Kevin Thilborger
Kevin is chief managed care and revenue strategy officer at Unlock Health.
This post continues a series on the state of managed care by Kevin Thilborger. Check out the first post here.
Over the years, we’ve focused a lot of analysis on United Healthcare’s strategy and the impact on providers. Yet more recently, we’ve seen an increase in conflict between independent Blues and the physicians and hospitals that populate their networks. What’s going on here?
First, most Blues are the dominant market share plans in their markets. We see Alabama and Mississippi with Blue market share north of 85%. States like Florida and North Carolina have Blues that have grown market share to 60% or more in recent years on the back of a rate advantage over other payors. Second, we see a deeply flawed BlueCard program that makes it nearly impossible for providers to be paid accurately and in a timely fashion. And third, we see uber-aggressive moves like the recent push by Blue Shield of California to lower hospital rates. Apparently, they promised a certain level of savings to the state employee retirement system (CalPERS) that was inconsistent with its previously negotiated rates.
Here is a recent quote from a senior executive at Blue Shield of California.
We are going live with our pharmacy reimagined initiative on Jan. 1. We plan to nail that. There are also a couple of large accounts we need to implement well. CalPERS is moving 400,000 of its PPO members to us from Anthem. We are also taking on the TRICARE contract for the West in California, which is around 350,000 members.
There's this financial temptation to treat the patient like an ATM machine. We need to tie pay to value. Our biggest challenge is getting the players in the system to embrace that as a serious objective.
We're not going to sign a contract with a provider unless it moves the needle on the structure of pay and the way we work together so we're confident it moves toward affordability and accountability on care. If it doesn't, then there may be a lot more contract terminations that may be more prolonged and painful. (Modern Healthcare, August 9, 2024)
This is a really unusual quote in a number of ways, yet it highlights a recent trend we are seeing with independent Blues across the country. There is a much greater level of contract tension and dispute between Blues and providers right now, and it doesn’t look like it will get better any time soon.
Historically, independent Blues were perfectly happy to give CPI increases when they were less than 2% but in the last few years they act as though CPI doesn’t exist — asking for reductions or fighting to keep the increase below 2%. Providers need rate increases to offset the record inflation we’ve experienced over the last few years, and it’s always toughest to get that from the biggest payor in the market. The Blues will fight to maintain their pricing advantage over other payors, and they will demand “value based” arrangements that aren’t really about value but do maintain the pricing advantage.
Now more than ever, parity amongst your contracted payors, including Blue, is critical. In all likelihood, if you look at your denial rates alone, you will find that your independent Blues plan (and their 33 sisters with different policies) has the highest rate. Only in healthcare would we tolerate a situation like this.
Unlock Health is here to help providers set managed care strategy and negotiate contracts in the complex world of payor-provider relations. Our full-service managed care consulting group helps providers set their managed care strategy, negotiate contracts, and handle all the contract modeling, analytics, and contract performance. And when negotiations are difficult or contentious, we pioneered the use of strategic marketing communication campaigns to protect providers’ brands and create pressure on payors for fair and reasonable settlements of contract negotiations. Email Kevin Thilborger, our chief managed care and revenue strategy officer, at [email protected].