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ACS CostPlus

The Growing Interest in Reference Based Pricing Plans

Creativity is the name of the game in 2014 as Health Care Plan sponsors attempt to halt continually rising health care costs. Past initiatives focusing on increasing contributions, decreasing benefits or switching to a different PPO Network for "better discounts" have had little effect. Offering any Plan in the Health Care Reform climate is a challenge! An increasing level of interest is emerging for a Plan that puts employees and the Plan Sponsor in charge of what they'll pay and how much they will pay for services.

Introducing ACS CostPlus - a plan design built utilizing Reference Based Pricing. The largest purchaser of health care in the United States is the Federal Government. They have gathered data for decades on the costs of services and base their Medicare payments on these findings. While these government reimbursements might not be as profitable to providers, it is a baseline that establishes what the cost should be.

ACS CostPlus uses Medicare allowable amounts as a basis of cost and adds a multiple to establish a reasonable level of reimbursement for all hospitals and other providers. In fact, 20% or more of Primary Care Physicians already bill at or below this reasonable level. This method of establishing reimbursement levels results in a substantial cost savings to employers. To illustrate how this works, check out this example of pricing for knee surgery:

MS-DRG = 470:
Major joint replacement or reattachment of lower extremity w/o MC

  • Retail billed charges: $43,150
  • Medicare reimbursement: $13,398
  • ACS CostPlus reimbursement: $18,758
  • Traditional PPO payment of 40% discount: $25,890

In this instance, ACS CostPlus provides a savings of over $7,132, on this one claim alone. There is a substantial savings on every claim paid.

How does it work?

Members have no Network list of doctors and hospitals. Full freedom of choice in providers is theirs. Hospitals and doctors do not contract with the Plan.

Clients who have implemented ACS CostPlus have had major successes as well as some challenges. Success comes immediately with substantial cost savings with every claim.

Challenges arise when an employee seeks services from a provider who is not willing to accept the reimbursement and expects to receive the amount billed. To assist in such instances, ACS makes available a Patient Advocate to handle the occasional balance bill.

In addition to saving money for employers, reference based pricing plans deliver an important message to the health care market. It drives home the point to hospitals and providers that it is reasonable for them to make a profit, but puts a cap on what they will receive from the health plan for specific services.

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