April 22, 2026

A Guide for Employers Exploring Alternative Health Plan Strategies

As health care costs continue to rise, many employers are evaluating alternative health plan strategies to gain more control over spending.

One model gaining attention is reference-based pricing (RBP).

For some organizations, it offers a path to improved health care cost control. It also may raise important questions about implementation and employee experience.

What Is Reference-Based Pricing in Health Plans?

Reference-based pricing is a reimbursement strategy used in many self-funded health plans.

A traditional health insurance plan relies on negotiated rates within a network of providers. RBP uses a different pricing model, that sets a standard price for medical services, usually based on a percentage of Medicare rates. It sets a standard price for medical services, which serves as a reference point for reimbursement. For example, a plan might set the reference price at 150% of the Medicare rate for a particular service.

Providers are reimbursed according to that benchmark, rather than negotiated network pricing. The goal is to bring greater transparency and consistency to health care costs.

Why Employers Are Considering RBP Health Plans

The appeal of RBP health plans centers on cost control and transparency. Compared to traditional models, reference-based pricing can:

• Establish consistent reimbursement levels
• Reduce reliance on network contracts
• Potentially lower overall claim costs

For employers seeking more control over their health benefits strategy, this can be a compelling option.

How Reference-Based Pricing Fits into a Broader Benefits Strategy

RBP is one of several alternative health plan strategies available to employers. It can be most effective when combined with:

• Employee education initiatives - RBP helps employees become more informed health care consumers. By understanding the costs of services, employees can make more thoughtful and cost-effective health care choices. Further, savings achieved through RBP can be passed on to employees, resulting in lower premiums and reduced out-of-pocket expenses. This not only enhances employee satisfaction but also promotes better utilization of health care resources.
• Clinical management programs - You might consider integrating RBP with medical management programs, available through your third-party administrator (TPA) or other vendors, to optimize care and effectively manage chronic conditions. This integration helps deliver more comprehensive and coordinated care.
• Ongoing data analysis - RBP plans generate valuable data that can be analyzed to identify trends, monitor plan performance, and make data-driven decisions.

A thoughtful, integrated approach is key.

Key Considerations Before Implementing Reference-Based Pricing

While RBP offers advantages, it requires careful evaluation in several areas.

Without traditional networks, employees may face greater responsibility in provider selection and potential balance billing scenarios, so clear communication is essential. At a high level, balance billing occurs when a provider bills the patient for the difference between what they charge and what the health plan pays.

Balance billing can be actively managed with proper advocacy and support, including vendors that work directly with providers to negotiate or settle balance bills, often reducing or eliminating what the member owes. Some plans also implement member protection strategies to ensure members aren’t held responsible for balance bills. Regardless, it’s key to educate members on what to expect if they receive a balance bill.

Reference-based pricing works best for employers who are open to change, prioritize employee education and take an active role in health plan management

Is Reference-Based Pricing Right for Your Organization?

There is no one-size-fits-all answer. For some employers, RBP offers meaningful savings and transparency. Evaluating your workforce, risk tolerance, and long-term strategy is essential.

Rising health care costs are driving employers to explore new approaches. Reference-based pricing is one option, but success depends on informed decision-making and thoughtful implementation.

Learn more about RBP and the opportunity it offers for greater cost management.