Although Preferred Provider Organizations (PPOs) have been a popular group health benefit plan feature since their introduction in the 1980s, their shine is starting to fade.
PPOs are supposed to be a great way to lower health care costs. Providers agree to a discounted rate in exchange for insurers steering members to their services. The problem is that retail prices charged by hospitals and physicians continue to rise steeply.
PPO discounts for the same service can vary wildly between networks and even between providers in the same network. The lack of transparency means insureds have no idea what services will cost.
PPOs often have very restrictive provider panels and members are penalized for seeing out-of-network providers, even at in-network facilities (often without realizing it).
Insureds and agents are looking for a better option for their clients. Reference-Based Pricing (RBP) plans are a great alternative because they solve the challenges and restrictions of PPOs.
Reference-Based Pricing removes the ambiguity and uncertainty around health care cost. That’s done by using a pricing model based on an established benchmark instead of on provider retail fees or provider-carrier negotiated fees. RBP plans often set their reference point at the Medicare allowable rate – a rate accepted by most providers across the country. Plus, most plans use a “Medicare Plus” reimbursement where the payment is ABOVE the Medicare allowed rate.
An employer can see significant savings with a RBP plan over a PPO plan while the provider still receives more than they would normally receive from Medicare.
There are a lot of ways to tackle the challenges of today’s health care system — the rising costs, the price variability, the lack of transparency. With more than 50 years’ experience in small group benefits, Allied is proud to offer innovative benefits solutions to ensure our members are paying a fair, reasonable price for quality care.
Reference-Based Pricing plans, like our Freedom Plans, are making an impact where it matters most: in the lives of our members.
Are you ready to move beyond the traditional PPO?
Founded in 1970, Allied is one of the nation's oldest and most experienced third-party administrators. Allied National is a 90 Degree Benefits Company, a subsidiary of Blue Cross Blue Shield of Alabama. As the small group benefit experts, Allied works with small business employers to provide unique and affordable group health benefits.
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Allied National is a 90 Degree Benefits Company, a subsidiary of Blue Cross Blue Shield of Alabama. Founded in 1970, Allied National is one of the nation's oldest and most experienced third-party administrators. We're the small group benefit experts working to provide unique and affordable group health benefits to small business employers.