Provider-Payer Relationship Under COVID-19
COVID-19 Upset Provider-Payer Relationships
The COVID-19 pandemic has affected most, if not all, businesses everywhere. For healthcare, in particular, the pandemic and its consequences altered the ways that payers and providers do business with one another.
How So?
Let’s catch a momentary peek at several of the more immediate effects on payer-provider relationships, consisting of upturns in the instability in patients’ insurance coverage and a drop in the number of patients, particularly for non-essential treatments. From there, let’s review the best ways to respond to these challenges going forward, including expanding services, reexamining contracts and working with payers to provide the best outcomes.
To begin, let’s examine how things were prior to the pandemic.
How Things were Before COVID-19
Payers and providers functioned in relative harmony prior to the pandemic. Both sides profited from issues such as steady but controllable upsurges in patient flow, extensive and near-universal insurance coverage and proper payments for service. In other words, rather smooth sailing.
The environment in the healthcare system was and continues to be depicted by “value-based purchasing”, better known as “pay for performance.” A few key characteristics of the model were ripe for COVID impacts.
- Financial incentives are provided to healthcare providers for attaining performance objectives.
- Errors and poor outcomes are attached with penalties, frequently assigned to both providers and payers.
- Metrics are inclined to be short-term, as long-term performance is more difficult to measure.
These factors worked together to produce an atmosphere where a disruptive invasion such as a pandemic creates an ineffectiveness that can be harmful to everyone concerned. For example, surprise bills for COVID-19 testing has a major negative impact.
Immediate Impacts of COVID on Payer-Provider Relationships
The arrival of COVID-19 had a variety of effects on businesses both inside and outside of the healthcare sector. As an example, locales with greater population densities had to deal with a groundswell of cases, leading to shortages of staff and supplies. Interruptions across most supply chains delayed production and distribution of necessary goods and services.
There Were Several Other More Subtle Short-term Impacts
The pandemic led to radical transformations to the employment landscape. Early shutdowns and work-from-home directives eventually led to layoffs and higher unemployment.
As more people lost their jobs, the percentage of the population covered by health insurance also varied greatly. For some, their coverage may have changed several times within a plan year or moved from employer-based coverage to coverage through Medicare, Medicaid or the Affordable Care Acts’ health insurance plans. All these circumstances shaped patients’ payer mix and led the way to adjustments to issues including claims and eligibility.
Another short-term impact was the overall reduction in the volume and range of services provided, causing a decline in revenue for healthcare providers
Another impact was the harm that was done to short-term performance outcomes and the providers’ capacity to boost them over time. In addition to diverting treatment for patients, providers who were overrun with COVID cases, which were more apt to produce bad outcomes, were excluded from taking on cases that were more predictable and likely to generate better outcomes.
How Can these Relationships be Strengthened After COVID and Beyond?
As a first step, providers can choose to cut the cost burdens of COVID by expanding the range of services (including COVID-19 Testing) provided and planning for increases in volatility risks.
As a prime example, the pandemic drew attention to the strengths of telehealth and remote-based services. Providers ought to consider taking maximum advantage of improved infrastructure and society’s acceptance of remote platforms such as Zoom. Patients who earlier were unable or unwilling to meet remotely might now be more enthusiastic, which can bring about cost savings for providers and patients alike.
Providers must also account for all the risks linked with the new, remote normal. Aside from the unpredictability, these take into account miscommunications and weaknesses that could lead to cybercrime. Mending these gaps is critical to more positive relationships.
Finally, providers must also reexamine their current relationships with existing payers and strengthen new relationships with them and other associates. Looking ahead, for example, the pandemic pointed to the need for providers to build in contractual protections for pandemic and other emergencies.
Let’s face it, payers and providers are expected to have dissimilar views on what contractual changes should be made to address provider needs during the post-pandemic recovery.
Accordingly, both entities will need to consider partnership models to financially align on strategies to achieve success in the new post-COVID reality.
Simply seeking rate increases is likely to be shortsighted and an unsuccessful strategy in the long run. Rather, providers might consider how their current reimbursement model might be reevaluated. For example, in light of the impact of the pandemic, providers might ask whether a fee-for-service arrangement is still right or whether providers should explore alternative reimbursement methods, such as a greater mix or capitation or a percentage of premium or other models. These methods may not only offer cash flow stability on a short-term and longer-term basis but also mitigate against risk relating to a significant shift of patient mix and services.
Key Takeaways of Provider-Payer Relationships Under COVID-19
- COVID-19 has upset the feeling of normalcy in healthcare delivery and its disruptive impact on the payment and delivery system will be experienced for the foreseeable future. The relationship between payers and providers must be redefined in the post-pandemic period.
- The present trends shaping healthcare associated with COVID-19, particularly those impacting providers’ relationships with payers, are offering insight into how the relationship between payers and providers should go forward.
- Providers must identify a forward-looking approach that identifies and plans for a payer contracting “reboot” to take into account streamlining their payer contracts and reimbursement models in the post-pandemic era.
If your lab or medical office is in need of COVID-19 testing billing, feel free to reach out to us and we’ll advise you on a strategy and best practice and methods for quick turnaround reimbursement