Healthcare suppliers and insurers have lengthy had a tense, typically adversarial relationship — and the contract negotiation course of between these two gamers has grown extra advanced than ever earlier than, in response to one well being system CEO.
Michael Mayo — CEO of Jacksonville, Florida-based Baptist Well being — spoke about how his well being system navigated a current protracted negotiation with Florida Blue throughout an interview final week on the ViVE convention in Nashville. The method required months of preparation, exterior consultants, and even a job pressure of board members, he mentioned.
The ultimate end result was a profitable deal — however the journey to get there underscored simply how a lot the dynamics between hospitals and insurers have shifted.
Beginning close to the start of 2024, Baptist started drawing up preliminary monetary assessments of what issues would appear like 5 years down the highway primarily based on Florida Blue’s reimbursement charges on the time, Mayo defined.
Shortly after this work started, Baptist knew it needed to rent an exterior consulting agency to provide you with a plan, he mentioned.
“We checked out how they have been reimbursing amenities within the different a part of the state, and we decided that our system was reimbursed virtually 40% under the bottom in our market. So we additionally employed an out of doors skilled communications agency. And that’s all they do — work on behalf of the suppliers in these negotiations,” he declared.
To achieve success in its contract negotiation course of, Baptist needed to assemble a devoted staff, Mayo acknowledged. This additionally included a “job pressure” of board members that helped Baptist construct its case to convey to the desk with Florida Blue, he mentioned.
With that staff in place, Baptist started structuring its case for larger charges. The well being system notified Florida Blue “nicely prematurely” about its intention to go-out-of-network if sure necessities couldn’t be met, Mayo remarked.
This couldn’t have been a lot of a shock for Florida Blue, he famous. Prior to now few years, Baptist had dropped Florida Blue as its pharmacy profit supervisor and third-party administrator, Mayo acknowledged.
“That was form of a prelude. I imply, you may’t say, ‘I didn’t see this coming,’ as a result of we simply needed to take a stand and do higher for our well being system — for our survivability sooner or later. However I do suppose what all of us discovered is we have now to speak extra early on, and we’ve obtained to search out the place the locations are that we are able to agree on one thing that may ship a greater product to the patron,” he declared.
Total, Mayo mentioned the entire negotiation course of took about eight months, with the 2 entities settling on an settlement in September.
The method was lengthy however fruitful in his eyes.
“It was a difficult occasion to say the least. Thankfully, I give credit score to their CEO for coming to the desk. We had a great dialogue — we made some concessions, they made some concessions, and we obtained to a degree that improved our monetary place, with additionally caveats round how denials will probably be dealt with. The factor we each need is to maneuver in the direction of extra value-based care. In reality, a part of our reconciliation was engaged on specific value-based initiatives with a phase of their inhabitants,” Mayo defined.
Each member of the healthcare ecosystem has a accountability to make care extra reasonably priced and accessible, a spokesperson for Florida Blue wrote in an electronic mail to MedCity Information.
“Pushed by our mission of serving to individuals and communities obtain higher well being, one of many ways in which Florida Blue advocates to protect affordability each day is by negotiating with supplier programs — to make sure high-quality care is inside attain for our members and the communities we serve. We’re happy that we have been capable of attain an settlement with companions at Baptist Well being Jacksonville as a part of our shared dedication to Northeast Florida,” the spokesperson wrote.
The negotiation course of didn’t all the time require a lot preparation, Mayo acknowledged. In different phrases, a decade or two in the past, hospitals didn’t must convey on exterior consultants and dedicate months to their negotiation technique.
And in some states, hospitals don’t even have the choice to battle it out on the negotiation desk as a result of sure insurers have such a robust maintain of the market, Mayo identified.
“I’m from Alabama, and I used to work in Alabama. The Blues in Alabama management about 85% of the market, so you actually don’t negotiate. You are taking what they provide,” he declared.
Blue Defend of Alabama didn’t reply to MedCity Information’ requests for feedback by the point this text was revealed.
Mayo additionally famous that suppliers and payers face related calls for.
Suppliers cope with price pressures, as do payers — however the two events have completely different methods for addressing their respective monetary challenges, Mayo mentioned.
“There’s a number of similarities that we’re all going via, however on the finish of the day, the insurers are attempting to say, ‘We’re bringing worth and representing our constituents or subscribers,’ when in actuality, they’re simply accumulating premiums and paying claims. And one of many ways is simply to disclaim claims. And that’s out, that’s been revealed within the press, and that’s an enormous sticking level proper now with a number of the carriers,” he remarked.
These circumstances are a part of what makes provider-payer relationships so antagonistic.
“It’s a special day and a special time in a number of methods,” Mayo famous.
Whereas suppliers and payers are definitely “not chummy,” profitable negotiations between the 2 are nonetheless attainable, Mayo famous.
“When you can achieve a mutual respect for each other and discover widespread floor that you’re attempting to resolve, you may get there,” he mentioned.
Photograph: fizkes, Getty Photos
