Insurance contracting strategy and implementation

Healthcare Insurance Contracting Strategy:

First Student's Response:

The process of negotiating a health insurance is usually time-consuming and labor intensive to an extent that physicians are always left frustrated and uniformed. In each contract negotiation for health insurance, the health plan organization usually enjoys several advantages that guarantee the organization success. In the past few years, health insurance has emerged as a major issue in this industry because of the increase in the number of uninsured population, which contributes to decreased accessibility and affordability of care services. Health insurance has also been a major issue because of the increase in the costs of care services, which hinder the delivery of quality care services.

Generally, health insurance contracts vary with regards to the terminologies used, organization providing the health plan, and information contained in the contract (Jones & Mills, 2006, p.51). These differences can be classified into the obligations of the health plan, terms and termination, the obligations of physicians, and general provisions of the contract. While it is good to analyze the various aspects of a health insurance plan before getting into the agreements, the parties to this contract should develop and use the most appropriate strategy before entering into the agreement.

The most appropriate insurance contracting strategy is the managed care contracting strategy, which is increasingly used in the prospective payment and managed care environment. The effectiveness of the managed care contracting strategy is demonstrated in the fact that it slows the medical arms race, which characterized indemnity insurance and Medicare cost-plus reimbursement period. Managed care insurance contracting plans enables private purchasers to lessen the costs of health care services while maintaining or enhancing the quality of these services (Devers, Brewster & Casalino, 2003, p.450). Since this strategy promotes selective contracting, it has higher leverage as compared to the ability of individual physicians and patients to bargain hospital prices and costs of health care services. This strategy creates a counterbalancing force to the demands of patients and physicians for care services through the use of management techniques.

However, the use of managed care contracting strategy requires effective initial negotiation and constant maintenance and renegotiation of provider contracts. These factors play a crucial role in streaming revenue and the overall productivity of service lines. Actually, one of the most profitable revenue strategies when using the managed care insurance plan is the establishment of aggressive initiatives and developed measures to ensure that reimbursement is most favorable. This strategy is referred to as optimal managed care contract negotiation, which commences with the analysis and interpretation of the existing contracts and examination of currents contracting needs and future ones (Overton, 2012).

During the negotiation process, an analysis of targeted payers should be conducted because of its impact on all stages of the negotiation. The analysis helps in understanding the payer covered lives within the provider's demographic region. Furthermore, it helps understanding the payer's combined volumes of providers, which proves to be essential data or information before the commencement of the bargaining process.

There are several aspects that should be taken into consideration or reviewed in order to properly examine and analyze contracts and contracting needs. They include contract terms and historical reimbursement examples of payers and the provider demographic payer contracting tendencies. The other necessary element in this process is procedure cost vs. reimbursement evaluation and proactive search of strong reimbursement for future volume. Analysis of the first element is crucial because it helps in ensuring that reimbursement documented in existing contracts is being effectively recorded. The information obtained during this stage can be used at any time of renegotiations or contribute to the development of effective alternative approaches. The assessment of the second element helps to determine how insurance contracts compare and to ensure reimbursement expectations are established within competitive market ranges. The third element can be used for defense in validating the need for higher reimbursement than the current offer.

Second Students' Response:

As the use of managed care plans have increased in the past few years, there is an increased need for appropriate insurance contracting strategy. The existing managed care plans are primarily based on demand management through co-payments. While these strategies have been relatively effective in providing coverage, they can contribute to deficient treatment in relation to ideal treatment. Since there is need for ideal provision of treatment at reduced costs, the current strategies in managed care plans can be deemed ineffective. This is primarily because a simple demand-managed health insurance contract is not generally optimal. Moreover, contracting strategies that provide treatment randomly are not realistic.