Steve Purkapile of HUB International discusses reference-based pricing and what employers should consider before renewal.
Quick answer: Purkapile believes employers should examine what healthcare services actually cost—not merely accept another difficult renewal. Reference-based pricing (RBP) can help using defined benchmarks to evaluate healthcare payments with businesses needing to focus on plan design, preparation and member support to achieve results.
A critical thought … Employers scrutinize major purchases. Why should healthcare be different?
That question drives the perspective of Steve Purkapile, Regional Director of Financial Consulting for the Western Region at HUB International. With decades of underwriting and benefits experience, he believes employers should examine what healthcare services actually cost—not merely accept another difficult renewal.
In Imagine360’s Changemakers interview, Purkapile explains why the conversation about healthcare costs should start before the pressure of renewal season.
Three questions Steve says employers should task before their next health plan renewal
The questions are simple. The decisions behind them are not. Evaluating reference-based pricing requires attention to financial assumptions, organizational readiness and the member experience.
A result that raises questions about the status quo
Purkapile describes a longtime client that transitioned from fully insured coverage to self-funding and eventually RBP. He estimates the employer saved at least $10 million over roughly a decade.
That is one employer’s experience, not a guaranteed result. What makes the story compelling is the preparation and commitment behind the numbers—details Purkapile shares in the full interview.
What is reference-based pricing?
Reference-based Pricing, also called metric-based pricing or reference pricing, is a cost-containment strategy that looks at costs in a different way by using public data as a pricing benchmark.
How does RBP differ from traditional health insurance?
Traditional carrier arrangements typically rely on negotiated network rates. RBP uses a defined benchmark; administration and provider interactions can also differ.
Rather than relying on the hospital or facility’s chargemaster price (which is often over-inflated) to price a claim, RBP uses a more data-driven approach to establish a fair cost of care. To determine this more reasonable cost, most RBP providers use a benchmark like Medicare, usual and customary costs, or the actual cost reported by the facility to determine the reimbursement. With the established benchmark in place, the RBP provider reprices the claim, adding a fair profit on top of the reference price. This becomes the new amount paid to the healthcare provider.
How long does it take to evaluate an alternative health plan?
Purkapile says planning and preparing for a significantly different model can take approximately 18 months. Actual timelines vary.
Does reference-based pricing guarantee savings?
No. Savings depend on claims experience, plan design, implementation and other factors. Employers should evaluate both financial and employee-service implications.
Healthcare costs may be unavoidable. Accepting an unclear pricing strategy does not have to be.
What does it take to challenge the traditional healthcare model?
Get Steve Purkapile’s complete perspective on healthcare pricing, employer readiness, employee advocacy and what he has learned from decades of advising employers.
