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3 MLR Questions Payers, Providers Should be Asking

Karen Minich-Pourshadi, for HealthLeaders Media, January 17, 2011
  1. What can providers and payers do to comply with this regulation?
    Hospitals and payers will need to continue to look at new mechanisms for reimbursement and shift away from episodic and disease state care. They will have to work toward prevention and wellness. They also need to look at different reimbursement models and changes that can be made to current models to incentivize prevention and wellness.

    Providers and payers are going to have to start a real dialog around this topic. A number of payers and providers are experimenting with this [different approaches to reimbursement for wellness care] already and they’ve become very creative, using approaches like group appointments. In the future, payers may reimburse more for group appointments than they’ve done in the past to achieve the long-term goal of prevention and wellness. The payers new goal is to keep patients healthier and out of the hospitals, and that’s should cost them less in the long-term.

Of course, Snow is right: If the payers reduce their costs long-term then that’s better for them, but also better because it means healthier patients. Moreover it’s a good reminder that providers also need to think differently now in order to stay ahead of the curve too. Hospitals and health systems need to invest more of their attention and dollars on outpatient and preventative care programs; lest they suffer financial losses when their inpatient volumes dwindle. It’s truly the circle-of-life for the patients, payers and providers—everyone’s ultimate health or demise depends on the other person moving in the same direction to stay healthy.


Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media.
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2 comments on "3 MLR Questions Payers, Providers Should be Asking"


bob (1/18/2011 at 2:48 PM)
MLR requirements call for a new approach to billing and collections. A great deal of money [and headaches as well] can be saved with the simplest approach to partnering between the provider and a competitive third party payer. This approach involves the provider contracting out the entire billing and collection processes, including all claims processing, to a single, competitive third party payer. The contracting third party payer negotiates a collaborative strategic plan and annual budget with the contracting provider, and guarantees monthly payment to the contracting provider of all of the budgeted income, eliminating any involvement of the provider in payment and collection of bills for services to individual patients. The contracting third party payer takes over the management and staffing of the provider's billing and collection processes, maintaining the staff at the hospital, working in close collaboration with the hospital's staff that provides care and information. This approach of course requires a high degree of mutual trust, as well as processes to deal with any issues in achieving agreement on the annual budgets, and on how to handle unforeseen income and expense developments during the budget year and at the end of the budget year. Probably some arrangement for arbitration may be required. But the advantage to the provider of [1] guaranteed income and [2] being relieved of all responsibility for billing and collections may be sufficiently great to overcome any reservations. For the contracting third party payer, this arrangement assures a relevant role in the years ahead as coverage becomes universal. This approach shifts the interaction between provider and payer from a focus on individual patients to a much more effective, broader bundled perspective that has tremendous implications for greater effectiveness and efficiency than when the focus is on individual patients. As important as the reduction in costs of claims processing and collections is the fantastic reform impact of the collaborative strategic plans and budgets, prepared by professionals increasingly improving their understanding the interaction of the necessary patient care focus with the equally necessary population care focus. For more information, see my web site sigmondpapers.org or call at 215-561-5730.

Ken Peach (1/17/2011 at 1:49 PM)
With artifical limits placed on what the insurance company gets to keep out of the premium dollar (15-20%), the goal now is to reduce operating expenses, not to change how care is delivered. The biggest impact of this law has not been on patient care - it has been on insurance agents and consumer choice. Agents have seen their commissions cut as much as 40%. Many are leaving the business. Entire lines of insurance products that were available to consumers a year ago have been pulled from the marketplace because they are no longer financially viable. Consumers now will have less product choice and fewer agents to explain those products that remain.