The Power of a Solid Managed Care Strategy to Advance Your Practice
In today's healthcare landscape, particularly in the United States, managed care is the predominant system of healthcare delivery–and for good reason. Since its introduction in the 1980s, managed care has proven effective at controlling healthcare costs, improving the quality of care, and ensuring that resources are used efficiently and effectively. And, in theory at least, managed care is designed to make sure the benefits are equally distributed among three key players: patients, payers, and providers.
Unfortunately, achieving that perfect balance is often easier said than done, and payers and providers find themselves living in a state of constant tension. “It’s simple, really,” explains Adam Middleton, principal at The Viability Company, a Nashville, TN-based organization that oversees managed care contractual relationships. “Payers and providers don’t speak the same language. Payers don’t understand the complexities of running a practice, and providers get lost in the intricacies of insurance coding and protocols. The end result is poor communication and a serious lack of trust.”
The reality, though, is that payers and providers need each other. Yet establishing and managing contractual relationships–a.k.a. a managed care strategy–takes time and energy, two resources already in short supply for providers these days. That said, running your practice without a solid managed care strategy in place is not a mistake you want to make.
What are the signs that my managed care strategy needs improvement?
There are several key indicators that it might be time to reassess and improve your managed care strategy:
● High practice volume without the revenue to match–Of course, lagging revenue could be a result of multiple things, like inefficient billing practices or inflated operational costs. But your payer contracts are likely a significant part of the problem, especially if you haven’t reviewed or updated the terms on a regular basis. “This is truly a case of the squeaky wheel getting the grease,” says Middleton. “Payer representatives manage hundreds of contracts, and those contracts auto-renew every year. If you’re not reaching out to review your reimbursement rates, it’s not going to happen–and that means you’re leaving money on the table.”
● Unhappy and frustrated patients–Feedback from patients regarding difficulties in accessing care, issues with insurance coverage and approval for treatments, or dissatisfaction with the coordination of their care can indicate problems with your managed care strategy.
● Frequent insurer denials–An increase in claim denials or disputes over coverage and payments from insurance companies may suggest that the terms of your managed care contracts are not aligned well with your practice operations. It may also be an indication that there are billing and coding inefficiencies at play.
● Regulatory compliance issues–Encountering frequent compliance issues or facing penalties are a red flag that your managed care strategy is not aligned with current healthcare regulations.
● Low staff morale and high turnover–Issues such as burnout or frustration among your team, especially related to managed care contract management tasks, can signal that daily operations are more difficult than they need to be. And sometimes, “too difficult” can translate to certain tasks like tracking payments,for example, just not getting done. “If you’re not monitoring payments, you will be underpaid–frequently,” warns Middleton.
What are the benefits of an optimized managed care strategy for providers?
Having a solid managed care strategy is beneficial for healthcare providers for several reasons:
● Financial sustainability: A well-crafted managed care strategy helps providers control and reduce healthcare costs. By negotiating favorable terms with payers, providers can establish competitive fee schedules and reimbursement rates, making healthcare delivery more predictable, cost-effective, and sustainable. In a healthcare environment dominated by insurance payments, this is critical in maintaining the financial health of your practice, clinic, or hospital.
● Predictable revenue stream: Managed care contracts often come with an established patient base, which can provide a predictable patient volume and revenue stream–as well as a reliable budget to plan against.
● Increased operational efficiency: An effective managed care strategy streamlines many administrative processes–including billing, claims management, and compliance with payer requirements–which reduces overhead costs and allows providers to focus more on patient care rather than administrative duties.
● Higher quality care: Many managed care contracts include clauses related to the quality of care such as standardized, evidence-based treatment protocols, which improves patient outcomes and often rewards providers for meeting certain benchmarks.
● Competitive advantage: Inclusion in preferred networks is often a part of a robust managed care strategy, which can help enhance a provider’s reputation by association and attract more patients.
● Improved regulatory compliance: One of the conditions of a well-negotiated managed care contract is mandatory compliance with state and federal healthcare regulations and payer requirements, which can significantly reduce a provider’s risk of penalties, audits, or legal issues caused by non-compliance.
● Focus on prevention: Many managed care strategies emphasize preventive care, which can reduce the need for expensive treatments and interventions later on, benefiting both the patient and the provider.
