Healthcare providers have many problems when they try to make contracts with insurance companies. In the past few years, fewer big insurance plans control most of the market. This gives payers more power, which makes it harder for providers to negotiate.
Scott G. Ellsworth, MBA, an expert in healthcare contracts, says that payers often treat negotiations like a business deal. They wait until the last moment to talk, so they can get more advantages by using contract deadlines as pressure. Providers need to be ready for this and plan well.
Payers usually focus on quick goals such as payment amounts and paperwork rules. They often do not think about bigger, long-term relationships. Providers, however, need to talk about many things. These include denied claims, medical policies, old unpaid bills, and the work needed for administration.
Experts like Ellsworth and Dr. Eugene G. Brown III, MD, RPh, say healthcare practices should start negotiations at least a year before contracts end. This allows them time to study the market, gather facts, and set clear goals.
Good facts and data are very important for making strong proposals. Providers should use numbers about pay rates, how payers perform, and market trends to support their requests. When data is clear, it makes the provider’s case stronger and easier to believe. Also, regularly updating these contracts helps keep payment terms in line with what the market demands.
Dr. Brown says providers should show payers why their services matter. For example, offering more care options, cheaper sites for service, and full care can help in talks.
Even with good preparation, talks sometimes get stuck. Then, studies and experts say it is time to bring in top leaders from the payer side.
Escalating is important for a few reasons:
Ellsworth says escalation should happen only after trying all other ways to settle and when it is clear talks are stuck. He also says provider leaders, like CEOs and boards, need to be united and ready before moving talks up. This helps strengthen the provider’s position and prepares them for results, including ending contracts if needed.
Providers should use these steps when bringing talks to executives:
If talks still fail, providers might use stronger actions. These can include sending notices to end contracts or moving patients out of certain insurance networks. But these steps should be used carefully because they can hurt patient access and community health.
Providers must remember that payers have seen contract threats before. These actions may not always work and can create problems. It is important to act in a way that keeps patient care as a priority.
Good negotiations cover more than just payment rates. Providers should look closely at:
Lawyer Matthew B. Roberts, Esq., suggests resisting one-sided contract terms and preferring short-term deals to allow updates as things change.
Artificial intelligence (AI) and automation are becoming useful in healthcare, especially in tough tasks like payer talks.
For example, Simbo AI uses AI to handle phone calls and answering services. This helps reduce paperwork for healthcare offices. Staff can then spend more time on contracts and managing payer relationships.
Automation tools in payer talks can:
Using AI like Simbo AI can help healthcare offices work better and support their payer contract talks.
In the U.S., medical practices need early planning, fact-based strategies, and knowing when to bring in top payer leaders during contract talks. Staying honest, keeping executives informed, and escalating at the right time are necessary for good results.
Even with payers having timing and power advantages, providers can respond well by focusing on more than just payment rates. Building open and full relationships with payers is important. Using AI and automation tools also helps practices manage the complex process of payer negotiations today.
Starting negotiations one year in advance allows providers to conduct thorough research, set clear objectives, and strengthen their position by fostering constructive dialogue with payers.
Providers should back their proposals with accurate data and analytics, which reinforces their credibility and demonstrates transparency in their negotiation stance.
Negotiations should address the overall relationship with the payer, including issues like claim denials and administrative burdens, fostering a collaborative rather than confrontational dialogue.
If negotiations reach an impasse, providers should consider escalating discussions to executive leadership to enhance the likelihood of concessions from the payer.
Providers can exercise hard leverage, like issuing non-renewal notices, only when necessary and after exploring all other options to ensure patient care isn’t adversely affected.
Alignment among executive leaders strengthens the provider’s negotiating position, enabling a unified front and ensuring all parties are informed and prepared for potential challenges.
Providers should negotiate with integrity, making a good-faith effort to reach agreements while being prepared to go out of network if terms are unacceptable.
Payer contractors often play hardball, focused on their transactional goals, and possess knowledge that allows them to leverage timing to their advantage during negotiations.
Payers often state their own goals upfront, using them to set the narrative and control the discussion. Providers should establish and prepare their own goals early.
Addressing all payer concerns during negotiations can enhance the relationship long-term, facilitating a productive dialogue and laying the groundwork for future engagements.
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