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NEGOTIATING PROVIDER CONTRACTS IN A HEALTH REFORM ENVIRONMENT July 2, 2013 William J. TenHoor AHP Healthcare Solutions.

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Presentation on theme: "NEGOTIATING PROVIDER CONTRACTS IN A HEALTH REFORM ENVIRONMENT July 2, 2013 William J. TenHoor AHP Healthcare Solutions."— Presentation transcript:

1 NEGOTIATING PROVIDER CONTRACTS IN A HEALTH REFORM ENVIRONMENT July 2, 2013 William J. TenHoor AHP Healthcare Solutions

2 Objective To review the fundamentals of becoming a better negotiator and contracting more advantageously for your organization with managed care organizations and other payers. 2

3 Understand Your Markets Good performance compels expertise Understanding markets, their payers, parity and reform The Markets Public Market: Federal MH and SUD Block Grants, State and Local Government, Medicaid, Medicare, TriCare, HRSA Commercial Market:, Self Insured Employers (Large Group, Small Group) Individual, MCO and Traditional Insurers, HMOs, MBHOs Self-Pay Market Markets versus Products (Health Plans) 3

4 Parity and Reform Environment Both parity and health reform impact behavioral health 08 Parity law (MHPAEA) restrains the restrainers in group insurance products – potent but requires continuing monitoring and enforcement Evolution from grants to insurance and exchanges The many parties in a health insurance contract The ten essential health benefits (MH/SUD, chronic disease mgnt.) The exchanges – non-stigmatized, non-exclusionary individual purchasing Insurers become retail health solutions companies Growth in commercial and public coverage (est. 30 M by 2014) Medicaid expansion, Exchanges New products lines and provider consolidation New delivery entities incorporating BH – ACOs, PCMH, FQHCs 4

5 Contracting Relevance Growing level of commerce in health care will be insurance-based Insurance is based on agreements (contracts) between 3 parties: payer, provider, subscriber Can also include intermediaries (MBHO) Many types of contracts MOU, MOA, verbal only Many applications in many industries health care, government procurement Focus: provider-insurer/MCO/ACO contracts – new/renewal End point of a sale Not about selling but about building/assuring trust and rapport Note: This Is not legal advice 5

6 Preliminaries Contracts represent large portion of asset value of a service business, deserving commensurate attention Contracts express policy environment 2010 Aetna contract modification From medical appropriateness to medical necessity Key aspects of a contract Memorializes intention to create a legal obligation Mutual assent Involves offer and acceptance 6

7 Managed Care Contract Basics Operationalizes behavioral expectations regarding the delivery of care to members Requires recognition of and understanding about who the other party is and what their motivations are: MBHO with a full risk contract with an insurer Insurer administering a Medicare Advantage PPO Market (who are your likely customers?) Commercial, Medicaid and/or CHIP, TriCare Review higher level contract into which your contract fits Medicaid – MCO BCBS - MBHO Contracts (Medicaid especially) generally available, given transparency & FOIA 7

8 Many Important Components Definitions – ensuring clarity Scope of covered (and non-covered) services Full capabilities of the provider, such as prevention/wellness Scope of license of providers Covered products (both Medicaid and commercial?) Compensation and payment processing Term, termination, post-termination, severability New AQCs are 3-5 year contracts UR/UM, QA, clinical coordination practices, guidelines and standards (medical necessity) Privacy, reporting and recordkeeping Member eligibility, enrollment & disenrollment Procedures – negotiate greater MCO responsibility Verification (and risk of error) and effective date 8

9 Entire Agreement Means everything in it but only whats in it Watch out for incorporate by reference Get copies (such as the provider manual) Get prior approval for any future change, amendment or modification Specify hierarchy of attachments for conflicts Watch out for whats not said Other partys agreements imposed on you 9

10 Compensation Provisions Price is not everything Understand amount of payment, when and how All arrangements FFS to full risk - continuum Tie payment to population, products, services covered Define timely payment, late payment penalty Third party payment collections, obligations, penalties 10

