Some say insurers could use reference pricing to shut out sicker patients.

Some health insurers and plan administrators agree with patient groups: They say the government should develop consumer-protection rules for “reference pricing” — a hot health care cost-management tool.

Company representatives make that point in reference pricing comment letters sent to federal regulators. In May, the U.S. Department of Health and Human Services (HHS) joined with the Internal Revenue Service (IRS) and the Employee Benefits Security Administration (EBSA) to put out regulations letting employers use reference pricing in their health plans.

See also: Feds allow reference-based pricing

The regulators asked for comments on whether, and how, they should keep insurers and self-insured plan sponsors from abusing reference pricing. 

An insurer that uses reference pricing, which is also known as “reference-based pricing,” encourages or requires enrollees to use providers who accept a fixed payment for some or all services. A patient who uses a provider who charges more may have to pay some or all of the difference between the reference price and the actual price.

In some cases, an insurer may use reference pricing in place of a traditional managed care network. The insurer may pay the reference price to any medical provider who provides the service and let the patient cover the rest of the cost.

Justine Handelman writes in a letter for the Blue Cross and Blue Shield Association that some plans use reference pricing along with a provider network. In that case, Handelman says, the patient who sees a high-cost in-network provider pays the difference between the reference price and the usual in-network price.

Representatives for some insurers, insurance groups and employers asked regulators to go easy on plans that are experimenting with reference pricing.

Regulators already have many weapons they could use to deal with problems, Daniel Durham and Thomas Wilder write for America’s Health Insurance Plans.

Sterling Boon, an Austin, Texas, benefits broker who has reference-pricing-based coverage himself, says use of reference pricing is the only way to end the “Robin Hood mentality” that leads hospitals to use high fees from well-insured patients to pay for care for the uninsured.

But representatives from the Consortium for Citizens with Disabilities say plans could use reference pricing to discriminate against people with disabilities, by, for example, shutting out doctors who charge more but provide the kinds of specialized services that people with disabilities may need.

In a comment from Consumers Union, DeAnn Friedholm says regulators should set detailed requirements for reference-pricing programs. An insurer should show that the network of providers who take the reference price is adequate, not just that the size of the entire provider network is adequate, Friedholm says. She says a plan that users reference pricing and saves money ought to pass some of the savings on to the enrollees.

Gregory Jacob writes for Castlight — a company that sells tools health plan enrollees can use to check provider prices — that regulators should encourage the use of reference pricing by, for example, keeping much of the excess cost involved with using high-cost providers out of a patient’s out-of-pocket cost total. Letting a patient who sees a high-cost doctor reach a plan’s Patient Protection and Affordable Care Act (PPACA) out-of-pocket cost maximum limit too early would weaken the ability of a reference-pricing program to squeeze out excess costs, he says.

But Jacob says Castlight agrees that regulators could set reasonable limits on when a plan can apply reference pricing. Reference pricing should not apply in medical emergencies, Jacob says.

Anthony Mader, a vice president at WellPoint, says a plan should use reference pricing for common procedures with great variability in price, not for emergency services or in areas with few providers.

A plan has to have a good process for making exceptions for patients who need exceptions, Mader adds.

Dennis Casey of ACS Benefit Services Inc., a third-party administrator (TPA) in North Carolina, says enrollees in a reference-pricing program should have access to a strong patient advocacy program that can handle price negotiations with providers. A plan may also need to have lawyers who can protect the patients from aggressive provider billing and collection practices, Casey says.