Standard payer negotiations are challenging enough: provider organizations are managing increasing costs, downward pressure on reimbursement, and now a nationwide pandemic. Few providers are looking to exacerbate this already complex situation.
However, market pressures are incentivizing providers to shift care to lower-cost settings, deploy telehealth services, and transition away from volume-based reimbursement toward alternative payment models (APMs) based on value. Today’s environment presents a unique opportunity to explore APMs such as bundled payments, as they offer the most direct route to value-based reimbursement, thereby expanding the market for value-based care delivery.
Provider organizations (i.e., hospitals or physician groups) pursuing entry into commercial bundled payment contracts need to recognize the opportunities and risks associated with commercial bundles. Commercial bundles differ from Medicare bundles, as providers have more control over program design (e.g., episode selection, exclusions, pricing, contract language provisions), which may be more appealing to some provider organizations. However, commercial programs may require more up-front diligence and planning due to the data analytics required as well as the previously mentioned program design.
Provider organizations choosing to participate in elective Medicare or commercial bundled payment programs need to answer many questions, including:
- Which service line or clinical episodes present the greatest opportunity for savings?
- Which have the greatest variability in medical spend and present an opportunity for increased care standardization?
- How do you build an accountable and collaborative provider network with internal and external providers?
In addition, when entering commercial programs, providers need to decide:
- What level of risk should you accept?
- How will you design your payer and pricing strategy?
- What contract provisions are key to optimizing operational and financial performance?
We will help you answer these questions—and more—to ensure you will enter into a commercial bundled payment arrangement with confidence. Payer negotiation is often not prioritized in the development of value-based payment models, and we believe well-executed preparations and negotiations can be the difference maker.
This article provides a streamlined payer negotiation process for commercial bundled payments by outlining two phases: (1) Preparing to Negotiate and (2) Negotiating with Confidence. Key steps are illustrated below.
Published February 15, 2021
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