Navigating Medicare Reference Pricing: Key Takeaways from Onpoint’s Latest Client "Onpointer: Data Insights" Session
July 2025 - Onpoint Health Data recently hosted a user group session focused on helping our clients deepen their understanding of Medicare reference pricing -- a methodology and tool used to analyze healthcare spending and benchmark total cost of care against a standard rate. As an increasing number of organizations seek to assess the relative cost of care across comparable services and providers, leveraging Medicare rates as a standardized reference point is useful in informing policy decisions.
Through this session, we provided both foundational knowledge and technical guidance around reference pricing. Our analysts shared insights informed by years of experience supporting the efforts of health purchasers and state agencies to advance health cost growth analysis and to conduct benchmarking within their market and nationwide. A few key takeaways included:
- Medicare reference pricing provides an anchor for multi-payer cost analysis
- The relationship between what a provider charges for a service and what a commercial insurer pays is often opaque, based on proprietary processes and contracts.
- In contrast, Medicare’s payment mechanisms are publicly available and transparent, with a focus on estimating costs rather than negotiating rates with individual providers.
- Incorporating reference pricing into APCD and multi-payer analyses requires careful stratification
- CMS has a complex set of rules to determine final payments for specific hospitals or providers. To create an effective benchmark, Onpoint calculates a national payment for specific services, allowing for reliable comparisons across regions and providers.
- Different service types require different methodologies. For example, inpatient stays may require bundled payment comparisons rather than line-item matching.
- Reference pricing is one part of a broader cost transparency strategy
- Medicare rates should be viewed as a complementary tool alongside commercial allowed amount benchmarks, negotiated rate disclosures, and alternative payment model data.
- Multiple pricing perspectives should be used together to inform policy development, rate setting, and purchasing decisions.
Onpoint is committed to equipping our clients with the tools and expertise they need to make data-driven decisions that improve healthcare affordability and transparency. Medicare reference pricing is just one example of how we help clients turn complex healthcare data into actionable strategies. If you’re interested in learning more about how Medicare reference pricing can support your organization’s goals, reach out to connect with our team!