|
|
Negotiation: Not "What Can You Do for
Me?"
 Recently, while
developing a negotiation unit for a health insurance client, we were
prompted to think about what makes an effective negotiation program.
We were also reminded of the elements critical to the success of
such a program.
Why and What?
For health insurers, negotiation of
financial terms is an integral part of day-to-day medical management
operations. The number of services that either require or lend
themselves to individual negotiations, however, depends on various
factors. The need for individual negotiation is largely created by
benefit plans and provider contracts that are: vague, include
perverse incentives, lack payment benchmarks, feature
discount-off-charges reimbursement agreements, and lack a hold
harmless clause. A provider network which is marginal for numbers
and distribution of providers, results in a significant number of
services being provided outside of the network structure. It is
another major contributor to the need for negotiation.
Out-of-network inpatient hospital confinements, air ambulance
transport, unique durable medical equipment (DME) requests, and
itemized provider bills are prime targets for review and
negotiation. A review of itemized bills frequently reveals errors
and/or inappropriate charges, such as duplicate charges for hardware
or hospital services, physician charges above allowable
reimbursement levels, drug charges exceeding the average wholesale
price (AWP), and DME charges in excess of a discounted Medicare
reimbursement schedule.
Critical Success Factors
One word sums it up:
people. Namely, those who will be reviewing bills, analyzing
requests for DME, reviewing claim charges, and subsequently
performing the direct negotiation. These people are, by any measure,
the most important element of any negotiation program. Lacking
people who have the right attitude and temperament and who are
receptive to coaching and mentoring makes the rest of it hardly
matter. A broad knowledge of health care benefits, claim payment
policy, and medical management is required. Negotiators must be
analytic, persistent, willing to give and take during the
negotiation process, able to process information quickly so as o
respond effectively to information received, and able to not take
insults personally. These are the attributes that allow one to not
only effectively engage in, but to succeed in, the negotiation
process.
Goals and Benchmarks
The ultimate goal is to
achieve an agreement for a reimbursement level that meets an
industry benchmark. Examples of such benchmarks are Medicare's
Resource-Based Relative Value Scale (RBRVS) fee schedule and DME
reimbursement, or a manufacturer's wholesale price for implantable
devices. Web sites such as Vimo.com can provide hospital inpatient
charge benchmarks. Using such benchmarks conveys a level of
knowledge to the other party and sets expectations; in some
instances, it establishes the level of insurer liability. Asking for
or accepting a percentage discount from some mythical fee will not
result in reimbursement that has appropriate relevance to the value
of the good or service. It leads only to a false sense of
accomplishment on the part of the negotiator.
Nuts and Bolts
The techniques and operational
aspects of the negotiation process are critical. First, it is
important to realize that providers recognize and understand both
the present value of money and the fact that a large receivable that
becomes the primary responsibility of the insured may be difficult
to collect, resulting in a significant delay in receiving payment.
When analyzing the case to be negotiated, identify the points
of leverage that can be used to your advantage. Likewise, it is just
as important to anticipate the leverage the other party is likely to
apply and be prepared to rebut or negate its effect.
The initial provider contact may not be empowered with the
latitude and authority to conclude a satisfactory agreement. In that
instance, request the name and phone number of a person who can
actually negotiate and consummate an agreement. Developing a
database of these secondary provider contacts will facilitate future
negotiations with the same provider organization.
When negotiations stall, or it becomes apparent that a
favorable agreement is not in the offing, it might be necessary to
defer to a higher authority. A different negotiator who brings a
change in dynamic and technique may be able to salvage a favorable
agreement.
During the negotiation, it is helpful to stress that you wish
to reach an agreement in which the insured, the provider, and the
insurer all gain. Make it clear that upon reaching such an
agreement, payment will be quickly delivered. The goal is to achieve
high-quality, cost-effective care for the insured within the
constraints of your liability while avoiding an undue financial
burden for the insured.
Negotiation is both an art and a science. It is not just
asking, "What can you do for me?" (The answer to that approach is
usually "not much.") By reducing the overall cost of care, the
approach described has resulted, and will continue to result, in
superior savings.
We would be pleased to help create such a unit that
exemplifies the art and science of negotiation and generates
significant savings for your company.
|
|