Avea Solutions Blog

Negotiating Reimbursement Rates with Payers: Part 1 of 2

[fa icon="calendar"] Jul 23, 2019 3:22:38 PM / by The Avea Solutions Team

The Avea Solutions Team

 

Negotiating Reimbursement Rates with Payers: Part 1 of 2

Are you thinking about your reimbursement rates for addiction treatment in 2020? If not, you should be.

During the summer lull, many providers turn their attention to back-office improvement initiatives, and unfortunately, most of us in the addiction treatment industry have felt the pressure of declining reimbursement rates over the past 18 months. Now, more than ever it is crucial to understand how to negotiate more effectively with payers for higher reimbursement rates if facilities want to survive the revenue revolution upon us. For most, this is unchartered territory with little knowledge of where to begin. To help bridge this gap, we interviewed Kevin Isaacs, founder and President at PANLR - a leading provider of outsourced payer contracting services.

This is Part 1 of 2 of our interview:

 

kevin-issacsQ: Kevin, thanks for taking time to help our readers understand such an important topic in our industry right now. Before we get started, can you tell us what your company name PANLR stands for? 

PANLR stands for “paneler” – since we help addiction treatment facilities get onto insurance panels and negotiate favorable re-imbursement rates.

PANLR's goal is to extend access to high quality treatment. By facilitating in-network contracts, we help ensure that beneficiary populations can seek treatment from and afford quality providers. Simply put, we want to make sure the best providers are rewarded for being the best.

 

Q: Why has contracting become such a hot-button topic for treatment centers?

A: In a word - control. As a provider, your business model revolves around payment-related assumptions and it’s unnerving when that reality changes. Many providers see going in-network as a way to regain control over their revenue. 

The reduction in out-of-network reimbursements is the most obvious way providers feel themselves losing control, but payers can exert influence in more subtle ways – authorization difficulty, referrals, claims audits, clinical reviews, lengthened receivable cycles, performance improvement plans. Going in-network often means finding stable footing when you feel you’re in a minefield.

And from a patient’s perspective, the rise of high-deductible plans, large co-pays, and plans offering limited or no Out-of-Network coverage continue to shift preference towards in-network providers, while competition for insured patients has intensified among providers.

 

Q: Can you be good or bad at contracting?

A: Providers can be diligent or neglectful. We get calls all the time from executives huffing and puffing about their rates: “How can anyone be expected to stay in business at this level of reimbursement!” “It’s unfair what they’re doing to us!” “We’ve been treating their people for 12 years!” and so on. But once we get our hands on the contracts we find out they’re 12 years old. No wonder…

Contractors, on the other hand, can be good or bad. Contracting skill is determined by some combination of experience, rigor, and attention to detail – all of which factor into efficiency. Why is efficiency important? Let's say you're a medium-sized in-patient treatment center taking in-network patients: 35 beds reimbursed $800 per night. You go through contracting and do “ok” in terms of your outcome, achieving a 6% rate increase for the next contract period.

Well for every month that passes without you renegotiating, that’s $50,000 you’re missing out on that drops straight to the bottom line.

 

Q: What’s one action treatment providers could take right now to improve?

A: Whether you're in-network, out-of-network and want in, or out-of-network and just curious, my advice is the same: ACT!

Contracting is a pure example of a Quadrant 2 Activity – Important, but not Urgent. To be fair, contracts are easy to neglect:

  • Payers set up roadblocks to deter follow through and structure delays in the process
  • The data gathering and analysis required to inform a negotiation strategy often puts so many items on your to-do list that providers never get off the tarmac

Don’t let that stop you – act! Even without a copy of your old contract, you could do a lot worse than giving your 2nd or 3rd biggest payer a call to learn where the holes are in their addiction treatment network and to see how your organization can help fill them. That won’t translate to higher rates overnight, but it shows a willingness to partner that can pay off in the long-term.

 

READ PART 2: How to become more sophisticated in negotiating reimbursement contracts

In the second part of our series, we ask Kevin the following questions:

  • Not everyone has the budget to hire a full-time contractor; how can our readers become more sophisticated?
  • If a facility is having an Outcomes Study performed, will those results impact the contracting process?
  • What are the major winds of change in the industry from a contracting perspective?

Topics: "Reimbursement rates", "negotiating contracts with payers", "addiction treatment billing"