By TKG’s Lindsay Gingras
The healthcare payer market significantly varies depending on individual state and regional landscapes. Payer and provider relationships rest on the party with the most leverage whether that’s market control, high quality scores, low total costs of care or market-wide shift of risk to providers.
TKG had the opportunity to review the shifting landscape of payer-provider relationships earlier this month at AMGA’s annual conference. CEOs, Medical Directors, and Project Specialists of major health systems met to discuss the implications of this shifting landscape within their market. Through our discussions, we came to the conclusion that market consolidation, criteria for narrow network participation, and assumption of full financial risk are the most prominent emerging market trends for the coming years.
MARKET CONSOLIDATION
- – Health systems of large scale have increasingly narrowed their payers to a trusted market, but that health system must have the majority, if not total, market control
- – Payers fear provider consolidation, as they fear that providers will have too much leverage over patient care delivery
- – Horizontal integration and consolidation is also increasing, as health systems acquire community partners such as home health organizations to better manage financial risk
NARROW NETWORK PARTICIPATION
- – Local presence by a payer is key to level of partnership. There is less flexibility for providers to leverage their relationships with payers if the national payer does not have a large stake within the state. Providers should start with the “big dogs” in terms of their network’s payer coverage
- – Systems are becoming more selective in contracting with independent physicians. Physicians that provide services out of cost with the market will need to reevaluate in order to participate in a clinically integrated network
- – Post-Acute Care (PAC) is a target for managing Medicare escalating costs. When performing a review of bundles for hips and knees, it was found that the PAC costs were more variable than hospital, doctor, or device costs
FULL FINANCIAL RISK
- – Clinically integrated networks are a success factor. Payers have more leverage with smaller, independent practices who have limited influence
- – Trusted or “preferred” provider partnerships can help system-based providers standardize the care provided to their patients and set expectations for care coordination
- – It is predicted that MA will be the fastest growing method of insurance, which involves the government pushing risk off to providers. As large systems are moving towards a MA population, at what point might they close their doors to traditional Medicare patients and only accept MA Medicare patients?
- – A system-wide mandate to adopt generic medications is the #1 tactic for managing medication costs. However, system leadership and formulary decision makers need to consider the cost benefit of using more costly drugs that might ultimately lower the total cost of care