Weekly Business Insights 10/17/2024
How Value-Based Care Is Making Payor Contracts Even More Complex. Payer Contract Negotiation: How to Prepare, Negotiate, & Track Effectively. Transforming The Provider-Payer Relationship From Adversarial To Collaborative Through Value-Based Care.
How Value-Based Care Is Making Payor Contracts Even More Complex
It’s an American tradition. Physicians charge a fee for their services, do their best to achieve better outcomes for their patients, and are paid by health plans and sometimes directly by patients. But value-based care models and risk-sharing arrangements are on the rise. Driven by these trends, payor contracts are becoming increasingly complicated. So it’s especially critical, say legal experts, that physicians understand the impact that contractual terms, conditions and provisions will have for their private practices and the patients they serve.
Payment models continue to evolve. More employers are entering into direct contracts with physician practices, health systems and others, targeting annual total cost of care and shared costs with doctors and their administration. Meanwhile, pharmacy and behavioral health are becoming progressively integrated with other costs. Commercial insurers are also focusing on value models that shift more risk to physician practices and providing more product designs that offer value-based language to employers. Joint ventures are likely to expand, involving employers, insurers, health networks and clinically integrated networks.
Payer Contract Negotiation: How to Prepare, Negotiate, & Track Effectively
Insurers steer patients to providers, increasing providers’ patient volume. For this reason, providers can be hesitant to push too hard to win favourable terms in their contracts. Because payers write the contracts initially, these documents are full of terms that benefit them the most.
Whether that’s true or not, you do need to make sure the language in your contracts is understandable, fair, and supportive of your business. The fee schedule is the most critical aspect of the contract. Start at your organization by listing your top codes that drive the majority of practice revenue. It’s likely that 20 of your codes generate 80% of your revenue. Fight hardest for the best rates for that 20 percent. Don’t let payers offer good rates just for services you rarely provide. Most likely, you won’t see much revenue coming in from those services. Be careful if a payer proposes reimbursing you, for example, at an average of 160 percent of Medicare. It sounds good, but they are likely quoting from across your fee schedule of 500 codes or more. Avoid the averages and pay most attention to the reimbursement rates of your most common CPT codes.
Payer Contract Negotiation: How to Prepare, Negotiate, & Track Effectively | MD Clarity
Transforming The Provider-Payer Relationship From Adversarial To Collaborative Through Value-Based Care
To succeed in value-based care (VBC), both payers and providers must address and overcome these challenges. VBC begins with a common goal for payers, doctors and patients: prioritizing preventive care and overall patient health and improving outcomes, which in turn can lower the total cost of care. As VBC adoption grows, payers and providers must find the tools to transform traditionally adversarial interactions into partnerships that put patients at the center of care. There are three key pathways payers and providers can take on that journey.
The shift from adversarial to collaborative relationships between physicians and payers is not only possible — it is increasingly necessary, and the urgency to move to risk-based models is not slowing down. According to McKinsey, payers must evolve from simply administering benefits to managing care and capturing cost savings. In this new reality, physician partnerships (especially in VBC models) become increasingly important. As cost pressures rise, payers must scale proven models and adopt innovative new ones, all while enhancing health outcomes and member experience to adapt to a changing market and meet members’ needs.
Collaborative, end-to-end platforms designed for a VBC future provide a robust framework for this transformation. The right tools help payers and providers focus on quality outcomes, transparency and continuous collaboration. This transformation benefits the entire health care ecosystem, marking a significant step forward in delivering high-quality, cost-effective care.