Prices for medical services can vary greatly between providers. So, instead of basing prices on discounts of variable prices, The Alliance contracts on a percentage of Medicare (Reference-Based Contracting by The Alliance). This is important because Medicare is the single largest purchaser of healthcare in the US and has established base rates for various services, and they adjust them by provider to factor in geography, patient mix, and quality metrics. Reference-Based Contracting by The Alliance provides the benchmark we need to pay a fair price for services, rather than simply focusing on savings of total charges.