Payer-provider contract fights increasingly enter the spotlight

Contract negotiations between payers and providers are becoming more public, and the number of communities affected across the country is growing, according to data published Oct. 25 by FTI Consulting.

Notably, disputes reported in the media during the third quarter involved Medicare Advantage plans more than ever previously recorded, standing at 15 total.

"In whole numbers it may not be shocking, but each of these disputes can affect a few thousand to tens of thousands of people, so it's significant," Adam Broder, managing director of FTI's strategic communications segment, told Becker's. "Medicare Advantage is being scrutinized by federal regulators, and I think these disputes are a mirror of that on the local level with some hospitals feeling the pinch."

FTI has tracked media reports regarding negotiations over reimbursement rates between provider organizations and insurance companies during each quarter since early 2022.

"What the data tells us is that the effects of COVID are still being dealt with," Mr. Broder said. "With hospitals and payers having gone through COVID and having to so quickly rearrange operations, both sides are saying something needs to change. Anything can set off one of these contractual disputes, including reimbursement rates, prior authorization or expansion of provider groups." 

Mr. Broder also said he believes going public with negotiations is becoming more common for hospital and insurance executives alike. 

"It's clear that both sides are using tactics they hope will help them be successful, but there are regulations around when patients need to be notified," he said.

Six key takeaways:

1. In the third quarter, at least 21 contract disputes became public and were covered in the media compared to 11 in the third quarter of 2022, a 91% increase.

2. Coverage of disputes occurred in 13 states during the third quarter, compared to seven states during the same period in 2022.

3. More than one-third of the publicly reported disputes in 2023 have failed to reach a timely agreement. At least 13 disputes face end-of-year deadlines.

Medicare Advantage

4. Sixty-four disputes have been reported in the media this year through Sept. 30 and 37 of those, or 58%, involved Medicare Advantage plans. Among all disputes this year, 10 exclusively involved MA plans.

5. In 2022, 29 of the 51 disputes reported in the media involved MA plans, with eight disputes exclusively involving Medicare Advantage plans.

6. In the third quarter specifically, 15 disputes involved Medicare Advantage, the most FTI has recorded in a single quarter to date. In the third quarter of 2022, seven MA disputes were recorded, a 115% increase year over year.

"I think about contractual disputes in terms of risk — financial, reputational, political and regulatory," Mr. Broder said. "My advice for both sides is to prepare and think about the various scenarios of what can happen and how you ultimately are going to reach your goal."

Additional resources from FTI about how to prepare for rate negotiations are available here.


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