4 best practices to improve payor relationships

Healthcare revenue cycle leaders say the darndest things. Especially about payors. When asked to rank discussion topics at this year’s Kodiak Revenue Circle conference, “payor behaviors” topped the list of 15 topic choices.

In a preconference survey, Kodiak Solutions also asked attendees to share one of their best practices in managing their relationships with payors. Some of the answers were more colorful than others.

The invitation-only event brought together healthcare revenue cycle leaders from 15 hospitals and health systems from across the country. These leaders talked extensively about managing payor relationships during the conference, held Jan. 15-16, 2024, in Scottsdale, Arizona.

In these discussions, Kodiak Revenue Circle members shared challenges managing their payor relationships and offered tactics and strategies they’re using to overcome those challenges and improve their revenue cycle performance.

4 common payor relationship challenges facing providers

To understand the solutions, it’s important for provider organizations to recognize the challenges.

Relationship inertia

Many revenue cycle leaders characterized the challenge of relationship inertia as payors being reluctant to change their claims-paying behaviors until they’re forced to do so. That force often comes from a shift like a new set of state or federal payment rules requiring change.

A good example is the new Interoperability and Prior Authorization Final Rule, issued by the Centers for Medicare & Medicaid Services in January 2024. The rule requires Medicare Advantage plans – and other health plans offered to the public under federal health insurance programs – to make and send their prior authorization decisions within seven days for non-urgent requests and within 72 hours for urgent requests. Payors that haven’t been following these timelines will have to change their behaviors to comply with the new rule.

Missing decision-makers from JOC meetings

The second challenge is the lack of an influencer or decision-maker from a payor organization at a joint operating committee (JOC) meeting. Contracts between providers and payors typically include the creation of a standing JOC gathering to resolve payment or claim disputes.

The challenge occurs when a payor sends a representative to the JOC meeting who has no authority to resolve a dispute. The payor’s JOC representative might be authorized only to refer the matter up the chain of command, which delays the decision of whether and when to take up the issue, leaving the provider hanging and the issue unresolved.

Data silos

The third challenge, at least historically, is the lack of a level playing field when it comes to data. Payors have had the upper hand because they have access to claims data from all their contracting providers.

Payors see the big picture and can tell an individual provider it’s getting paid as accurately, fairly, and promptly as other providers. An individual provider can see only its own picture and has no idea how data compares with its peers. It’s a weak hand for a provider to play at a JOC meeting.

“As provider margins have become tighter, and as payors are increasingly focused on maximizing their margins, collecting becomes an ever-bigger challenge.”

Member of the Kodiak Revenue Circle

Limited provider and employer relationships

The fourth challenge is found at the employer level. Payors, especially commercial health plans, work for employers. The way commercial health plans earn new business and retain old business is by saving employers money on healthcare costs. Commercial health plans can keep their premiums competitive by underpaying or not paying claims to keep their own costs low. It’s a symbiotic relationship with employees that keeps providers on the outside looking in.

4 best practices to improve provider relationships with payors

For providers to improve relationships with payors, they might have to level the contract playing field and gain more control over – and have more confidence in – how those relationships progress. Healthcare revenue cycle leaders shared some of their best practices to offer solutions to other provider institutions facing similar strained relationships.

Break relationship inertia

The first best practice is to break relationship inertia and move payors to act. While providers can’t write their own rules in the Federal Register, they can threaten to terminate a contract.

In the past, a provider threatening to drop a health plan or a health plan threatening to drop a provider was more of a public relations dance with both parties knowing full well that they would eventually reach an agreement. Today, provider threats to drop a health plan are real. So is threatening to file a lawsuit against a health plan and then actually suing when negotiations fail. The key to successfully breaking relationship inertia is the health plan knowing that the provider is serious.

Send decision-makers to JOC meetings

The second best practice is for providers to send their own influencer or decision-maker to a JOC meeting. Providers shouldn’t send someone not empowered to make a decision or push back on a payor. Instead, they should assign someone who can take action without running out the door or running the decision up the chain of command. That could be the CFO or even the CEO. Once a decision-maker arrives at a JOC meeting, the payor across the table is likely to send its own decision-maker who can make tough calls on the spot without delay.

In addition, members of the Kodiak Revenue Circle recommended that providers integrate their revenue cycle and managed-care departments. Working together might produce better and more enforceable contract terms and might better inform the influencer or decision-maker sent to the JOC meeting.

Use technology to access industrywide data

Providers and payors are playing on a level field when they have access to the same data. Kodiak’s Payor Market Intelligence (PMI) takes providers’ net revenue and revenue cycle data transmitted to the Kodiak RCA platform and calculates more than 50 revenue cycle key performance indicators (KPIs) by payor type or by individual payor. PMI also compares a specific provider’s KPIs to national and regional KPIs that PMI normalizes from data sent to the Kodiak RCA platform by its more than 1,850 hospitals and 250,000 users.

A provider’s odds improve when it knows the cards in its own hand at a JOC meeting while also having a peek at the payor’s hand. This access to information will lead to more productive discussions as all parties have the same accurate, objective, and verifiable data.

“As providers, we need to be consistent. We should approach payors in a similar fashion so that the payors – at least for the larger ones that represent patients in all our markets – see and hear similar things from revenue cycle leaders.”

Member of the Kodiak Revenue Circle

Develop relationships with employers

Providers should have access to employers – the same employers that have a seemingly symbiotic relationship with payors. It’s time to make employers part of a provider’s team. The poor claims-paying behavior of a payor can have an unhealthy clinical and financial effect on an employer’s workers. Prior authorization delays can delay medically necessary treatment. Arbitrary claim denials can increase employees’ out-of-pocket cost burden for their medical care.

Providers should position themselves as advocates for local employers and employees. Keeping workers healthy, productive, and on the job is good for all involved. Members of the Revenue Circle suggested that providers take the relationship even further and make employers responsible for ensuring their employees pay their deductibles and copays and for collecting those amounts if employees don’t meet their financial responsibility.

Trust for successful relationships

The common thread through all four best practices is trust. Payors should quickly learn to trust that a provider will terminate a contract or file a lawsuit and that providers will send a high-caliber decision-maker to a JOC meeting. Meanwhile, providers should feel confident to trust the data they have. Finally, providers should trust themselves as the patient’s clinical and financial advocate. As in most relationships, a lack of trust can lead to failure.

Members of the Kodiak Revenue Circle support these four best practices, which can enable provider organizations to take their payor relationships to the next level.

Learn more about how to build stronger relationships with payors at the Kodiak Solutions Healthcare Virtual Symposium on March 13, 2024.