Reference-based pricing and the TPAs that offer it

Updated October 21, 2026

Reference-based pricing (RBP) is a way for a self-funded health plan to pay providers a set benchmark, often a multiple of Medicare rates, instead of rates negotiated through a PPO network. A TPA that offers it reprices each claim to the benchmark, pays the claim, and helps members resolve bills from providers who want more than the plan paid.

What is reference-based pricing in health insurance?

Reference-based pricing sets what the plan pays for a service by reference to an outside benchmark rather than the provider’s billed charge. It is used mainly by self-funded plans. In the vendor model that Catalyst for Payment Reform studied in 2021, claims were repriced at roughly 140% to 180% of Medicare and paid with or without a contract.

For comparison, a 2026 study in Health Affairs Scholar found that one reference pricing program paid hospitals an average of 122% of Medicare for inpatient care and 149% for outpatient care. At the same hospitals, prices in RAND’s commercial price data averaged 240% and 311% of Medicare. That program’s benchmark was not Medicare alone: it paid the greater of the hospital’s cost plus 12% or Medicare plus 20%.

The term covers several designs, and Catalyst for Payment Reform separates three:

Much of the academic research, such as a 2019 employer study in The American Journal of Managed Care, examines the first design. Montana’s state employee plan is a public example of the second: in 2016 it told hospitals it would pay no more than 230% of Medicare, and every hospital in the state eventually signed. When people say “RBP plan,” they usually mean the third.

How does reference-based pricing work through a TPA?

The TPA, sometimes working with a separate RBP vendor, reprices each claim, pays it and manages any dispute that follows. Catalyst for Payment Reform found that RBP vendors take over a subset of TPA functions:

• Repricing: applying the Medicare multiple to the codes on each claim.
• Claims editing: checking that claims are coded correctly and documented.
• Auditing: reviewing high-cost claims closely to avoid overpayment.

In that model the TPA still pays the claim, usually runs utilization review and case management, and handles other customer service. That is how RBP fits into managed care: the pricing changes, and the clinical programs stay. Ask each TPA which functions it performs itself and which a partner performs. The directory’s reference-based pricing filter shows TPAs that list RBP among their services.

Member advocacy and balance-billing disputes

A balance bill is a provider’s bill to the member for the difference between its charge and what the plan paid. Catalyst for Payment Reform groups the defenses into negotiation, education, navigation and advocacy. The most important education point is telling members not to pay a balance bill and to send it to the advocacy team. Advocacy can include negotiating with the provider, legal support, and steps to keep a disputed bill out of collections and off a member’s credit report.

How often balance bills happen varies by program. In the program in the 2026 Health Affairs Scholar study, about 2% of patients received a balance bill in 2025, down from 15% in 2014. Vendors interviewed by Catalyst for Payment Reform said fewer than 2% of their claims led to a balance bill, and closer to 10% for facility claims. These are self-reported figures, so ask each TPA for its own.

Direct contracts and hybrid models

Many RBP plans are not network-free. Catalyst for Payment Reform found that many RBP vendors hold direct contracts with some providers and informal agreements with others. A plan can also apply RBP only to out-of-network claims, only to facility claims or only to certain services, with a rented PPO network filling the gaps. Some plans let the vendor negotiate within a set corridor above the base multiple. Which design you choose affects how the No Surprises Act applies, as explained below.

What are the tradeoffs for the plan and for members?

The plan gains a lower price per service, and in exchange takes on more administration, more disputes and some access risk.

For the plan:

• Savings: Catalyst for Payment Reform put typical RBP savings at 20% to 30%. It warned that claims of 70% to 90% are likely measured against billed charges, not against the plan’s prior PPO rates.
• Effort: the same report says an RBP plan requires member education, monitoring of utilization, and close work with the TPA and vendor.
• Fiduciary questions: some RBP vendors act as ERISA co-fiduciaries. The report notes that this obliges the vendor to act in the plan’s interest, which may differ from one member’s interest in a quick settlement.

For members:

• Access: some providers turn away RBP patients. The report describes a hospital asking an RBP member for $12,000 up front, and notes that RBP may not be workable where one health system dominates the market.
• Out-of-pocket risk: in the 2019 employer study, a main reason employers gave for not adopting reference pricing was concern that employees could face catastrophic out-of-pocket costs.
• Navigation: members need to know which providers accept the plan before they get care, and what to do if a bill arrives.

What does the No Surprises Act cover for RBP plans?

The No Surprises Act, in effect since January 1, 2022, protects members of plans without a network from balance bills for emergency and air ambulance services, but its non-emergency protection applies only at participating facilities. The Departments of Labor, HHS and the Treasury addressed RBP plans in FAQs Part 55, issued August 19, 2022.

What it covers

• Emergency and air ambulance services: the balance billing ban applies whether or not the plan has a network (Q1). Unless a specified state law or All-Payer Model Agreement applies, the member’s cost sharing is based on the lesser of the billed charge or the qualifying payment amount (QPA). A plan with no network must calculate the QPA using an eligible database.
• The worked example: in the FAQ’s example, the plan’s reference amount was $800 for an emergency visit billed at $1,200. The member, who had met the deductible, could not be billed for the $400 difference.
• What the plan pays: the final payment is the amount the provider and plan agree on or, if they use the federal independent dispute resolution (IDR) process, the amount the IDR entity decides. So an RBP plan may have to pay a total amount different from its reference price (Q4).

What it does not cover

• Non-emergency care without a participating facility: the ban on balance billing for non-emergency care applies to out-of-network providers at a participating facility, meaning one with a direct or indirect contractual relationship with the plan. The Departments said these protections “would never be triggered” for a plan without a network of participating facilities (Q1).
• Ground ambulance: CMS says ground ambulance services are not covered by the law’s billing protections, though state law may set different rules.

Where hybrid designs change the answer

Contracts can create participating facilities. The July 2021 interim final rules say a single case agreement between a facility and a plan counts as a contractual relationship. The facility is then a participating facility for that patient’s care, so out-of-network clinicians who treat the patient there fall under the protections. A plan with direct facility contracts may have participating facilities in the same way. Ask your benefits counsel how the rules apply to your plan’s specific contracts.

Out-of-pocket maximums

FAQs Part 55 (Q5) restates earlier guidance: a self-insured plan using RBP may treat providers that accept the reference amount as its only in-network providers for the out-of-pocket maximum, as long as it uses a reasonable method to ensure adequate access to quality providers at that price. That approach is not considered reasonable for emergency services.

What should you ask a TPA that offers reference-based pricing?

Ask how the program handles the hard cases, not only the average claim. These add to the general questions in how to choose a TPA, and several follow the Catalyst for Payment Reform report.

1. What benchmark and multiple do you use for facility and professional claims, and can we set or change them?
2. Which functions do you perform and which does a partner vendor perform? How is each one paid?
3. Which providers near our employees have direct contracts or agreements, and how do members see that before care?
4. What share of claims led to a balance bill last year, broken out by facility and by service?
5. When a member receives a balance bill, who contacts the provider, how quickly, and who approves a settlement above the reference price?
6. Is legal defense and credit protection for members included in your fee, or priced separately?
7. Who calculates the QPA for No Surprises Act claims, who handles open negotiation and IDR, and what do those steps cost?
8. Do you measure savings against Medicare, against our prior PPO rates or against billed charges? (See how TPA fees are quoted for why the baseline matters.)
9. How do you apply the out-of-pocket maximum when a member uses a provider that does not accept the reference price?
10. How do you work with our stop-loss carrier on RBP payments and settlements? TPAs that offer stop-loss coordination can explain this process.