11 Risk Arrangements Rate setting only for what you can control Rate fairness - using actuaries, accountants Payment calculation basis – changes to Assignment/enrollment procedure Sufficient numbers and adverse selection MCO Withholds Rationale Lower is better Method and timing of distribution Stop loss insurance 11

12 Negotiation The process of reaching agreement that meets your interests better than your best no deal option The art of letting the other party have your way Daniele Vare Good DealNo DealBad Deal Many FACTORS affect your interest in and the shape of a deal, such as price, timing, scope, operational considerations, value perceptions, exclusivity, competitor impacts, territory/place, etc. 12

13 Principled Negotiation Fishers & Urys Win-Win: Getting to Yes Popular, fundamental, simplistic Separate the people from the problem Focus on interests, not positions Generate options before deciding what to do Require objective criteria/standards for achieving results 13

14 Principled Negotiation in Action PROBLEMSOLUTION PostureSoftHardPrincipled ParticipantsFriendsAdversariesProblem solvers Agreement VictoryWise outcome, efficient, amicable ConcessionsMake to cultivate relationship Demand as condition of relationship Separate people from the problem People/ProblemSoft on bothHard on bothSoft on people, hard on problem AttitudeTrust others, make offers Mistrust others, make threats Neutral on trust, explore interests PositionsChange easily, accept one-sided losses Dig in, fortify, demand one- sided gains Focus on interests, explore mutual gain option 14 Adapted from Getting to Yes, Fisher and Ury

15 Inventing Options – Fisher and Ury Whats wrongWhat might be done In Theory In the Real World 1. The Problem What might be done Current symptoms 2. Analysis Diagnosis Categorize symptoms Suggest causes ID barriers, whats lacking 3. Approaches Strategies Theoretical cures Broad ideas about what might be done 4. Action Ideas Quantify, qualify Specific steps to deal with the problem 15

16 Other Suggestions Meeting in person – dont text Dont teleconference Manage the physical space 16

17 More Recent Emphasis Expand and divide the pie by productively managing the negotiation Cooperative moves to create value Example – As part of contract renewal, offer an EAP to a payer who does not have one, but could sell it to the employers the payer services Competitive moves to claim value Negotiating an acceptable price for both parties Game theory and non-rational participants 17

18 Common Problems Neglecting the other partys problems and interests Relies fundamentally on depersonalized assessment Understanding/addressing the other party is the path toward solving your own problem Prepare by role playing and role reversing 18

19 Common Problems Neglecting BATNAs Best alternative to a negotiated deal Protecting yourself & making the most of your assets The insecurity of an unknown BATNA Each side has their own – know both Examples Walking away, working more closely with a competitor, creating a stalemate and prolonging it, going to court The depreciated asset sale – invoking competitors A good BATNA is potent bargaining tool 19

20 Common Problems Neglecting to convey your offerings and strengths and build relationships People do business with those they know Dont assume purchasers know who you are Many health insurers still do not understand behavioral health – worse, they misunderstand Objective criteria are lacking. Instead, By issue, jointly search for measurable objective criteria Use reason to determine most appropriate, how to apply Do not yield to pressure, only to principle Precedent, reciprocity, tradition, equal treatment, moral standards, etc. 20

21 Common Problems Letting price override all other issues Letting position drive out interests Searching too hard for common ground Differences are sources of value as well as commonality – the difference inventory 21

22 Negotiation Business Process 22

23 Plan and/or Simulate the Experience 23

24 Conclusion We hope you leave this session With a better understanding of important elements involved in negotiating generally and in concluding the negotiation of more rewarding managed care contracts, and as a result, increasing the value of your organization Good luck and thanks for your participation. 24

25 Questions & Discussion Bill TenHoor bill@tenhoor.com © 2012 by Advocates for Human Potential – Healthcare Solutions. All rights reserved. No part of this document may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of AHP. 25


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