The RBP Buying Conversation: It’s Not Apples-to-Apples
When I worked as a broker, I always believed that modest and selective diversification of carrier partners was important. For each line of benefits coverage I recommended or placed, I would have two or three options, but I didn’t do business with everybody. From my perspective, being both knowledgeable and discerning were important parts of my consultative relationship with my clients.
I would have a few good voluntary carrier partners, major medical fully insured carriers, stop-loss partners, level-funded products, TPAs, etc. This helped me compare options — often apples-to-apples — to my clients and make recommendations. The broker/consultant community has historically trained buyers to compare products in this way. In fact, 20 years ago, most of the profession involved getting quotes from the market, comparing them on a spreadsheet and negotiating ongoing contracts with carriers. Understanding complex and new-fangled solutions, much less how to implement them, wasn’t popular practice back then.
We learned from our predecessors in the benefits brokers arena that the buying process should always entail policy costs and terms to one another. As an unfortunate aside, some of us were meticulously trained on how to persuade buyer decision-making based on a combination of overrides, volume accommodations and other forms of personal gain — but I digress.
Reference-based pricing, still in rapid development and highly specialized, isn’t as simple as comparing quotes on a spreadsheet. With RBP, there is just no such thing as an “apples-to-apples” comparison. Now that I’m on the “DOC side,” working daily in reference-based pricing, I don’t believe it’s necessary to diversify your RBP business among multiple players in the space, like you may with other types of programs you place for your clients. There are way too many moving parts, in a part of the benefits industry that is under constant evolution and change. In fact, new players enter the space regularly, unaware of the massive amount of complexities that exist beyond repricing a claim or getting a direct contract
Let’s take a step back for some historical context. Medical benefits for American employees initiated in the late 1890s, when blue collar companies in Washington started offering the first iteration of DPC in the form of direct access to physicians. In the early 1940s, the Stabilization Act was responsible for employers to start offering healthcare as a major benefit.
When we realize employee healthcare benefits as being somewhere between 80 and 120 years old, we should think of reference-based pricing as a teenager. It’s gangly, growing out of it’s expensive blue jeans in a matter of months, eating everything in sight or barely anything at all.
It’s moody, temperamental and spends way too many hours a day with headphones in — drowning itself in self-deprecation while quietly, optimistically hoping the rest of society will find a place for it. The sullen teenager. We, as the consultant community, have a responsibility to keep a close eye on this teenager.
That’s why I believe that being a legitimate consultant in the RBP space requires us to stay closely attuned to the changes, adjustments and adaptations. New players enter the space regularly, unaware of the sheer number of obstacles to success in implementing an RBP strategy. Some who have been here for a while start to morph and change — sometimes to mimic a competitor, at times to change hands in ownership, occasionally with the intent to squeeze more revenue out of the operation.
All this to say, when evaluating an RBP solution for your clients, do yourself and them a favor and recognize from the start that it may be darn near impossible to compare apples to oranges outside of they’re both fruit, they’re both round and they’re both good for you. Instead of broadly lumping all the fruit together, do your research. Ask questions. Find solutions you believe are consistently working toward the successful and sustainable implementation of a program that protects the member experience as much as plan assets. No vendor should worry about you wanting to learn more or work with a competitor. In fact, we prefer brokers who have tried other solutions so they can appreciate what we do. Ultimately, it’s a benefit advisor’s job to help lead their client to an informed decision. Too often a consultant will overwhelm their client with myriad factors they don’t have the time to understand. Analysis paralysis, in that situation, may keep them from jumping to the DOC side when they have long needed to make the leap.