Improve Payer Strategy Archives – Spark Health Partners

What Drives Friction Between Providers and Payers?

Stacie Sutter, AVP, Payer Strategy — Mon, 10 Feb 2025 16:35:32 +0000

What you need to know

Financially strained providers face immense pressure to collect reimbursements from reluctant payers. Addressing avoidable friction from inconsistent payer policies, excessive information requests, interoperability issues and non-equitable rate increases is crucial to ensure that healthcare systems can continue to provide efficient, cost-effective care.

Friction between health systems and insurance companies is a $200 billion problem. The process for determining what services insurance companies will cover and how much they’ll pay has become mired in administrative complexity, driving up unnecessary costs for payers, providers and patients.

For healthcare organizations grappling with rising expenses and nationwide staffing shortages, delayed and denied payment resulting from this avoidable friction — in addition to high administrative expense — is untenable. To ease financial strain on providers and reduce administrative costs across the healthcare system, the issues causing this friction must be addressed.

1. Inconsistent, unclear coverage policies

Utilization management policies are essential to ensure appropriate care is delivered at the appropriate cost. But instead of leveraging an industry standard like the clinical guidelines recognized by CMS, payers exploit vague regulatory language to enforce their own rules for deciding what care will be covered or denied based on what they consider to be the right care choices at the right time.

Not only do these policies vary widely by payer, they’re also difficult to locate and keep track of. There’s no single, streamlined repository for this information, and the rules change constantly — Spark’s proprietary tracking system shows upward of 180 new payment requirements and policy updates made per day across payers.

This constant flux significantly burdens providers with the task of staying updated on all payer changes, a time-consuming and complex process. Meanwhile, payers spend their time making updates and changes, and creating loopholes that often benefit them. This dynamic creates a one-sided situation that heavily favors payers, leaving providers on their own to ensure compliance and appropriate reimbursement in the face of shifting updates.

Keeping track of coverage details across policies to determine which services require prior authorizations and which services are covered is such a huge administrative burden that most payers outsource the process to third parties.

The real cost of friction:

A patient with a history of bone cancer was in the hospital for 10 days, receiving an open skull biopsy, an MRI confirming brain lesions and a CT scan confirming rib fractures and lesions throughout the chest. Despite meeting inpatient criteria defined by InterQual, MCG and CMS’ Two-Midnight Rule, the payer denied inpatient status for the patient. After exhausting the single peer-to-peer review allowed by the payer, the provider was left to choose between downgrading the case to observation status and accepting lower reimbursement, or billing the claim accurately and waiting for the ability to appeal. If appealed, the majority of these types of denials are eventually overturned, but only after an average of three appeal attempts, which significantly diminishes and delays payment for providers.

2. Broken, burdensome information exchange

The more insurance companies invest in AI-driven payment integrity systems, the more data they require from providers to approve coverage and determine payment. Payment scrutiny, which historically occurred as a post-payment audit, now occurs before care can be delivered or billed. Providers are increasingly required to submit detailed information like thorough medical records before a treatment plan is authorized and itemized bills before a payment decision is made.

Complying with authorization requirements and increasing requests for additional information is resource-intensive and the submission process is error-prone and varies by payer. Like coverage policies, submission requirements are difficult to find and often require providers to learn by trial and error.

Some payers still require providers to fax information or make phone calls to process prior authorizations. Some require files to be uploaded to a third-party tool or web-based portal, which are often out of sync with the rest of the payer’s systems, resulting in lost files and duplicate requests.

Frequently, despite providers following the correct initial process for sending the data, they must also make manual phone calls and inquiries to ensure the data is attached to the correct patient. The backlogs of waiting for requested data to properly transfer — and be attached to the correct claim — often lead to delays in both care and payment, all while consuming unnecessary resources on both sides.

In one AMA survey, 92% of physicians reported that prior authorizations delay necessary care, with decisions taking anywhere from three days to more than a month. Nearly half of physicians surveyed said these policies led to urgent or emergency care for their patients. Even once authorization has been granted, denials by payers often still occur on the back end. This forces providers to continue fighting for care that has already been authorized and deemed medically necessary for patients. This ongoing battle consumes significant resources and time, further complicating the delivery of timely and appropriate care.

