Individual communication, transparency, and focusing on joint goals can help uncover win-wins in managed care contracting.
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What is an example of a recent win with a payer?
Peg Burnette: “An example of a recent win with a payer at Denver Health was when we changed how we worked with one of our largest insurance payers on updating our contract, which had stagnated over a period of time because we had a dispute over billing certain claims.
"And before I get back to that and talk about strategy with more detail, I did want to talk about the kind of organization that Denver Health is and our payer mix, which is not that common in health care. We're a safety net hospital, and there are many of those across the U.S., but few in each state. And we're the largest safety net hospital in Colorado. So our payer mix is 50% Medicaid, which is a lot more Medicaid than you would normally see. Medicaid pays below cost. Then we have our commercial insurance, which is about 12%. Then Medicare, which also pays below cost. So even though commercial insurance is a small portion of our payer mix, it’s very important to Denver Health because it allows us to generate a gain on one line of business, the commercial line, which helps to pay for our mission, which is to care for all of the residents of the city and county of Denver, regardless of their ability to pay. As you might imagine, along with the Medicaid business that we have, we have a substantial number of uninsured residents, and that number is growing as well with all of the current events that are going on.
"So getting back to this contract and how we changed our approach: When I thought about a ‘win’ with a payer, I thought it was difficult for me to view this way, because we're trying to treat our commercial insurers as partners. And so to me, it only works if it's a win-win. There is a lot of press and and sometimes bad feelings about commercial insurance companies, because of their bottom lines and how their executives are paid. But that's their business model and I'm not going to change that. And I have to look after Denver Health's business model, which is to make us successful by generating the optimal gain possible at our commercial insurance business to pay for our mission.
"So we’ve tried to approach each commercial contract as a partnership and go in and see how can we make it a win-win. And what it has really boiled down to, in this case, is relationships. It's said a lot and it might be seen as trite or repetitive, but relationships are primary. In this certain instance, the relationship had sort of stagnated or not been tended to over time. Then communication was cut off and there were misunderstandings between the teams to where no negotiations were taking place, and it was just sort of a stalemate over this amount of money that this commercial payer thought that we owed them. So what we did was reconnect the relationships at the right level.
"I'm at a senior VP of revenue cycle level at Denver Health, and then I have a VP of revenue cycle and a VP of contracts. So those folks established their relationships with their counterparts at this commercial insurance company, and I established a relationship with my peer. And we were able to get back together, start talking collaboratively about how to make this work, and we shared with this commercial insurance payer our strategies. We don't have to share every detail of the strategy because there are some tactics we don't always want to share, but the basics of ‘Here's our payer mix, and we need to be able to generate money on this contract so that we can offset that.’ And then basically we don't have the money to pay this large amount of money back and our reasons why we thought (the perception of the contract) was unfair to begin with. And so to our delight, the insurance company listened to us and we talked together and we came to a compromise where we think we both walked away with feeling satisfied, a true win-win. And so that's just one example and I really think it was predicated on the relationships. Now our challenge is to continue the partnership and work on other areas, such as centers of excellence, because Denver Health has some of the best physicians. We really want to work on things like that and quality initiatives with our commercial insurance partners and not fight over or get stuck on issues of reimbursement. Reimbursement should be clear in the contract, spelled out, and we work together on improving it if it's not what we want to see from both sides.”
