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Shifts in Healthcare Impact Payor/Provider Negotiations

Posted in Practice Management Solutions | Aug 2015 | Comments (0)

Tags: medical practice management tipsmedical outcomes data collectionmedical practice reimbursementambulatory surgery centersambulatory care trendsoutpatient spine practicepractice managementoutcomesbusiness planacquisitionconsolidation

Changes in the healthcare delivery system, industry consolidation and the push to demonstrate value are changing the course that surgeons take to work with payors. Surgeons affected by these changes must understand what these industry shifts mean for their negotiating power and ultimate reimbursement.

The recently-announced acquisitions of Cigna by Anthem and of Humana by Aetna greatly consolidate the insurance industry from five major companies to three. Operators of Ambulatory Surgical Centers (ASCs) say that this will likely heighten the price pressures they face.

“The recent acquisitions, consolidations and mergers should be cause for concern for everyone, consumers and providers alike,” says Eric Woollen, Vice President of Managed Care at Practice Partners in Healthcare. “These entities will place increased pricing pressures on an already strained environment. In most cases, no cost savings have been passed on to the consumer. Premium rates will still rise while payments to providers will target reductions.”

The shift toward value-based reimbursement will also burden surgeons, due to increased reporting requirements.

“The pendulum of risk sharing will significantly shift to the provider,” Woollen says. “Providers will need a reporting system capable of handling the necessary metrics to demonstrate both quality and value. Open dialogue with payors regarding target indicators and overall goals can help shape a mutually beneficial relationship.”

In light of these trends, there are ways that ASCs can work with payors to ensure favorable contracts.

Jamie Pearlman, Vice President of Managed Care at Meridian Surgical Partners, outlines tips for doing so.

Six steps to negotiate reimbursement with payors:

  1. To maximize revenues, a practice must know and be able to explain their core value proposition, focus on quality care/outcomes, surgical services market position, hospital relationships and dynamics of current payor environment.
  2. Engage payors and ask about their needs and the market pressures that they face. Remind them that ultimately, physicians play a key role in controlling costs and ensuring quality care.
  3. Be proactive in developing relationships with payors. Practices must develop trust and be able to respond to payor perspective that limits increased payment.
  4. Beyond internal due diligence of practice financial needs, practices must have clear-set contract objectives in mind that will shape their negotiation mindset.
  5. Practices must be flexible in negotiations and open to new payment methodologies, payor products and provide network configurations (tier networks, narrow networks, ACO, etc.).
  6. Practices must be able to walk away from a deal that does not fit into their financial or strategic objectives. Understand that timing in any negotiation is critical for success.

Seven ways providers can work better with payors:

  1. When preparing to negotiate, practices should think about the kind of payor/provider relationship they want—a one-time negotiation or the beginning of a long-term partnership. Longer term relationships often include interest in new products, payor/employer affiliations or risk-sharing models.
  2. Open the lines of communication on both sides. A constructive negotiation cannot happen when both sides are not talking to or are talking past each other.
  3. The best battle plan rarely survives the first contact with the “enemy.” Practices should adapt, adjust and overcome. Negotiation is a process and practices should remain disciplined in their efforts to find equitable positions for both parties.
  4. Practices should understand that “everything” is negotiable. Understand “I can’t” vs. “I won’t.”
  5. If a practice does not understand contract language, it will probably be used against them. Always clarify any vague language/rate terms.
  6. Practices should be aware of a “myopic” view of a given market. Managed care organizations have access to much better and more robust data, and can therefore see some of the bigger trends.
  7. From a tactical perspective, if a practice does not ask for it, they will not get it. If a practice does not deserve it, the practice will not get it. If a practice does deserve it, they must explain, or more importantly, demonstrate why they should get it. Negotiation power comes from understanding leverage points.

No matter the case, maintaining an open, strategic relationship with your payor is crucial for successful negotiations.


DISC Sports & Spine Center recently partnered with Anthem Blue Cross to provide in-network services at DISC’s ASCs. The deal went into effect immediately, allowing patients with Anthem Blue Cross coverage
to receive care from DISC’s range of specialties. 

Basheer Alismail, Director of Operations at DISC, noted the importance of presenting Blue Cross with
a solid value proposition, backed by data, during the agreement. 

“They’re about to give you a benefit of being in-network—they need to know why,” he says. “Arming your group or the physician with clinical quality data, outcomes data and patient satisfaction data is step one. That conversation doesn’t happen unless you can demonstrate clinical quality. Step two is thinking about it from the payor’s aspect and saying why (financially) they have an incentive to partner with your group. If you can’t adequately demonstrate that, you’re going to have a hard time getting them to manage risk through your facility.” 

DISC has a two-phase reimbursement approach with Anthem, first focusing on facility reimbursement and then surgeon reimbursement, according to Alismail. 

“Phase one was essentially to minimize the barriers limiting them [surgeons] from a resource perspective – getting the anesthesia and facility services under contract first,” he says. “Immediately, it unlocked the ability for the surgeons to access the tools and facility of their choice.”


Hannah Corcoran is an Editorial & Media Assistant at ORTHOWORLD. She can be reached by This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

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