The real cost of friction:

To schedule an MRI, a staff member from the provider’s office called the patient’s insurance company to determine if an authorization was required. After multiple phone calls and trial and error, they learned that while the payer didn’t require any prior authorization, a third-party was engaged to manage coverage determination for the payer and that the third-party actually required specific documentation for the MRI to be authorized. After gathering and uploading the necessary information to the designated portal, they were told there was an issue sharing the documentation back to the payer’s system and the information would need to be resubmitted.

3. Inequitable, unsustainable contract rates

Many providers are struggling just to secure standard rate increases. Major payers have approached negotiations with demands for rate concessions, making it increasingly challenging for providers to maintain financial stability. But even standard rate increases offered by payers aren’t enough cover the real-life costs of patient care, with Medicare rates historically only covering around 80% of a hospital’s actual costs.

Despite contracting at the same rate or higher, Medicare Advantage (MA) plans only reimburse hospitals around 90% of Medicare once the cost of underpayments, delays and denials is factored in. With more than half of the Medicare-eligible population enrolled in MA plans, settling of every dollar owed is simply not sustainable for providers.

The top five U.S. health insurers have collectively amassed over $371 billion in profits since the passage of the Affordable Care Act. Despite lobbying CMS to increase their own subsidy rates to keep up with inflation, payers are typically unwilling to offer material rate increases to address the same market pressures impacting providers.

Aggressive tactics like terminating contracts with uncooperative payers are becoming more commonplace, pitting payers and providers against each other in arduous, and often public, battles for months. Not only are these negotiations costly and time-consuming, they also cause concern and uncertainty within communities.

The real cost of friction:

When its contract was up for renewal with Florida Blue Cross Blue Shield, NCH requested moderate rate increases to cover the rising cost of patient care and preserve local access to doctors and vital services for families across Southwest Florida. Despite being the third most profitable Blue Cross program in the nation and paying NCH less than other insurers in the region, Florida Blue refused to negotiate, waiting three months to even respond to NCH’s initial proposal. NCH launched a public campaign to help educate patients and community members on the need for Florida Blue to offer fair payment and the implications of terminating its contract if agreement wasn’t reached. It wasn’t until the day that the contract was set to expire that Florida Blue started to negotiate, ultimately agreeing to a rate increase.

The bottom line

There’s immense pressure for financially strained providers to collect reimbursements from reluctant payers — but there seem to be roadblocks at every turn, given payers’ complex policies, delays, requests for information and a reluctance to offer equitable rates to providers.

As part of the larger healthcare ecosystem, payers and providers should share a goal of getting care to patients in need. Both parties must therefore work toward a joint understanding of the problems at hand as well as mutually agreed-upon end goals — an action that will pay dividends in reducing friction for payers, providers and patients.

You know the causes. Now what?

Learn 3 key steps to proactively counteract payer denials and delays.

The post What Drives Friction Between Providers and Payers? appeared first on Spark Health Partners.

Payer Strategy Playbook: Reducing Friction to Restore Focus

Spark Health Partners — Thu, 06 Feb 2025 14:12:32 +0000

Learn 8 key strategies to reduce friction between payers and providers in order to bring patient care back into focus. … Read More

The post Payer Strategy Playbook: Reducing Friction to Restore Focus appeared first on Spark Health Partners.

4 Strategies to Level the Playing Field with Payers

Spark Health Partners — Thu, 30 Jan 2025 18:09:46 +0000

Spark's VP of Payer Strategy shares four innovative payer strategies to negotiate better contract rates and establish market leverage. … Read More

The post 4 Strategies to Level the Playing Field with Payers appeared first on Spark Health Partners.

3 Proactive Steps to Counteract Payer Denials and Delays

Stacie Sutter, AVP, Payer Strategy — Tue, 05 Nov 2024 20:17:42 +0000

What you need to know

Receiving accurate, timely reimbursement and reducing unnecessary administrative cost imposed by payers requires a proactive strategy from providers. This includes fortifying and enforcing payer contracts, investing in denial prevention and using technology to challenge delays and denials at scale.

