By: Ron E. Peck, Esq. and David Ostrowsky

Traditional health benefit plans and insurance carriers pay medical bills that generally fall into one of two buckets, based on the “network status” of the applicable healthcare services provider. If the benefit plan or carrier is utilizing a network (such as a PPO) and the applicable provider is a participating provider, then the provider is deemed to be “in-network.” When a provider is in- network, the plan or carrier will pay the provider’s billed charges minus a discount defined by the network agreements. If the provider is not participating in the network, they are deemed to be “out-of-network.” In instances where the provider is out-of-network, the plan or carrier will determine how much of the applicable medical bill is payable by the plan or carrier – utilizing factors that are outlined within the applicable plan document or policy. Usually, this “maximum payable amount” is less than the amount being billed by the out-of-network provider. Whereas network agreements prohibit in-network providers from “balance billing” patients the difference between their billed charges and the network discounted payment, there is no contractual obligation prohibiting out-of-network providers from balance billing patients the difference between their billed charges, and the maximum allowable amount payable by the plan or carrier to out-of-network providers. 

Many will argue that network discounts have little to no value, due to the fact that the discount is being applied to an extremely inflated price, resulting in a still excessive payable amount. For those who assign little to no value to network discounts, the knee jerk reaction may be to abandon networks altogether, and pay all providers an objectively fair amount, based upon the plan’s definition of maximum payable amounts and utilizing objective metrics to calculate said payable amounts.  On the surface, it may seem that this approach, commonly referred to as reference-based pricing (RBP), is a viable solution for plan fiduciaries trying to responsibly manage costs amid a marketplace rife with price variation. However, upon closer review, there are, in fact, multiple problems inherent in the RBP methodology: tremendous unanticipated out-of-pocket costs for patients when providers opt to balance bill for services exceeding the reference based price; a very limited number of providers willing to treat patients who participate in such plans due to many providers feeling disinclined to accept the reference price; price of services taking precedence over quality of services; and the undue administrative complexity of implementing and managing an RBP plan. Indeed, many benefit plans continue to utilize network plans, despite being contractually obligated to pay excessive prices, solely due to the protections networks afford against these issues.

Fueled by the belief that the American workforce deserves better, The Phia Group is championing an alternative to RBP: Care Empowered Pricing (CEP). CEP represents a new methodology providing first-class plan support, substantial savings, and advocacy for both members and employers, among other features. Not only does CEP feature an exhaustive review of regulations and balance bill resolution support handled by The Phia Group’s team of experts, a repository of compliant cost containment language, and cutting-edge Ignite Repricing technology software, but it also tailors the program to a group’s specific needs by customizing rates based on plan terms, direct contracts, and provider profiles.

In line with The Phia Group’s mission of empowering patients with access to high quality and justifiably priced care, CEP enables the TPA or health plan to assume ownership of the program. In contrast to a traditional RBP plan where the vendor manages the entire program in a black-box, and the TPA or health plan merely administers the claims, CEP is engineered in a collaborative manner that truly reflects a group’s brand, purpose, and market standing.

As its name suggests, Care Empowered Pricing sincerely embodies compassionate care for plan participants. Whereas RBP programs, with their shortcuts in compliance reviews, understaffed services, and obsolete provider data for quality metrics, often leave plan participants at risk of receiving poor care riddled with delays, CEP equips TPAs with technology-enabled provider selection and access support so that they can operate with the best interests of plan members in mind.

CEP isn’t just a new methodology for claims pricing. It is a complete solution meant to address access, pricing, and dispute resolution. With a quarter century of healthcare cost containment industry experience, The Phia Group has developed a revolutionary program in CEP that not only provides a bulwark against balance billing but also buttresses their entire ecosystem of cost containment services. Ultimately, it is the plan members – and their families – who are the real beneficiaries as they receive healthcare of the highest quality and at the lowest possible price point.