The Affordable Care Act (ACA) has had a profound impact on small group health insurance. Rates have increased significantly as a result of the ACA. These rate increases have been particularly difficult for small groups.

This is where a level-funded health plan could be a good fit for your small business.

Preferred Provider Organizations (PPOs) date back to 1980 when the first PPO was organized to provide contracted rate medical care to a health plan. For providing “steerage” toward the medical providers in the PPO network, the providers granted discounted rates for their services to the health plan.

Over the years, PPOs have changed and morphed into multiple variations, but the end result is the same – health plan members are steered toward PPO providers for their medical care and given favorable discounted rates.

The advantage of this type of arrangement is very obvious – it’s price.

In recent years, rising health care costs have forced small business employers to explore more cost-saving options like reference-based pricing (RBP) when it comes to offering group health benefits.

In BenefitsPro's recent article, How reference-based pricing is recalibrating buying benefits, they point out that "as health care becomes an ever-increasing portion of expenses, employers are no longer willing to rely on the hollow assurances of Preferred Provider Organization (PPO) contracts".

According to David Massey, Senior Vice President at Brown & Brown, “employers benefit options are limited; they can’t continue to absorb the increasing cost of benefits, passing costs on to their employees has run its course, paring down benefits is actively being considered or do they stop offering health benefits all together?”

Reference-based pricing (RBP), once considered a non-traditional option, is now gaining attention for small to mid-sized businesses.

It's a health plan alternative worth learning more about to make sure you’re spending your health care dollars wisely.

Read the full BenefitsPro article here.

As you start researching your company’s health benefit plan options, don’t discount plans that feature Reference-Based Pricing (RBP).
 
Rather than using a Preferred Provider Organization (PPO) network for claims discounts and pricing, RBP plans use some other method on which to base medical claim reimbursements to providers.
 
Many plans, like Allied National’s Freedom Plans, use Medicare for its reference base. We reimburse physicians 125% of Medicare allowable and facilities at 150% of Medicare. This reimbursement level is often lower than many PPO networks but is still well above Medicare levels accepted by most providers. These savings immediately translate to lower premiums and lower out of pocket costs when you need care.