Rising claim denials and payment delays are straining the already-fraught relationship between providers and payers.

Providers spent nearly $20 billion in 2022 pursuing delayed payments and denials, more than half of which were eventually overturned. Some health systems have seen denials double in the last year alone, with more than half of that activity coming from MA plans. Spark data shows MA plans issuing five times more first-pass denials than from traditional Medicare.

Across the industry, payers control the rules for how denials are determined, and they’re using advanced AI technology to enforce those guidelines by any means necessary. Providers must take a proactive approach against payer tactics that are hindering cost-effective care delivery.

Here are three efforts we’ve found effective in pushing back against increasing payment delays and denials:

1. Fortify and enforce payer contracts.

Many managed care contracts come with an evergreen clause, enabling them to renew automatically without any intervention from the provider or payer. These agreements might include an annual rate hike of a few percentage points, or they might not account for any increase at all. As more provider revenue moves from traditional Medicare to managed plans, including Medicare Advantage, the need for contract scrutiny and renegotiations becomes more critical.

Develop a payer scorecard to inform negotiations and help hold payers accountable

Leveraging accurate data and analytics during negotiations can significantly enhance a provider’s bargaining power. Evaluate performance across your commercial payers and pinpoint trends that should be addressed in your next negotiation. Concentrate on key metrics, including:

Clean claim rate
Payment as a percentage of charges
Speed to pay
Denial rates and reasons
Underpayments
Appeal volumes and success rates
Other year-over-year net reimbursement changes

Showing the total revenue impact of a payer’s behavior and comparing trends with other payers can help influence negotiations and accelerate issue resolution.

Close contract loopholes

Don’t accept standard boilerplate terms or unclear language that provides loopholes for payers to delay payment or increase administrative burden. Instead, revise contracts to include language that clearly defines dispute resolution requirements, penalties for non-compliance and mechanisms for enforcement. For example:

Require claim payment, denial or dispute within 30 days or payment remittance with interest on day 31
Set limits for requests for information, audit volume and appeal response timelines
Restrict bundling of charges and limit “lesser of” language

Even consider proposing a change in payment methodology to remove the payer’s incentive to downgrade claims, like a blended case rate for ER visits regardless of the E/M level.

Prepare an out-of-network strategy

If fair and equitable rate increases aren’t agreed upon, consider going out of network with the payer or specific plan. Many of these efforts have been successful in compelling payers to increase provider reimbursement to retain in-network status with their patients.

Prepare a strategy for your organization at least one year ahead of contract renegotiations to ensure your leadership, clinical staff, front-office staff and patients are well educated on the impact of being out of network and can access necessary resources to answer questions throughout the process.

2. Invest in denial prevention.

Establish a strong denial prevention program that is data-based and process-minded.

True root cause resolution not only requires an understanding of the actual source of denials, but also an ability to connect the right dots across the revenue cycle, clinical departments and various stakeholder groups to resolve the identified issues.

Make denial prevention a team sport

Form a denials prevention committee capable of analyzing denial trends, sharing results with various stakeholders and holding parties accountable for upstream issue resolution. Train front-end teams on common errors that result in denials downstream as well as the financial impact denials and claims resubmissions have on the organization, so they understand the implications and importance of their roles. Ensure all teams involved understand the amount of rework their efforts will decrease by preventing denials from occurring in the first place.

Strengthen documentation and audits to avoid errors

Reduce the likelihood of denials and expedite the review process by capturing thorough documentation to support patient status, procedures and diagnoses. Consider adding prompts to the EHR to document clinical decision-making, like ‘Will this patient be admitted? If not, will the patient’s length of stay exceed two midnights? If so, why?’ Leverage a combination of technology and experts across coding, charge capture and CDI to ensure all claims are reviewed before they’re billed. This helps confirm all coding and charging is accurate and fully supported by documentation.

Find ways to streamline data exchange with payers

Granting access to your electronic medical record offers clear benefits for payers — including accurate risk adjustment and access to real-time records for utilization management — but can also help streamline claim adjudication, automate the authorization request process, reduce requests for information and ultimately accelerate payments for providers if implemented correctly.

