The Power Play: Transforming Payer Tactics into Provider Success

A stark reality looms within the U.S. healthcare system today- a profound tilt in power and influence towards health insurance behemoths, creating a systemic imbalance between economic gain and human health. As giants like Aetna and UnitedHealth dominate, their policies significantly influence the cost, accessibility, and quality of healthcare services. Examining the hidden forces behind these payer power plays can reveal new patterns and future healthcare direction.

In 2023, U.S. healthcare spending reached a staggering $1.2 trillion, accounting for nearly 20% of the country’s GDP. According to Dr. Jerilyn Morrissey, Chief Medical Officer at CorroHealth, “Payers are laser-focused on maximizing their profits, with every decision tailored towards this goal.” The upshot, while financially fruitful for payers, is a system that shortchanges providers providing care.

The Payer’s Playbook

The strategies employed by insurance companies are intricate and multifaceted. Providers must understand the payer’s strategies and develop their own to level the playing field.

Payer Power Play #1: Market Dominance Through Medicare Advantage

Payers have crafted a formidable play in maximizing their profits through Medicare Advantage (MA) plans. As Dr. Morrissey details, “Approximately 11,000 seniors age into the Medicare system daily, and nearly half are opting for Medicare Advantage plans.”

In 2022 the Congressional Budget Office predicted that by 2030, half of all Medicare beneficiaries would be enrolled in Medicare Advantage plans. This benchmark was reached much earlier – eight years earlier, in fact – signifying a critical victory for payers in their quest to boost membership in this rapidly expanding business.

A cocktail of factors fuels this membership growth and payers’ market share, including an aging population and market consolidation, with larger insurance companies snapping up smaller plans. “Payers utilize their market control to strong-arm providers into unfavorable contract terms,” explains Dr. Morrissey. This power dynamic reinforces the payer’s market dominance and underlines providers’ need to understand and counter these tactics.

Payer Power Play #2: Raise Revenue Per Member

Payers have created an intricate dance between risk adjustment and clinical cost management in their quest to increase revenue per member. Medicare’s tight control on premium adjustments doesn’t deter them. Instead, they leverage the Risk Adjustment tool offered by CMS.

The Risk Adjustment tool was designed to ensure medically complex patients were included and help insurance companies mitigate the financial risk of treating patients who require more costly care. While the tool is inherently appropriate, payers have taken advantage of it by inflating their members’ perceived complexity and healthcare needs, leading to increased revenue per member. However, a 2016 Office of Inspector General (OIG) report highlighted that some health plans generated massive revenue by reporting unverified patient conditions, demonstrating potential areas for payer exploitation within the risk adjustment system.

Payer Power Play #3: Decrease Individual Healthcare Spending

This strategy is a linchpin in the payers’ drive for profitability. The primary goal is to curtail the cost of healthcare services per member, and payers wield a variety of tactics to reach it. Payers have invested in member engagement programs to encourage better health, hoping to prevent the onset of costly health conditions by promoting healthier lifestyles; while commendable, these tactics don’t create an immediate return on investment (ROI).

So, payers have developed other tactics to gain a quicker ROI. The foremost among these is hardball negotiations with providers, using their market control to force providers into agreeing to stringent contract terms. Payers also use subtle maneuvers like reducing payments for services rendered, automatic claim denials, delays in payment processing and imposing intricate administrative requirements to shift the cost burden to providers.

Payer Power Play #4: Cost-Shifting and Market Influence

In this strategy, payers flex their market muscle to sway healthcare providers and alter the cost structure. Cloaked under the banner of “Frictionless Healthcare,” payers introduce changes designed to streamline their operations and expand their profit margins at the expense of providers.

Additionally, payers use their influence to affect admission status choice and invest in commercial screening tools, algorithmic technology, and provider groups to further extend their reach and control. They can indirectly steer processes and decisions to their benefit by being stakeholders in these areas.

In essence, through these power plays, payers exert their market influence and economic clout to reshape the healthcare landscape, prioritizing profits over equitable healthcare access and delivery.

Playing Defense: Strategies for Managing Payer Behavior

As payers continue dominating and influencing the healthcare industry, providers must understand their strategies to develop countermeasures. CorroHealth stands at the forefront of the industry, advising and guiding healthcare organizations through the complexities of managing payer behavior. By staying informed and leveraging innovative technology and solutions like those offered by CorroHealth, providers can achieve a fairer balance between economic gain and human health in the U.S. healthcare system.

The Provider’s Playbook: Winning Strategies to Change Payer Behavior and Boost Revenue

The strategies discussed in this section are three-fold: getting your house in order, holding payers accountable, and escalating payer issues to change payer behavior. Each step is integral to ensuring that healthcare providers can compliantly request fair reimbursement, reduce denied claims, and ultimately secure their financial health.

