client had just 30% plan participation under a traditional PPO arrangement. After implementing the RBP program, participation jumped to 80%.

What about the numbers for cost containment? While most PPO plan costs are up an average of 7% since last year, our RBP program is seeing fixed costs that are an average of 15-20% lower. On top of that, actual claim costs are averaging 20-30% less.

Shining the Spotlight on Wellness, Too
With all the success RBP is having, we continue to explore ways to supplement these savings efforts. This includes the addition of Custom Wellness – a scalable program that focuses on improving employee health by incorporating things like on-site screenings and disease management. It integrates actual medical, prescription and screening data to further customize health coaching and make these efforts as effective as possible.

What we’re seeing with this emphasis on wellness is that the more we concentrate on factors that can influence the health of our workforce, the better chance our employees have in realizing successful medical outcomes.

For more information on Custom Design Benefits and how it has successfully implemented RBP and wellness programs, check out this article: