Most healthcare providers rely on only a handful of health plans for the majority of their reimbursement revenues. Yet few – if any – take a formal approach to managing their health plan-provider relationships. Opportunities for medium and long-term revenue growth are being lost.
If you are like most healthcare provider executives in the U.S., you probably think you have a fairly good handle on your health plan contracts. You may see some key data on your various payers throughout the year – things like claims payment rates and patient bad debt. You may get quarterly updates on payment accuracy. Maybe you personally participate in the annual negotiations.
Dig a little deeper, however, and you may find that, while your current approach may be consistent, compliant and somewhat data-driven, it is largely ad-hoc. Don’t feel badly; our experience suggests that the vast majority of providers are in the same position. Indeed, we work with a wide range of healthcare provider organizations. And our insider view suggests that most lack a focused approach to managing their payer performance.
The reality is that most healthcare providers only review their health plan performance on an annual basis (generally right before the contract is up for renewal). When they do assess their various contracts, they tend to do it in a vacuum; very few providers have any real sense of how their various payers perform against each other, let alone against industry benchmarks.
Part of the problem comes down to data: While metrics and overall performance measurements are available, they tend to be manual in nature or cumbersome to collect. Few providers know exactly which metrics they should be monitoring to properly assess the health of their contracts. Even fewer understand the amount of automated data that is actually available to them. Typically, even when they do know what data to evaluate, they often have access to only small slices of it.
For most provider organizations, capacity is also a challenge. Current approaches to contract reviews are extraordinarily manual and time intensive. Few providers have the time or the resources to continuously review all of their contracts using their current processes. And that means that the information they do receive is dated and narrow.
While this level of activity may have been enough to maintain health plan/provider relationships in the past, it seems clear that the environment is rapidly changing. Value-based care contractual reimbursement terms in managed care contracts are becoming more common and that is making contracting immensely more important to understand performance in an increased timely fashion. It is also bringing a host of new metrics into the equation.
At the same time, the introduction of new technologies – coupled with increased data integration between health plans and providers (see Towards the next generation of health plan and provider data sharing) – is creating new opportunities for providers to start to take greater control over their longer-term destiny. Those at the forefront are already uncovering new insights that are leading to more valuable payer relationships.
So what does a leading health plan performance management program look like? Clearly, much will depend on the type of provider organization you operate, your payer profiles and your current capabilities. No two health plan performance management programs will be the same (no, there are no “off the shelf” solutions or apps for this one).
However, our view suggests that there are five fundamental considerations that every healthcare provider organization should be exploring as they think about the value of their health plan performance management efforts.
The path toward a more formal health plan performance management program may seem long and complex (particularly for those with only a handful of key payers). Yet, as the market continues to shift toward value-based payments and competition increases around key markets and specialties, we believe that health plan performance management will become a key capability for leading providers.
Those able to get started today will know how to drive value from their health plan relationships tomorrow. Those that maintain the status quo, however, may find themselves at an increasing disadvantage.
For more information on this topic, or to learn how Baker Tilly healthcare specialists can help, contact our team.