In the latest regulatory guidance, CMS 4201-F aims to ensure that MA beneficiaries receive the same items and services as beneficiaries in the Traditional Medicare program, using identical coverage policies and approaches. The expectation is that this policy will result in a decreased number of denial determinations. Furthermore, Medicare Advantage Organizations (MAOs) are expected to follow the 2-Midnight Rule. Payers are prohibited from using InterQual or MCG criteria or similar products in isolation to alter coverage or payment criteria established under Traditional Medicare laws. This rule further prohibits MAOs from applying internal coverage rules when Traditional Medicare statutes, regulations, National Coverage Determinations (NCDs), or Local Coverage Determinations (LCDs) already exist.

Defense Play #1: Get Your House in Order

Healthcare providers are often under-resourced and struggle to keep up with claim submissions. However, payers are capitalizing on this, making it harder for providers to secure their revenue. Before moving forward, you must get your house in order.

Establishing and implementing consistent internal processes by aligning compliance, clinical leadership, and finance is critical. This creates a unified front working towards the common goal of fair and compliant reimbursement. Develop robust procedures for documenting patient stays that are unaffected by payer influence. Refer to regulatory guidance such as CMS 4201-F and the Two-Midnight Rule for patient status. Internal employees and teams may often think they understand these rules, but many nuances and historical implications must be considered. Furthermore, payers have trained your internal teams to inaccurately document patient stays to avoid payment. Educating teams on updated regulations and procedures is crucial and ensuring effective implementation using tracking systems with feedback to support ongoing improvement across the organization. This proactive approach protects against payer challenges and streamlines operations.

Defense Play #2: Hold Payers Accountable & Enforce Your Rights

Payers have responsibilities and obligations to uphold. To overcome this, the second defense strategy to ensure fair treatment is to assert provider rights and hold payers accountable to contract terms and other regulatory requirements.

After improving internal processes, the next step involves making sure that inappropriately denied cases receive adequate attention, including peer-to-peer discussions and that appeal processes outlined in the contract are pursued to their fullest extent. Be sure to quantify the impact of the most egregious denials by tracking cases, identifying patterns, and measuring the financial implications of denials. These tactics are vital to this defense strategy and will offer valuable insights to strengthen your negotiating position during contract renewals and disputes.

Defense Play #3: Escalate Payer Issues to Change Payer Behavior

Leveraging good data about the payer’s inappropriate behavior can help to improve the payer-provider relationship and be a vital source of information to shape future contract language. Comprehensive tracking and analysis of payer behavior patterns will safeguard your organization’s interests and ensure fair and compliant revenue.

“I absolutely fell in love when I saw the data analytics capabilities the CorroHealth team presented to me,” says Dr. Lenora Adams, System Vice President of Patient Care Optimization at SSM Health, who partnered with CorroHealth in 2021 to optimize their clinical revenue cycle and operations across multiple facilities in the mid-west. “Within the first quarter, analyzing payer behavior and seeing what each payer was doing at each step in the revenue cycle opened my eyes to many new possibilities.”

One of those many new possibilities to change payer behaviors is through Joint Operating Committee (JOC) meetings or executive escalation. These are a few initial pathways that provide an opportunity to voice concerns, collaborate on solutions, and foster a more transparent relationship with the payer. They serve as a powerful tool in addressing and resolving issues in a collaborative manner. Comprehensive data sets and well-documented patterns of payer behavior will allow providers to step out of the individual appeal transaction process and escalate these patterns of behavior and the financial impact created in a broader setting.

If collaboration is still challenging and if the contract permits, invoking arbitration can effectively enforce contractual rights or ensure fair treatment. This legal recourse can resolve disputes, ensuring that your organization’s rights are upheld.

Defense Play #4: Leverage the Power of Partnership

In this high-stakes game, providers must be more proactive than ever. Instead of falling prey to the payer’s power plays, providers can adapt their methods and build sustainable revenue models while providing quality care for all patients. As Dr. Morrissey asserts, “Providers must become as savvy in managing the complexities of negotiating with payers as they are in delivering care.”

But it’s difficult to do it alone. Providers need a good partner built on mutual understanding, trust and good communication and who intimately understands the payers’ rules, strategies, and tactics. The right partner can provide the tools, technology, expertise, and people power to support providers’ quest for fair treatment. Such a partnership ensures that providers have the best defense against payer denials while streamlining operations and improving revenue cycle management.

At CorroHealth, our clinically-led healthcare analytics and technology are supported by our unique methodologies and expertise in the clinical revenue cycle, healthcare regulations, and data to enable health systems to confidently and compliantly claim revenue for the care they provide, ensuring financial resilience for their future.

Let’s keep fighting for fair healthcare revenues so patients can continue to have access and delivery! All it takes is knowledge, determination, and collaboration to push back against payer dominance.

Ready to Empower Your Clinical Revenue Cycle? Start your journey towards fair and sustainable healthcare revenues today. Leverage the power of partnership with CorroHealth to secure your future. Don’t let payer dominance dictate your revenue flow. Connect with our team to book a strategy call and learn more about how we can help you fight for the financial resilience of your healthcare organization.

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