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THE TOP AND BOTTOM OF THE PAYER MARKET

EXECUTIVE SUMMARY

Not too long ago we had a conversation internally about the payer market and the rise of “payviders” (health insurers acquiring hospitals and physician groups). Since providers are joined at the hip with payers, we wondered how providers at the proverbial front lines (i.e. ambulatory care) are really feeling about the relationship and where this dynamic market is heading. Over the course of a few days we used our research engagement platform to gather specific data from nearly 800 ambulatory care leaders regarding their most and least favorite payers and specific reasons why.

While our clients use our platform far more than us to gather specific insights for their businesses, we occasionally eat our own dog food by gathering data on different industry trends we’re interested in. And yes, dog food can taste good. When conducting research is simple and fast, you catch those little details that make a big difference. In this study, we uncovered a few of those details.

From an industry perspective, where do the most impactful (read: largest) payers shine and where are they tarnished (or just plain rusted out)? We found a few surprises. Also, if you do something crazy, like throw three massive “government-owned payers” (Medicare, Medicaid and Tricare) into the same pot as everyone else, what shakes out? A perspective that may cause you to question your very existence.

The bottom line is, love them or not, payers are as entrenched in healthcare as stethoscopes, waiting rooms and lab coats. Ok, lab coats are out of fashion, but the point is payers are critical and rather than having them double as punching bags, perhaps a new perspective and approach is in order.

Author: Chris JensenJunior Author: Fran Djoukeng

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THE TOP AND BOTTOM OF THE PAYER MARKET 2

VENDORS COVERED IN THIS REPORT


DEMOGRAPHICS

We received feedback from more than 790 leaders in ambulatory facilities who manage or oversee payer relationships. The mix of titles is diverse enough to avoid some biases we might find by focusing on a specific group.

PARTICIPANTS BY TITLE

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PARTICIPANTS BY STATE

Most

Fewest

FAVORITE PAYER AWARDS


BCBSFavorite Payer

MEDICARE#1 FAVORITE PAYER

Favorite Payer awards were given for having the widest margin between favorite and least favorite votes among ambulatory

providers. More explanation of this on page 8.


A HANDFUL OF PAYERS HAVE THE LION’S SHARE

The top payers in terms of contracts are UnitedHealthcare (UHC), Blue Cross Blue Shield (BCBS) and Medicare. If we throw all regional BCBS franchises into the same pot, our data generally follows market share statistics available from other sources, with some exceptions.

The top 10 payers, in contract volume, control a hefty slice (60%) of the contract pie. While Medicare is always an easy target among providers, for obvious reasons, it contracts with a considerable share of ambulatory facilities. It’s no revelation that government-run entitlement plans cannot be ignored even in the face of society’s concerns about their long-term viability and alleged inefficiencies. In fact, if you combine both Medicare and Medicaid, they total 14% of the share of contracted payers among participants.

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PAYER CONTRACTS AMONGAMBULATORY PROVIDERS


CRÈME DE LA CRÈME AMONG PAYERS

While top market share businesses can pat themselves on the back all day long, this measurement is a lagging indicator and in no way dictates the future. In fact, market share is often a shadow of actions taken years earlier by completely different executive leadership. Current perception by customers, however, is arguably the leading indicator of what’s to come...unless you’re a massive government-run insurance program, in which case the rules rarely apply. That said, by a large margin Blue Cross Blue Shield wins as the payer with the highest number of favorable votes. That may not be earth-shattering news to their leadership because elite companies already know the outcome of staying extremely close to customers and the market, which they are obviously doing.

The more curious story in favorability is Medicare’s rating among providers. The margin between this second place finish and number three (UHC) is almost double. When did this happen? The rumors about Medicare are rampant. This mammoth government insurance provider is alleged to be slow, inefficient, broken, and inflexible. However, when you control the proverbial endless checkbook, there’s bound to be a closet full of devout supporters...just don’t ask them to raise their hands in public. However, data displayed later in this report suggests maybe Medicare isn’t the devil it’s often made out to be.

In other news, there can be a slight disparity between payers with the most contracts and payers that have the highest favorability rating. We know nobody’s winning a Nobel Prize with that insight, but while UHC is among the payers with the most contracts, providers seem to suggest they are not exactly the best partner.

(See graph on page 7.)

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FAVORITE PAYERS AMONGAMUBULATORY PROVIDERS

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LEAST FAVORITE PAYERS

There’s something to be said about “biggest player, biggest target on your back.” UnitedHealthcare may suffer a bit from this generalization. Providers find UHC significantly more difficult to work with than the competition by almost double the number of the second least favorite payer (BCBS). They definitely have their work cut out for themselves. While BCBS isn’t viewed as negatively as UHC, it’s not all roses, with 11% of participants citing them as their least favorite. This is not just another case of “you can’t please everyone all the time.”

