Improving payer, provider dynamics: 4 critical components
The core principles of the healthcare business model are changing in the Affordable Care Act world we live in. Less commonly will the “cat and mouse” game between payers and providers persist—the time has come for both parties to collaborate and seek to achieve optimal outcomes in terms of cost, quality, and accessibility.
There are four key components at the root of the changing dynamic between payers and providers:
Cost and charge transparency
As that dynamic continues to shift, and both parties work with one another, as opposed to against one another, we will continue to see improvements in the cost, quality, and accessibility of healthcare services.
Here’s more on the four key components, and what payers and providers should do about each of them:
1. Trust between payers and providers must improve
Historically, lack of trust between healthcare providers and health plans is rooted in the way that business has been conducted for decades. At the core of standard fee-for-service agreements, incentives are misaligned between the two entities, and providers are (by law) shielded from understanding the competitive landscape, in terms of reimbursement rates other competitor hospitals are receiving from health plans.
On the contrary, health plans typically have more available resources to understand whether their contracts (specifically, fee-for-service reimbursement rates) are in-line with the market.
According to a recent HealthLeaders survey, 39% of provider respondents noted that trust with commercial payers needs improvement, which is imperative as contracts move from a standard fee-for-service structure to risk-based, or outcome-based arrangements.
Providers should look for signs of trust from payers during value-based contract negotiation, such as a payer’s willingness to provide utilization or spend data broken out by in-network and out-of-network.
Providers will need to learn to reciprocate this good faith by no longer making unjustified, blanket demands for rate increases, and instead come to the negotiation table ready with cost and quality data that clearly illustrates a system’s value proposition to the payer and the members it serves.