Many employers use cost-shifting health strategies to mitigate health care costs to their employees. But how far will companies go? The more costs that are pushed off onto employees, the less benefit they receive from the company’s health care plan.

There is a better solution to mitigate costs that will benefit not only the employer but also the employees.

Reference-based pricing uses demographics and fair pricing methodology to pay claims to hospitals and other health care facilities. With this strategy, employers gain the power to utilize fair pricing practices.

This cost saving method provides several benefits. To start, most patients are blind to the costs of various health care services and procedures. And it is not their fault! Because of the lack of transparency in the health care system, it is nearly impossible for individuals to navigate the confusing landscape.

As out-of-pocket costs are on the rise, both employers and employees are worried about the lack of information in the health care system. There is a constant question of what costs of services they may have to pay for themselves. Rarely do individuals know the cost of services or alternatives available in advance.

Reference-based pricing is all about transparency. Services with large cost variations without much change in quality are the main focus. Employees can save themselves, and their employers, money by asking for all alternatives available and selecting the most appropriate option.

With a special focus on the cost of each medical service or procedure, reference-based pricing helps to manage claims throughout the year,  typically resulting in lowering cost renewals at the beginning of the next plan year.