One example is the electronic medical prior authorization (eMPA) capability available in Epic’s Payer Platform, which one healthcare organization used to eliminate manual intervention for nearly 90% of authorizations from a particular payer and decrease decision turnaround time from an average of three days to one hour.

3. Use technology to challenge payment delays and denials at scale.

The increasing administrative burden of appealing denials and escalating issues with payers is so resource-intensive that many providers opt out of the process altogether, accepting reimbursement far below what they deserve for the care provided. With the right technology-enabled strategy, providers can do more to liquidate outstanding AR and overturn denials.

Streamline the dispute process

Implement a robust mechanism to review payments, flag issues and automate the dispute process. Setting up a system to issue demand letters either in batches or individually can help compel payers to resolve disputes while also documenting your organization’s proactive efforts, should litigation become necessary. Leverage detailed claim statusing and collection notes to facilitate side-by-side claim analysis that will enable you to review account details and resolve outstanding AR.

Automate appeals

Reduce the time staff spend on initial denial reviews and appeal creation by leveraging generative AI to draft preliminary appeal letters based on templates tailored to different denial reasons. More sophisticated solutions can integrate with the EHR and leverage external data — like coverage criteria and payer policies — to automate complex clinical appeals so high-value resources can focus on validation rather than manually drafting arguments.

Solution Spotlight: See how Spark’s generative AI synthesizes disparate data to create compelling clinical appeals at scale >>>

The bottom line

Eliminating friction between payers and providers requires extensive work by both sides, but there are strategies healthcare organizations can implement in the near-term to help improve the timeliness and accuracy of payments. Taking a proactive approach to payer delays and denials not only enhances financial performance but also supports the delivery of high-quality, cost-effective care.

Don’t go it alone

A proven end-to-end partner can get your payer strategy in place quickly to help secure your organization’s financial future.

The post 3 Proactive Steps to Counteract Payer Denials and Delays appeared first on Spark Health Partners.

Providers Should Push Back Against Direct EMR Access for Payers

Ryan Goodin — Tue, 29 Aug 2023 23:53:18 +0000

Lessons learned from providers who have granted direct EMR access to payers. … Read More

The post Providers Should Push Back Against Direct EMR Access for Payers appeared first on Spark Health Partners.

Tips for Providers Thinking of Going Out of Network

Brad Gingerich, VP, Payer Strategy — Mon, 17 Jul 2023 20:56:42 +0000

Considering the decision to go out of network with a payer? Understanding the implications and implementing a well-thought-out strategy is crucial. Discover how to navigate the process of debating going out of network effectively to optimize your healthcare organization’s financial stability and patient care.

Why Consider Going Out of Network?

One common reason for health systems to exit a payer’s network is the inability to reach mutually agreed-upon reimbursement rates and terms during contract negotiations. Years of challenges with timeliness, accuracy and costs of pursuing full reimbursement from an insurance company often lead to this last-ditch effort.

Impact on Providers

Two of our clients recently leveraged an out-of-network strategy that ultimately resulted in contract rates double the standard annual increase of 2%-3% for each year of their agreement. One of the organizations only went out of network for a matter of hours before settling on a higher rate with the payer. The other merely threatened to exit the network, leveraging social media and community news outlets to make their position public and put pressure on the payer to come to the table with more reasonable rates.

Impact on Payers

The impact of going out of network varies based on the size of the health system. It can challenge network adequacy for government-sponsored plans, disrupt network access for commercial patients and their sponsoring employers and increase payment for out-of-network services.

Tips for Considering + Implementing an Out-of-Network Strategy With Major Payers

Assess Current + Prospective Out-of-Network Patient Volume

Review patient volume metrics such as primary care attribution by plan type, elective procedures by plan type and patient referral patterns. If the emergency department is a primary access point for patients, the non-participating status will have a lesser impact to patient volume since all emergency services qualify for in-network benefits regardless of participation status.

Be Selective About In-Network Services

Consider keeping primary care, OB/GYN and pediatricians in-network to maintain HMO patient attribution. This is especially important for temporary out-of-network periods. It also mitigates disruption of PPO member attribution to the primary care physicians, allowing patients with out-of-network benefits to still be referred to the out-of-network facility for elective procedures.