● Partnerships and collaborations: A strategic approach to managed care can lead to beneficial partnerships with other providers and healthcare organizations. A more collaborative environment can allow a provider to expand services, coordinate and improve care, and increase revenue.
● Negotiation leverage: A solid managed care strategy equips providers with in-depth market analysis to empower providers to secure more favorable terms during contract negotiations. With our proprietary, full-service analytics platform RealRate[1] TM, The Viability Company is able to uncover the payment rates of your competitors so we can confidently negotiate your full value and increase your revenue. “RealRateTM allows us to easily and quickly monitor rates and ensure that your negotiated rates are current and competitive,” says Middleton. “That alone allows a strategy to quickly pay for itself.”
How often should I be reviewing my payer contracts?
At The Viability Company, we recommend an annual review of all of your payer contracts. “If you allow a contract to continually evergreen and the rate is set to an older Centers for Medicare & Medicaid Services (CMS) fee schedule, your practice won’t have any opportunity to keep up with inflation or the cost of living increase built into CMS rates,” says Middleton. It’s also important to remember that payers have budgets, too. If, for example, you haven’t touched your contracts in 10 years, a payer will not be able to give you a huge percentage increase at one time. That means it could take as long as three years to get your practice billing at competitive market rates.
The good news is, annual due diligence pays off. For instance, after reviewing the contracts of one of our provider clients, we were able to help them achieve a substantial percentage growth from higher reimbursements and increases revenue by identifying untapped opportunities.
Can I negotiate these contracts myself?
Yes, but it is far more time-intensive and complex than you may realize. Successful contract negotiations with managed care organizations require a deep understanding of healthcare law, economics, and strategic planning–not to mention, intentional relationship building. Our team of experts leverage years of experience working with both payers and providers to help you understand what payers actually care about in order to negotiate more effectively, establish value-based pricing, and connect with the people who can recognize and reward your value.
“Providers have enough on their plate as it is,” explains Middleton. “Besides, we speak payer. It takes time, patience, and persistent, ongoing communication to find common ground and develop these relationships.” All too often, and understandably so, providers–and their practice administrators or revenue cycle managers–are simply too busy with the day-to-day demands of their practice to keep up with contract end dates and rates, which can result in avoidable and costly mistakes.
What is the first step in developing a managed care strategy?
The best place to start is with a thorough evaluation of the medical practice, including a comprehensive review of key areas such as operational efficiency, patient care quality, financial standing, and a compliance track record. In addition, all current contracts and fee schedules should be reviewed and compared against current rates and terms to market pricing to determine the provider’s best course of action for payer renegotiation.
What are the key components to consider when developing a managed care strategy?
At The Viability Company, three proven tactics always guide our strategic decisions:
KNOW your current contracts: Believe it or not, many practices don’t have their current contracts or fee schedules, which makes it challenging to determine where to begin on rates, terms, and negotiation windows. Do yourself a favor and keep your contracts easily accessible.
DEFINE your value proposition: “The bottom line is, everyone wants additional rates,” says Middleton. “That means you need to determine what sets your practice apart in your market.”
THINK like a payer: It’s important to remember that the provider-payer relationship is a two-way street, which means when negotiating, it’s beneficial to also consider what is most important to the payer and their members.
Are strategic decisions primarily financially driven?
Driving revenue performance and maintaining financial viability are important goals of any managed care strategy. After all, you deserve to be compensated fairly for the value of care you provide. However, financial gain is far from the only consideration. First and foremost, a solid managed care strategy allows providers to focus on what they do best: caring for their patients.
After a provider has a strategy in place, what is the role of The Viability Company?
After we’ve determined the best managed care strategy for your practice, we get to work making sure that the strategy is implemented and operationalized. For example, we can ease your administrative burden by organizing your contracts in searchable formats with built-in notifications. We can monitor payments on an ongoing basis to prevent underpayment. We can manage ongoing communication with payers. We can even serve as a fractional managed care executive overseeing such tasks as ongoing compliance and risk management, monitoring and improving performance metrics like patient satisfaction and care quality, and providing expert consultation to a practice’s leadership on managed care trends, opportunities, and potential risks.
Are you ready to optimize your operational efficiency, secure financial stability, improve the quality of the care you provide, and remain competitive in your market? Let our team leverage our expertise and vetted connections to craft a winning strategy that works in this value-based healthcare environment.