Value based healthcare pricing is becoming a more prominent style of benefit plans. This is a style of plan where the price of care is negotiated during each procedure. The consumer and provider agree to a price for the procedure or visit before it is done, as opposed to accepting a price given from the provider. While market price and cost of performing the services do factor in, there is more room for consumer negotiation in this style of pricing, often allowing for cheaper services which is a benefit to the policyholder.
Why would a provider negotiate their prices you may ask?, well if this style of plan is implemented more widely, it creates a much more competitive market where prices will have to drop or at least stop increasing. It is still business for the provider even if they must charge less than they would want to. The dramatic increase in healthcare prices is partially due to increasing rates charged by providers. Value based pricing gives more leverage to the buyer of services. Traditionally, plans had not been set up this way and inflation in the economy, especially healthcare, have driven rates extremely high.
Giving power to negotiate to the consumer and insurer who represents them will help to keep money in people’s pockets. Not only does having prior negotiation help the price but can help avoid unnecessary procedures being done and conflict between insurers and policyholders over what will be covered. An example of this could be fee for service plans, where a physician is paid by each service provided to the policyholder. Sometimes you will see more procedures than necessary done to stimulate higher costs. No plan is perfect for every situation, but value based pricing proves to lower costs for policyholders and could help hedge against inflation rates in medical procedures.
Post By Xavier Bodnar
Hilb Group Employee Benefits Producer/Broker
xbodnar@hilbgroup.com
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