Educate Physicians About the Out-of-Network Experience

Reassure primary care physicians and staff about the implications of being out of network and its impact on access to care. Provide a clear roadmap of expectations and reinforce the need to have privileges at a participating facility.

Connect With Impacted Self-Funded Employers

Rank and engage the top 10 self-funded employers utilizing the out-of-network plan. Consider offering direct-to-employer network rates or alternative insurance carriers. Consider petitioning the payer for renegotiation to restore your organization to the network.

Keep Patients Informed + Engaged

Educate patients about the implications of being out of network for each service and plan type, including the distinctions between medical emergencies and elective procedures, whether they have secondary coverage and different plan types. Utilize existing communication channels such as patient portals and targeted outreach via mail or phone. Ensure staff are available and equipped to address specific patient questions through a centralized call center.

Make Your Position Public

As payer/provider contract negotiations become more public, consider sharing your stance with community media outlets to shed light on your position. Clearly state your position and support it with available data to demonstrate the gap between reimbursement and cost, supporting your rationale for a higher negotiated rate.

Prepare Your Operators for a Smooth Transition

Ensure your Patient Access team is prepared to accurately schedule and register patients and answer coverage-related questions. Update processes and tools to identify at-risk accounts and ensure compliance with the No Surprises Act and any applicable state surprise billing laws. Evaluate utilization management procedures as well as billing and collections processes to effectively manage out-of-network claims.

In Summary

When healthcare organizations consider the decision to go out of network with a payer, it requires careful analysis and planning.

Whether it’s a temporary tactic to strengthen negotiations or a permanent decision, assessing patient volume, providing comprehensive education to staff and patients, and engaging employers are critical components for a smooth transition. By proactively managing these factors, organizations can navigate this shift successfully to strengthen financial performance and continue delivering high-quality care to their communities.

Spark Health Partners offers comprehensive revenue cycle managed services to clients, including strategic guidance for health system executives and managed care departments to improve payer relationships. We support our clients with out-of-network strategy analysis and operationalization. Our payer strategy experts have more than 15 years of experience leading payer negotiations, educating managed care teams and effectively addressing and resolving payer challenges.

Brad Gingerich has 16 years of experience in managed care and revenue cycle operations, designing and implementing national payer strategies for large health systems.

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The post Tips for Providers Thinking of Going Out of Network appeared first on Spark Health Partners.

3 Tips to Successfully Negotiate Your Next Payer Contract

Andrew Bess, Chief Client Officer — Mon, 27 Feb 2023 20:57:23 +0000

As hospitals and health systems continue to face financial headwinds from rapidly rising expenses, workforce challenges and stagnant reimbursement rates, healthcare leaders are turning to their managed care departments as a critical line of defense against avoidable payer pressure.

Historically, market share has dictated authority during contract negotiations between payers and providers, often giving payers the upper hand. So how can providers of any size level the playing field? They must know what provisions to include in their contracts, leverage comparative data to change payer behavior and use price transparency rules to their advantage.

Here are three tips to help improve your next payer contract negotiation.

1. Find the gaps in your current contracts.

Rates are only as good as the payment terms supporting them, so make sure managed care leaders have a strong understanding of existing contract terms as well as the best practice language required to drive proper reimbursement.

For example, do you have provisions that require the payer to pay, deny or dispute a claim within 30 days or remit payment with interest on day 31? Are you preventing pre-payment review on claims not disputed within 30 days? How are you limiting requests for information, audit volumes and appeal response timelines? Are you restricting bundling of charges and limiting “lessor of” language? How are you protecting yourself against recoupments?

Tracking and maintaining a list of managed care contract provisions and recommendations gives providers a path to increase reimbursement rates and ease costly administrative burdens.

2. Compare payer performance.

Make sure you’re tracking and comparing payer trends across your organization. Build a payer scorecard to analyze performance across your commercial payers and identify trends that need to be addressed during your next negotiation. Focus on metrics like clean claim rate, payment as a percent of charges, denial rates and reasons, underpayments, appeal volumes and win rates and other year-over-year net reimbursement changes.

