Employers Want to Pay Medicare Prices to Cut Health Costs (1)

Employers that directly pay their employees’ health claims are increasingly pegging the prices to Medicare to rein in out-of-control costs, though in some cases hospital systems are pushing back by balance-billing the plan participants.

The use of so-called reference-based pricing gained national attention when the California Public Employees’ Retirement System adopted the practice in 2012, but more medium and smaller companies are also turning to it, health insurance brokers and benefit advisers say.

Reference-based pricing is one innovation employers are using to lower the high prices that hospitals charge to commercial health plans, typically well above what Medicare pays. Whether ...