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NatCon 15: How to negotiate with managed care

April 20, 2015
by Julie Miller, Editor in Chief
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What makes all the difference when negotiating contracts with managed care is whether or not a provider can leverage from a position of strength. Providers must examine the assets they bring to the table and communicate them effectively in the contracting process, said Adam J. Falcone, partner with Feldesman Tucker Leifer Fidell LLP, speaking at the National Council for Behavioral Health 2015 conference in Orlando.

Falcone said providers should initiate the contract discussion and should come prepared. He also recommends a few tips as you approach managed care payers:

1 Know as much about the payer’s obligations and requirements as possible. For example, some payers might need to hold contracts with a certain number of behavioral health providers per county under state law, especially in the case of meeting today’s highly scrutinized network adequacy standards. Medicaid managed care payers might also be obligated to post their current contracts online, and those examples can provide your business team with enlightenment in advance of the negotiations.

2 Watch out for provisions that are not included in the contract. Make a checklist to ensure you get everything you need in writing.

3 Leverage your status in the community as a must-have provider. Falcone said managed care payers will need the high-profile providers so they can secure customers in your area. “Do some kind of market analysis to understand who you’re competing against,” he said.

4 Timing can work in your favor. A new plan or new product coming into the market will need to shore up providers, so act quickly. Falcone said it’s much easier to negotiate with “the new guy” and from that point, maintain the relationship in future contract talks. He said it’s best for a provider to approach a managed care organization rather than the other way around.

5 Compete on value. Falcone said it’s critical to quantify what your organization can bring to the table. Know your unit costs, understand your outcomes and pitch the managed care company on your ability to keep costs low and quality high. “Just saying to them, ‘pay me more,’ does not work,” he said. 

6 Additionally, he recommended writing into contracts a provision that will allow you to access the payer’s data to help you create your case for quality. Payers have a goldmine of claims data that can demonstrate your value in the relationship.

7 Consider offering a model the payer is more likely to prefer, such as integrated models, shared risk or pay for performance. Falcone said alternative payment models are not especially prevalent right now since there aren’t as many agreed-upon quality measures in behavioral health as there are in traditional physical health. But integration, which behavioral health is increasingly embracing, presents an opportunity for leveraging. “Plans do not create these innovative models themselves,” he said.

8 Take your time in the negotiations and prioritize working through the deal-breakers. Don’t simply email the red-lined contract back to the payer. Instead, make a personal phone call or set up an in-person meeting to talk about the key points. Falcone recommends asking questions rather than taking a defensive stance. “Beating up a partner is not a way to negotiate,” he said. Besides, once the contract is signed, the parties will be working closely together. 

9 Communicate your value. “If you think you provide a high value product, you have to sell it and explain it,” he said. “You have clinical leadership; they have clinical leadership. Make a coffee date.”

10 Be ready to walk away if the contract isn’t going to work for you.

In the end, being prepared for the negotiation and prioritizing key points along the way will serve providers well.