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LEAST FAVORITE PAYERS AMONGAMBULATORY PROVIDERS


COMPARING LEAST AND MOST FAVORITESWhere does Medicaid expansion look to gain for this year? Anyone’s guess. Some states are refusing to expand Medicaid (nothing new). To date, at least a dozen state governments have pledged to not cover uninsured residents. And as baby boomers age, they will heavily impact the healthcare industry. Politics aside, is there something top payers can model from Medicare’s example? Medicare ranks rather high in approval ratings among ambulatory care providers for many practices. So, could it just be that most providers have accepted this inevitable partner going forward and the rest are considering or have already dropped Medicare amidst a relentless, burdensome regulatory climate?

COMPARISON OF BEST TO WORST PAYERSAMONG AMBULATORY PROVIDERS

When we compare “most favorite” and “least favorite” votes of participants only four payers emerged in positive territory: BCBS, Medicare, Tricare, and Anthem.

What are these organizations doing that competitors are not? In reality, only BCBS and Medicare enjoy a wide margin between these two measurements and are therefore the de facto standards for truly successful payers. While there are obvious elements of Medicare’s structure that private payers cannot model, there are a couple of cues (faster reimbursements and fewer denials) private payers should pay close attention to. BCBS, on the other hand, rates high across many specific areas that are important to providers. Beyond these obvious pieces of data, nothing replaces individual relationship building, and BCBS is clearly doing that at a higher level than other private payers.

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On the other hand, Medicare once again shines with a low seventh place finish as least favorite. How does a government-run program get less negative feedback than some of the biggest private-sector companies? Could it be that providers have lower expectations for Medicare, or is this yet another data point supporting the notion that Medicare is viewed by providers as a legitimate partner?

THERE ARE SOME REDEEMING QUALITIES

Payday is a good day for most professionals and providers are no exception to this rule. The top reasons that providers become best friends with payers are: 1) quicker reimbursements and 2) less staff time devoted to making sure they get paid. Human resources is arguably the most valuable and costly asset for any company. When payments are speedy and solutions take up less of providers’ time, they can focus on more important items, such as the overall patient experience.

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Again, Medicare’s respectability among care providers is beating out its private competition. Providers who have contracts with Medicare say it doles out reimbursements, in aggregate, faster than any other payers. Medicare also denies fewer claims than most of its public sector counterparts and is viewed as requiring less paperwork than any other payer. Perhaps it isn’t such a mystery why Medicare ranks so high compared to its peers on the private side.

Medicaid also performs at a high level with strong placement in faster reimbursements (2nd place), less staff time requirements (1st place), less paperwork (2nd place), and good pre-certification (1st place).

BEST PRACTICES AMONG TOP INDIVIDUAL PAYERS

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t

k

tricarebest customer

service

MEDICAREleast amount

or paperwork

MEDICAIDLowest Staff

time Required

MEDICAREFastest

Reimbursement

MEDICAidbest

Pre-certification

fewest denied

claims

MEDICAideasiest

negotiations

MEDICARE


Tricare (a government health care program dedicated to supporting the US military) shows up strong with the highest rating with fewest claims denial and best customer support. This is a great trend to discover as anything that supports our men and women in uniform is very welcome.

Looking at the private payer side of the equation, BCBS is viewed as processing reimbursements the fastest, ranking high in “requiring less staff time,” though they are below average in “denying fewer claims.” On the other hand, Anthem leads private payers in requiring the least staff time.

Note: Coventry didn’t receive enough “best payer practices” votes to be considered for top position in this data set.

TOP REASONS PROVIDERS GRIPE ABOUT PAYERS

Remember the timeless saying your grandpa used to tell you, “A penny saved…” Lower costs are results providers can’t deny. So, it’s not a stretch that requiring more staff time is something providers seriously dislike in the payer/provider relationship. That said, we were surprised that it beat out claims denial by almost 10%. Note to payers: the way to an administrator’s heart is a relatively simple, hassle-free claims process.


LEAST FAVORITE PAYER PRACTICES


PAYER PRACTICES THAT TURN OFF PROVIDERS

Strengths can often become weaknesses, depending on the situation. It’s surprising (or perhaps not) that Medicare’s paperwork is perceived as more burdensome compared to all the top payers, except Tricare–but this is mitigated by how quick they are to process reimbursements. Life is all about trade-offs. We give up one thing in place of another. So, when it comes to Medicare, it’s important to note that predictability is a virtue. In other words, the paperwork is a real pain compared to most private payers but you know what you’re getting yourself into before the claims process ever begins. This isn’t always the case with private payers’ constantly moving targets.

You may notice that Anthem finds itself in the number one spot of requiring both the least and most staff time among our participants. Humana is rated the highest among private payers in having the best and worst customer service. Bottom line: it’s all about perspective. If the scope of this study allowed for a deeper analysis, we might uncover common conditions among providers that determine their view of Anthem and Humana on these subjects, one way or the other. However, Anthem has competition from Tricare (80%) on the “requires more staff” front.

By a healthy margin, Humana is viewed as denying the most claims among top payers in this study and providing the lowest level of customer (provider) support. Given the level of priority providers place on these two factors, this is not a winning recipe for future growth.

