Overcoming Disruption and Ensuring Access for Your Members
Selecting the right provider network is a crucial step in ensuring your employees receive top-quality care. Time and effort are invested in this consideration to ensure the right facilities and physicians are included, optimizing health outcomes and benefiting your employees.
However, despite your best efforts, hospitals’ mounting labor costs, unfavorable investment outcomes, and general inflation are prompting them to seek significant price increases during network contracting. In turn, this disruption is leading more providers and carriers to forego contract agreements, pushing major institutions out of network for the patients they serve.
The result? Members are left with limited healthcare options, and employers grapple with cost management challenges.
Hospitals may opt to exit carrier networks if they believe they’re not receiving fair compensation for their services. In the last year, several major hospital systems renegotiated contracts that aimed for increased compensation from networks, even as their current agreements came to an end.
For instance, in 2023, Anthem Blue Cross Blue Shield (BCBS) customers in Cincinnati, OH, were at risk of losing access to the Christ Hospital Network. Thankfully, an agreement was reached in time before the previous contract expired, demonstrating the potential for successful negotiations. Meanwhile, in July 2024, Trinity Health of New England went out-of-network with UnitedHealthcare following unsuccessful negotiations. That same month, Blue Shield of California notified members that Stanford Health Care hospitals were no longer in-network, though there is still an ongoing attempt to reach a new agreement.
Navigating network negotiations can be challenging and unpredictable.
Major negotiations often start 12-18 months before their effective dates, which makes it difficult to determine each party’s economic requirements. The role of staff and local constituents can add an additional unforeseeable variable.
In one instance, a carrier used one of its largest union clients to organize a picket line outside a hospital during contentious negotiations. In another case, a hospital was compelled to enter tough negotiations with a carrier due to strong backing from its nurse union. To further complicate matters, the contemporary transition of health systems from hospitals to ambulatory settings often muddles analytical models from both sides, making it difficult to calculate what subtle terms and conditions are negotiated and how they translate into unit price.
Navigating Network Changes with Proactive Strategies
Brokers and employers must be proactive in their preparations for potential network changes or increases.
To minimize the impacts of these changes, we recommend taking several steps, including:
- Understanding the situation: It’s crucial to stay informed about any network changes with local providers, even if they don’t immediately affect you. Unsuccessful negotiations with one carrier may foreshadow difficulties with others.
- Communicating with employees: Regular communication with employees about potential network changes, including the reasons for the changes and any impacts on benefits, can help manage expectations and reduce uncertainty.
- Working with a TPA: A TPA can help manage employee benefits communication and navigate any network changes. They can also facilitate direct contracting with out-of-network providers and stitch together national and regional networks for comprehensive coverage.
- Evaluating other network options: Evaluating different network options, such as narrow versus broad networks or alternative networks, as well as add-ons like telemedicine or direct primary care, can help employers determine which best meets plan and employee needs.
- Negotiating with hospitals or providers: Directly negotiating with healthcare providers or hospitals can help mitigate potential network increases. Brokers and TPAs can leverage their bargaining power and negotiate favorable terms for their clients and employees, including lower rates and better services.
- Implementing cost management tools: Cost management tools, including fraud, waste, and abuse programs and clinical care management programs, can help employers make informed decisions about healthcare spending while maintaining quality care for employees.
Discount differentials between networks, typically ranging from 1-5%, can be successfully mitigated through the implementation of robust fraud, waste, and abuse programs and claims excellence initiatives. These measures ensure cost savings without compromising measurability or quality of care.
Leveraging Clinical Care Management programs can further support employers by offering nurse resources to assist at-risk members, effectively managing larger claims and optimizing healthcare outcomes. In situations where a facility or provider change necessitates a standalone contract or higher fees within a network to maintain existing agreements, prudent financial stewardship is key to safeguarding benefits and ensuring long-term financial stability for the employer.
Preparing for Healthcare Negotiations and Cost Management
Amidst varied theories about the reasons behind hospital losses and the pursuit of increased compensation, the central truth remains: a loss for hospitals necessitates efforts to recoup those losses, irrespective of their origins.
In light of this reality, brokers and employers should proactively anticipate potential network changes or escalations to safeguard employees’ access to top-tier, cost-efficient healthcare.
A trusted TPA can serve as an invaluable ally in this endeavor, offering indispensable expertise in healthcare negotiations, diligent management of healthcare expenses, and ensuring that employees receive optimal care at the most favorable rates.
By partnering with a TPA, brokers and employers can fortify their preparedness and uphold their commitment to sustaining high-quality healthcare for their workforce while also prioritizing cost-effectiveness.
At Personify Health, we recognize the critical importance of informed decision-making and proactive strategies in navigating the complexities of healthcare. Through collaborative partnerships and strategic solutions, we aim to empower brokers and employers with the tools they need to navigate potential network changes and uphold the standard of excellence in employee healthcare benefits.