Overcoming Significant Rate Reductions and Crisis Resolution
A major insurer enters negotiations with a Southern hospital looking to lower contract rates. The insurer initially proposed a rate reduction of nearly 15%. The insurer made a claim that our client, a hospital with over 500 beds, had contract rates that were among the highest in the entire state. Our client knew their rates might be a bit high, but not by 15%. Our client did not have the contract rate intelligence to challenge the insurer’s claim with any certainty. The hospital was reluctant to sign the contract with the lower rates. Contract negotiation dragged on publicly for months with the very real possibility that our client would be forced out-of-network.
FlexPoint was deployed by the hospital six weeks before a final deal had to be reached with the insurer. Our assignment was to procure and provide our client with the actual reimbursement rates that each of the hospitals in the local market had most recently negotiated with the insurer. FlexPoint was successful at procuring and delivering the requisite contract rate intelligence for our client within four weeks. Our data gave our client the data they needed to confidently confront the insurer and call their bluff. In the end, our hospital client negotiated a very reasonable multi-year contract, keeping them in-network, still maintaining strong price position in their market, and ending a long drawn out public relations nightmare. Total return on investment for the engagement was significant for our client and the project investment in our services was less than $50,000.
Insurer Pushes Patients Toward Cheaper MRIs and CTs
Our hospital client in the Midwest with over 850 beds noticed that its CT and MRI volumes were decreasing but didn’t fully understand all the factors. They believed they might be overpriced in the market but were not sure by how much. FlexPoint was called in to find out how much our client’s competitors were being reimbursed for CTs and MRIs.
Within two weeks, FlexPoint was able to provide our client with each of its competitors CT and MRI reimbursement rates negotiated with each of the major insurers. We were able to identify immediately the major factor imaging volumes were decreasing. The insurer, representing nearly 80% of the commercial market share, had set significant rate disparities for imaging services within the market.
The insurer was paying one hospital $650 for CT scans and $750 for MRIs while all the rest of the hospitals in the same market were receiving an average of $1,200 for CT scans and $1,700 for MRIs. This particular insurer was aggressively steering its insured members to the one hospital that has the lowest priced imaging services.
FlexPoint’s provided this hospital client the contract rate intelligence to re-price their imaging services and to gain back their lost volumes.
Are Insurers Freezing Annual Rate Increases?
It is not uncommon for hospitals to receive a 3% to 6% escalation of contract rates year-over-year. However, over the past few years FlexPoint has worked with clients who have been told by insurers during contract negotiation that these traditional across the board rate increases will be either decreased or will no longer be offered at all. Recently, a hospital client from Texas was told by an insurer that contract rate increases have not been given to any hospital in their market for over a year and that such increases would not be offered for their facilities either. Our client asked FlexPoint to provide contract rate intelligence that would prove or disprove what the insurer was telling them.
FlexPoint provided our client with contract rate data sourced from current and prior year patient claims. With two years of comparative data, we were able to easily demonstrate to our client that the insurer was intentionally misleading them. Our data clearly proved that the insurer was giving 5% rate increases to the other hospitals in the market. In the end, our client received their 5% increase from the insurer.
“We knew that we were the highest cost provider in our market. Our new strategy was to become a more affordable option for patients -- without being the lowest cost provider. We received data from other consulting firms but we were not comfortable making critical pricing decisions using blended and outdated data. FlexPoint provided us specific competitor data we needed to find the right balance when re-pricing our services. Outstanding service all the way and a high return on investment.”
VP of Managed Care, 750+ bed hospital operating in the South
“Our system was building a new 125+ bed hospital in a small town with only one hospital. We needed to know whether the rates being offered by payors were competitive. With FlexPoint’s data we were able to negotiate 12.5% higher rates than were initially proposed to us by payors. The rate intelligence that FlexPoint provides is the most powerful and innovative revenue cycle tool I have seen introduced to managed care in my 32 year career. We will continue to use FlexPoint as a strategic partner going forward.”
Regional VP of Managed Care, 30+ hospital healthcare system operating nationally
“Instead of slashing operating costs to offset cuts in Federal reimbursement, we decided to first take another look at our commercial contract rates and evaluate whether we are competitively priced in each of our markets using more than anecdotal contract rate intelligence. After proving their capabilities in one of our key markets, we used FlexPoint in four additional markets. We found their overall approach to be innovative and cutting edge.”
VP of Payer Contracting, 20+ hospital faith-based healthcare system operating in the Midwest