CHAPTER 22
Health Plan Contracting
Sybil Yeaman
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NEW CHALLENGES IN THE health-care industry are driving sweeping changes in the models of how medical care is provided. Government pressure to provide medical care to the uninsured, an aging population, and health plans aggressively seeking cost containment all profoundly affect urgent care contract negotiations and their reimbursement. Understanding contracting and developing a successful negotiation process are more critical now than ever before.
Successful negotiation of contracts requires urgent care owners to understand their costs for providing medical care, their medical marketplace, the provider relationship with the health plan, the population and competition in their geographic area, and contract language. The time taken up front to prepare for contracting with health plans will provide leverage to negotiate more advantageous provider agreements and more favorable reimbursement.
Gaining a clear understanding of utilization and knowing the average cost per patient for doing business are the first steps in preparation for contract negotiations. If your center has not already established an effective utilization review process by payer and procedure, as well as an understanding of the costs to provide care, then start now.
Understanding utilization and the costs to provide medical care helps you determine if health plan fee schedules or higher-risk reimbursement rates cover the true costs of doing business or if they are unacceptable. This gives you leverage when renegotiating established contracts. For example, presenting a health plan’s utilization data at renegotiation time will help demonstrate the need to renegotiate and provide leverage for higher reimbursement rates.
Knowing the cost of doing business is especially important as new reimbursement and health-delivery systems are being created that attempt to transfer greater financial risk for health-care services to health-care providers.
Reviewing a health plan’s website will often provide knowledge of the payer membership and covered population volume. Using search engines will help reveal a plan’s public image, types of coverage, and reputation with members and providers in the marketplace. This simple step may reveal useful information before negotiations and help to create leverage for your center in the negotiation process. For example, if the health plan is targeting a new market or is attempting to sell a new product line, the health plan may provide more favorable reimbursement terms to health-care providers who help them compete in the marketplace or establish a new plan network. Being willing to support the new plan also gives your center additional value from the plan’s perspective in the marketplace.
Compare the health plan fee schedules to Medicare and to other well-established payers to determine if the fee schedules are consistent with other plan payment rates. Determine if the volume of membership in the plan will potentially increase center volume. The larger the plan and the greater the percentage of enrollees, the more important negotiating a contract will become and the more important it is to protect the center’s revenue stream.