Tracking regional and national payer trends outside of your organization can also help inform your payer strategy. Aggregate payment trends, claim resolution rate and denial information to determine if patterns within your organization are part of national or regional trends. If your average days to first payment are significantly higher than the national average, for example, strengthen provisions that limit claim resolution delays and determine how to reinforce compliance with these terms.

Showing the total revenue impact of a payer’s behavior and comparing trends with other payers can help influence negotiations and accelerate issue resolution.

3. Use payer price transparency requirements to your advantage.

Research and download corresponding in-network rates for each commercial payer with an upcoming negotiation. The size and scale of the available machine-readable files makes this a labor-intensive project, so create a project plan with enough lead time to download and review potentially thousands of files.

Compare your existing contracted rates with publicly available rates for the same payer across other providers. Look for any large variances between what your facility is paid and what other facilities in your geographic area have contracted for. Focus on high-dollar procedures, items and services, especially those aligned with the unique specialties or credentials of your organization. Consider current and expected patient volumes to accurately estimate the revenue impact of any current rate discrepancies or future adjustments.

And don’t overlook out-of-network payers. Review their payment rates and examine the revenue impact of bringing an out-of-network payor into your network.

Key Takeaways

With razor-thin operating margins, healthcare providers can’t afford to lose precious revenue due to unfavorable contract terms, inadequate protections or unknown contract loopholes. Ensure your organization has a strong managed care team equipped with the necessary data, contract language and negotiating strategy to even the playing field between you and your commercial payers so your organization can improve financial health and continue to navigate industry headwinds.

____

Andrew Bess leads Spark Health Partners’ payer strategy team, helping healthcare clients across the U.S. improve managed care strategies, negotiate favorable payer contracts, analyze national payer trends and successfully resolve issues by working side-by-side with national payers.

These materials are for general informational purposes only. These materials do not, and are not intended to, constitute legal or compliance advice, and you should not act or refrain from acting based on any information provided in these materials. Neither Spark Health Partners, nor any of its employees, are your lawyers. Please consult with your own legal counsel or compliance professional regarding specific legal or compliance questions you have.

The post 3 Tips to Successfully Negotiate Your Next Payer Contract appeared first on Spark Health Partners.

Improve Payer Strategy​ Archives – Spark Health Partners

What Drives Friction Between Providers and Payers?

What you need to know

1. Inconsistent, unclear coverage policies

The real cost of friction:

2. Broken, burdensome information exchange

The real cost of friction:

3. Inequitable, unsustainable contract rates

The real cost of friction:

The bottom line

You know the causes. Now what?

Payer Strategy Playbook: Reducing Friction to Restore Focus

4 Strategies to Level the Playing Field with Payers

3 Proactive Steps to Counteract Payer Denials and Delays

What you need to know

1. Fortify and enforce payer contracts.

Develop a payer scorecard to inform negotiations and help hold payers accountable

Close contract loopholes

Prepare an out-of-network strategy

2. Invest in denial prevention.

Make denial prevention a team sport

Strengthen documentation and audits to avoid errors

Find ways to streamline data exchange with payers

3. Use technology to challenge payment delays and denials at scale.

Streamline the dispute process

Automate appeals

The bottom line

Don’t go it alone

Providers Should Push Back Against Direct EMR Access for Payers

Tips for Providers Thinking of Going Out of Network

Why Consider Going Out of Network?

Impact on Providers

Impact on Payers​

Tips for Considering + Implementing an Out-of-Network Strategy With Major Payers​

Assess Current + Prospective Out-of-Network Patient Volume

Be Selective About In-Network Services

Educate Physicians About the Out-of-Network Experience

Connect With Impacted Self-Funded Employers

Keep Patients Informed + Engaged

Make Your Position Public

Prepare Your Operators for a Smooth Transition

In Summary

When healthcare organizations consider the decision to go out of network with a payer, it requires careful analysis and planning.

Get the latest insights

3 Tips to Successfully Negotiate Your Next Payer Contract

1. Find the gaps in your current contracts.

2. Compare payer performance.

3. Use payer price transparency requirements to your advantage.

Key Takeaways

Improve Payer Strategy Archives – Spark Health Partners

Impact on Payers

Tips for Considering + Implementing an Out-of-Network Strategy With Major Payers