RBP (Reference-Based Pricing)

Reference-based pricing is a self-funded plan design that pays providers a defined multiple of Medicare rates instead of using a rented PPO network's negotiated rates. A common structure pays 140 to 180 percent of Medicare for facilities and 120 to 150 percent for professional services. There's no traditional network — the member can go to any provider — and the plan pays the reference amount regardless.

The savings can be substantial. Rented PPO networks often pay 250 to 400 percent of Medicare for hospital services; RBP at 150 percent can cut facility spend by 30 to 50 percent. The tradeoff is provider friction. Facilities that don't accept the reference amount can balance bill, and the plan usually funds a balance-bill defense fund and legal support to resolve disputes. In practice, most non-hospital claims resolve without issue because 150 percent of Medicare is fair pricing; hospital claims are where the fights happen. RBP works best in markets with genuine competition among facilities and worst in markets dominated by a single hospital system with monopoly leverage.

The takeaway: RBP can save a self-funded employer real money, but only with strong member advocacy, legal support, and communication. It's not a plug-and-play swap for a PPO — it's a different operating model.