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LEAST FAVORITE PAYER PRACTICES


CONCLUSION

Are payers a boon or bane for ambulatory care providers? The answer is simply...yes. Technology (down the road) will likely disrupt the way payments are handled altogether, which may make life easier. For now, payers have a lot of work to do before getting off the troublemaker list providers often put them on. Providers appreciate services that reduce their time commitment and keep their cash flow positive. Faster reimbursement is the #1 factor that providers want. The “Favorite Payer” awards go to Medicare and BCBS for having the widest margin between favorite and least favorite votes among ambulatory providers.

Ambulatory care providers’ tolerance for denied claims and poor customer service is shrinking; however, the #1 cause for dissatisfaction among providers is what is viewed as the needless waste of staff time caused by payers. Payers might therefore seek out innovative ways to free the hands of hospital staff with better training, software, etc. And looking beyond hospital doors is also an imperative. If competition becomes stifled vis-á-vis mergers between medium and large payers, physicians might have a falling out with their partners in healthcare. The various rumors of mergers and new agreements might lead to a more progressive industryꟷ the impact of which will be felt by millions of members across the country. The hope is that as insurers acquire more hospitals and physicians, they will learn from these important entities and provide better overall offerings and services.

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Appendix A: BEST PAYERS AND WORST PAYERS BY STATE

14%

14%

11%

8%

8%

8%

5%

5%

3%

3%

3%

3%

3%

3%

TX

GA

MD

NC

CA

IL

FL

OH

VA

TN

MO

NJ

CO

DE

NC

TX

FL

MD

VA

TN

MO

KY

IN

OH

WA

GA

IL

NJ

10%

10%

8%

6%

4%

4%

3%

3%

3%

3%

3%

3%

3%

3%

NC

TX

MI

FL

TN

MD

NE

PA

GA

IL

MO

NJ

WA

MS

IA

18%

8%

8%

7%

6%

5%

4%

3%

2%

2%

2%

2%

2%

2%

2%

TX

MI

CA

NC

FL

TN

GA

MD

IL

MO

MN

MA

IA

NM

WV

13%

10%

10%

8%

8%

5%

5%

3%

3%

3%

3%

3%

3%

3%

3%

UHC BCBS

Best BestWorst Worst



TX

FL

NC

MD

NJ

CA

MI

PA

MO

IL

WA

OH

CO

KY

IN

12%

9%

6%

6%

6%

6%

4%

4%

4%

3%

3%

3%

3%

3%

3%

NC

GA

MI

FL

TN

MD

IL

MO

WV

VA

WY

16%

5%

5%

5%

5%

5%

5%

5%

5%

5%

5%

NJ

TX

FL

VA

MD

MI

MO

IL

OH

CO

GA

DE

23%

12%

12%

8%

4%

4%

4%

4%

4%

4%

4%

4%

NC

GA

TX

NJ

PA

NE

MI

FL

MD

IL

MO

MA

KY

WA

SD

AK

WV

7%

7%

7%

7%

7%

7%

4%

4%

4%

4%

4%

4%

4%

4%

4%

4%

4%

Medicare Aetna

Best BestWorst Worst



NJ

GA

CO

FL

MD

IL

NC

CA

IN

WY

TN

14%

14%

9%

9%

5%

5%

5%

5%

5%

5%

5%

VA

TX

NC

GA

PA

MD

MA

TN

CA

CO

KS

20%

15%

10%

5%

5%

5%

5%

5%

5%

5%

5%

TX

MO

NJ

GA

CO

MD

VA

PA

WA

KY

SD

NM

MS

12%

12%

6%

6%

6%

6%

6%

6%

6%

6%

6%

6%

6%

TX

NC

FL

VA

PA

NE

IA

IN

NY

MS

NH

WV

GA

19%

11%

11%

7%

4%

4%

4%

4%

4%

4%

4%

4%

4%

Cigna Medicaid

BestBest WorstWorst



GA

KY

OH

FL

NC

TX

23%

23%

15%

15%

15%

8%

FL

TX

VA

MI

OH

NC

KY

GA

IN

TN

CO

IL

19%

14%

8%

8%

8%

6%

6%

3%

3%

3%

3%

3%

NC

CA

VA

FL

SC

25%

25%

13%

13%

13%

VA

WA

VT

40%

40%

20%

Humana Tricare

BestBest WorstWorst



VA

KY

OH

IN

50%

13%

13%

6%

KY

IN

MO

VA

OH

CO

CA

CT

17%

17%

17%

8%

8%

8%

8%

8%

Anthem

Best Worst


Appendix B: List of Vendors Mentioned by Less Than 1% of Participants

AARPAdvicareAmerigroupBlueChoiceCarefirstCHIPConnect CareFirstcareHealthkeepersHealthsmartHIghmarkKaiserMedicaMolinaMultiplanOneNetOptimaOxfordSTARTrue ChoiceTuftsUnicare

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