Providers, payers face intense negotiations after COVID-19


Pamela Stahl, president of Anthem Blue Cross and Blue Shield of Georgia, said that if the pandemic has changed anything in her organization’s experience with contract negotiations, it has highlighted the shared payer and provider desire “to ensure that people have access to affordable healthcare and access to their physicians.”

Anthem BCBS of Georgia recently renewed a number of contracts, including one with Atlanta-based Piedmont Healthcare, and those negotiations wrapped up two months ahead of schedule.

Stahl said a key to this success was to talk early and often as the executive team. “While the folks who do the negotiations for us continued to work through the details, the executive team met regularly, talked openly and agreed to listen so that we could understand each other’s positions,” Stahl said.

Executives at both organizations also assembled a list of the top five issues most important to them, she said, adding, “We decided that those were going to be the items we would work through first, rather than waiting until all the other aspects of the contract would be done and then delaying the negotiations, since these were the hardest points to work through.”
While she would not disclose details of the agreement, Stahl said the Blues plan and Piedmont are working toward ultimately shifting to a value-based arrangement.

But that doesn’t mean hospitals, physicians and insurers are all best buds after collaborating to battle COVID-19. Fred Bentley, a managing director at consulting firm Avalere Health, said provider groups and hospitals may be in a relatively strong negotiating position relative to insurers because of an imbalance in their financial strength.

“For a lot of 2020, and extending into 2021, payers have had more money on hand than they typically do,” Bentley said. “While some health systems have weathered this period pretty well from a financial standpoint, hospitals that have struggled will be in a strong position to say, ‘you need to hold the line, if not bump up the (payment) rates, to help keep us whole and keep our doors open.’ ”

Major providers like Sutter Health in California lost $321 million on operations in 2020, while insurance giant UnitedHealthcare reported operating earnings of $12.4 billion, an increase of 20% from 2019.

Richard Bajner, a partner at consulting firm Guidehouse, echoed Bentley’s sentiments, saying a slew of provider revenue constraints make them more likely to enter contract negotiations with a “hardball approach.” Moreover, Bajner added, the Congressional Budget Office forecasts the Medicare Hospital Insurance trust fund will be exhausted by 2024, which is likely to pressure CMS to limit Medicare reimbursement over the next few years.

“In an environment where the trust fund is less solvent than at any other point in Medicare history, policy implications may be more draconian to the provider segment,” Bajner said.

Sagging government reimbursement will likely result in providers needing to eke out more money from the shrinking commercial segment.

“This will create an environment for more challenging conversations with payers that could lead to hardball negotiations over prices,” Bajner said.

The pandemic has already been cited as a factor in a contract dispute between Montefiore Health System in New York and UnitedHealthcare, which remains unresolved.

Another pressure point that will affect negotiation dynamics is CMS’ price transparency requirement. Both payers and providers will be coming to the table with detailed benchmarking analyses, Avalere’s Bentley said, and both will look to see “if their competitors down the street are getting a sweetheart deal, and asking, ‘why am I not getting the same?’ ”



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