Contract Disputes and the Skills Needed to Negotiate, people shaking hands

Contract Disputes and the Skills Needed to Negotiate

The Contract Disputes Environment

It has become commonplace in the field of healthcare for contract disputes to occur between health plans and providers or provider groups. Issues stem from price disputes, how providers are paid, denial issues and more. While a contract dispute rages on, patients, doctors, and caregivers are caught in the crosshairs. Patients are at risk of not being able to see their doctors or receive care from the facilities they need. Important treatments could be put on hold while searching for a new provider or waiting for a resolution.

For instance, the OhioHealth and Anthem disagreement concerning contractual issues left 11,000 patients unsure of how and where to receive their care. Doctors and practices risk the loss of revenue due to frequent denials, making running their practice more difficult. North Mississippi Health Services threatened to end their provider network agreement with Humana due to frequent denials.

According to Shane Spees, CEO of North Mississippi Health Services:

“Only 4 percent of our patient base uses Humana Medicare Advantage, but Humana Medicare Advantage accounted for 85 percent of all denials by all payers,”

When negotiations stall, both sides are left frustrated. New York City-based NewYork-Presbyterian and Empire BlueCross BlueShield came to a bitter impasse with the hospital commenting “Instead of working with us to find an equitable solution, Empire/Anthem has demanded deep cuts that would slash more than $200 million in payments to NewYork-Presbyterian, all while the insurance giant generates billions in profits,” Ultimately a resolution was worked out and many times they are but the process leaves everyone wounded and wanting for something better.

Learn The Skills Needed to Negotiate

It’s imperative that hospitals and health systems understand their current reimbursement methodologies. “…healthcare providers have to better understand both what their services are costing them and the amount those services are actually being reimbursed. Inadequate reimbursement will have serious consequence to the bottom line.”

Contract modeling can help organizations to test potential reimbursement scenarios, thus understanding financial outcomes ahead of time. With this approach, organizations can better plan for the future like when pricing or rate changes happen. Contract modeling helps organizations forecast the potential financial situation for a particular contract before fully executing the agreement.

“What happens to reimbursement as a higher percentage of the patient population ages into Medicare? What happens if the organizations enters into at-risk contracts? What happens if a payer changes reimbursement from a percent of charge to a per diem or case rate? What will the impact be if I opt-in to a bundled payment program?” – these types of complex scenarios can be fully vetted if you have the needed data, financial managers and analysts and modeling tools needed. Simple spreadsheets and financial software simply cannot handle these types of heavy analysis. Organizations who are able to effectively forecast these scenarios are then properly armed with the right information when it is time for negotiations.

Several types of scenarios exist:

1. Medicare break-even computation.

2. Assessment of performance of current contracts.

3. Assessment of proposed contracts.

4. Comparison of traditional and non-traditional reimbursement methodologies.

5. Assessment of pricing changes.

Learn more about these scenarios here.

Each of these scenario methods can give you a greater understanding of “what if” situations. When you have the knowledge gleaned from these analyses, you are giving yourself the skills needed to negotiate new and renewing contracts more effectively and taking a more proactive rather than reactive approach. Doing so not only makes for a financially healthy organization but also makes for better patient care.

Sunlit Cove Healthcare can help you gain the skills needed to negotiate. Learning this can help you avoid contract disputes and enter into negotiations fully prepared. Give us a call to get started.

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Sunlit Cove Healthcare Consultants

We provide management and consulting services to help healthcare businesses run efficiently. Navigating the dynamic and complex revenue cycle management is a challenge for many health plans, health care vendors, and providers. Our consulting services are available to assist with your day-to-day operations and provide expertise in growth and change management. We manage all aspects of your enterprise from the development of the revenue cycle management process to the completion of your business cycle.

Related: Contract Management