Reimbursement rates are critical to your organization’s bottom line. To ensure profitability and avoid operating in the red, rates must be strategically negotiated (or later, renegotiated).
In a recent webinar, James Craig, director of payor relations with BHCOE, shared how funders establish rates and highlighted strategies providers can use to negotiate rates. James was joined by Sarah Vega, Chief Operating Officer of Breakthrough Behavior, who shared with attendees a recent rate negotiation success story.
For background, James was formerly Corporate Vice President for Autism Services at Beacon Health Options, the largest autism services managed care provider in the US with over 11,000 cases and covering 13 million lives. He was responsible for product development, program design and implementation, network strategy, and continuous improvement of clinical services delivered to children diagnosed with autism spectrum disorder and their families and supported the Beacon clinical teams throughout the United States.
Below we’ve highlighted some of the key takeaways from the webinar. At the end of the blog post, download BHCOE’s “Checklist for Funder Rate Setting” to get your organization prepared.
How Health Plans Set Rates
Rates are rarely initially set according to skill, ability or clinical outcomes. Health plans primarily set rates through utilization management, risk and cost management. And rates vary significantly between commercial plans, Medicaid, Tricare and self-insured employers. Supply and demand, the level of competition with other funders, and access to services vs. projected cost all influence rates.
“The challenge with rates is that all providers are treated the same and rates do not increase much over time. Higher rates do not ensure quality access, but lower rates deter provider participation,” says Craig.
“Rate increases across a network have an outsized impact on a funder’s costs, so the trend has been for health plans to reduce rates as a mechanism for achieving cost savings.”
For example, Blue Cross and Blue Shield of Illinois recently proposed a 26 percent rate decrease. After an outcry from providers, families and advocates, they rolled it back to a 14 percent decrease.
As ABA utilization continues to rise along with funder costs, these trends in rate reductions are likely to continue. Now more than ever, providers need to understand the funder landscape and how to put their best foot forward in rate negotiations.
Best Practices for Funder Rate Negotiations
Funders are looking for several characteristics in a preferred provider. Ideally the provider:
- is accessible for new referrals
- provides individualized dosage for treatment requests
- follows supervision guidelines as outlined by the BACB or alternative certifying body
- provides their patients with generalization opportunities
- welcomes payor audits
Plans also want to see that you’re equipping caregivers to manage behaviors and support skills development.
A contract negotiation is your opportunity to show that you’re an asset who delivers essential services to the funder’s members. To do that, you must come to the negotiating table with as much hard data and analyses as possible.
For starters, lay out your costs of doing business, including staffing costs, rent, technology infrastructure and other expenses. You also need to articulate what sets you apart from other providers. For example, in-demand practice capabilities, such as treating adolescents or teens, or having a specialty niche, such as expertise with severe feeding issues, can help you differentiate yourself.
In a funder meeting, it’s important to provide a description of your services and how you execute them, share positive findings from your BHCOE audit and share competitive rate data with other funders. “Not all provider relations representatives are familiar with ABA and the way it’s delivered, so the clearer you can be about your practice, the better,” says Craig.
Data on staff and patient satisfaction, average length of stay, and clinical outcomes can help demonstrate that you deliver high-quality, efficient care. In addition, funders are increasingly looking at behavior health in a holistic and integrated context. To that end, it’s important to show how you’re coordinating with primary care physicians, speech therapists, occupational therapists, and other providers to deliver more holistic care.
It’s also important to share details around quality indicators in a funder rate negotiation. For example, do you have employees dedicated to ethics, quality assurance and HIPAA compliance? A wait list procedure and any language or cultural competencies are also important quality indicators to highlight during a funder rate discussion.
Funder Negotiation Success Story: Breakthrough Behavior
During the webinar, Sarah Vega of Breakthrough Behavior shared a recent success she had negotiating a 40 percent increase for direct services and a 35 percent increase for protocol modification rates. She received the full rate increase requested and the contract was fully executed within two months of the annual payor partner conversation.
Breakthrough Behavior’s BHCOE accreditation was a large part of Vega’s rate negotiation story. “Not all providers deliver the same level of service and we shouldn’t all be paid the same,” she notes. “That’s really what I highlighted to our payor partner. We weren’t at the same status with our accreditation when we last talked to the payor. Since then we’ve taken our practice to a higher level of quality, so reimbursement should be higher as well.”
In payor discussions, Vega adds that it’s important to emphasize that quality outcomes drive shorter lengths of stay for members. The faster Breakthrough Behavior can reduce impairments for patients, the less ABA costs the plan per member. Shorter lengths of treatment also increase provider capacity to serve more of the plan’s members.
When receiving rate increases, Vega emphasized the need for providers to be good stewards of the increase. Providers need to live up to the items outlined in their presentation to providers, including quality, medical necessity criteria and discharge planning.
Vega discussed the importance of quality assurance and performance improvement for providers. It’s critical to be able to show funders that your organization conducts internal audits and training on preventing fraud, waste and abuse. “I really believe that collaboration and transparency are imperative. This allows us to be good partners with payors and creates the best outcomes for patients,” says Vega.
She adds that it’s important to stay in communication with payors about contractual obligations after rate negotiations are over. “These ongoing conversations over time set you up for sustainable rates and give you a leg up when you come to the table next time to discuss rate increases,” she says.
For more details on negotiating rates with funders, be sure to watch the recorded webinar.
Be prepared for upcoming coming rate negotiations by downloading BHCOE’s checklist, How to Prepare for Funder Contract Negotiations.