The relationship between payers and providers can be contentious, especially in the current economic environment where costs are growing at a faster pace than reimbursement.
"There's no doubt inflationary pressures have greatly exceeded the payer's ability to pay us or their willingness to pay us," said Sunil Eappen, MD, president and CEO of the University of Vermont Health Network in Burlington, during an episode of the "Becker's Healthcare Podcast." "Between the healthcare workforce shortages of our nurses and our doctors at every level, and the inflationary pressures for medications, devices and to hire just our routine staff, it's been very, very expensive. The way we've approached our payers with that is to be completely transparent about it."
Transparency is the first principle of the University of Vermont Health Network's payer negotiation strategy. The team outlines inflationary pressures and the rates they're asking for and explains the reason for those rates. Dr.. Eappen said payers understand the challenges are real and health systems must make a margin to reinvest into the system for better patient care.
But that doesn't mean the conversation is easy.
Dr.. Eappen said the system works hard with all payers to reach reasonable rates. The University of Vermont Health Network is committed to providing equitable care to all patients so everyone can receive care within the network and a majority are covered through Medicare, Medicaid or commercial payers.
"We've started to really set some benchmarks for what we're trying to do, particularly with commercial payers. The goals there are: 'How do we get rid of the bureaucracy that often seems to get in the way of actually achieving the rates we agree upon?'" said Dr. Eappen. "The pre-authorizations that we spend a lot of time and effort and energy on, can we eliminate those when we know 80%, 90% of the time we get to the endpoint, anyway?"
Dr. Eappen mentioned payer policies can change throughout the year despite agreed-upon rates. It takes considerable resources to stay ahead of policy changes and collect in full.
"We spend an enormous amount of time going through those rule books around denials again, and so we're trying to reach agreements so that those kinds of things don't interfere with our patients getting care, and ultimately we end up with the rates that we agreed upon," said Dr. Eappen. "Not lower than that, nor higher than that. That's the work we've been doing with our payers to try to get us to see the endpoint in the same way."
The health system has also hired a workforce to deal with denials and manage the payer relationship, spending money on programs that don't make healthcare better but rather cater to the bureaucracy.
"That increases healthcare costs with no real value," Dr. Eappen said. "The second part of it is it makes our relationship more contentious, and so we're fighting over things that we think at the end of the day are the right thing to do for patients. We don't get more money as a result. We've already negotiated our rates, and now we're fighting over whether this is the right thing to do for our patients?"
A third aspect of the University of Vermont Health Network's payer strategy involves advocating for positive rule changes with local and federal politicians. One of the big topics right now is prior authorizations; if they must exist, Dr. Eappen said his team is pushing for more standardization between companies, so every insurer doesn't have their own set of rules.
"Can we make rules so that once we start the year, you can't change the rules unless everyone agrees to change the rules?" said Dr. Eappen. "Those kinds of things would lead to better care for our patients, more simplified care and less expensive care."