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Tips for Getting Contracted Into Closed Payer Networks

Thursday, February 16, 2017   (0 Comments)
Posted by: Steve Selbst, Healthcents
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To learn more about getting contracted with commercial and managed Medicare/Medicaid payers and plans, and the proven and successful techniques for doing so, register for the AAOE 2017 Annual Conference in Indianapolis April 22-25 to attend Steve Selbst's session titled, "How to Get Contracted Into Closed/Narrow Networks: 'The Secret Sauce'"


Today’s article is about how to get into “closed” or “narrow” networks. Let’s begin with answering the question “What is a closed or narrow network?” A closed network is a payer network which currently has participating (par) providers similar to you and, therefore, is not adding more similar providers, including you, to their network. A narrow network means it has just a few par providers of a certain type and are not looking to expand further.

Since many kinds of payer networks are already complete, it is often challenging for providers to get contracted into payer networks. In working every day with a broad range of providers, my experience is that this challenge is especially prevalent for DME companies, HME companies, home infusion companies, labs, ancillary providers, and some practices.

Therefore, the question is what can you do as a provider of valuable medical services and/or products to get into a closed or narrow payer network?

Step 1- Value Proposition

Don’t assume the worst. Prepare a value proposition / proposal letter and get it to the payer contracting manager (not the provider relations manager). See this prior blog post for more information about how to develop effective proposal letters / value propositions. If you write a strong enough value proposition the payer just may say “yes” and you are contracted. However, as the old saying goes “hope for the best but prepare for the worst.”  Therefore, if you receive a “Thanks, but not interested” reply then go to Step 2.


Step 2- (Very important)- How to respond to objections

Often the objections will be centered on the fact that there are already a small number of companies in a payer’s network fulfilling the network’s requirements for your products and services thus seemingly leaving you left out.  See if you can find out who the par providers are and what your competitive benefits are versus those already in network and be prepared to introduce price competitiveness into the negotiation.

Realistically, if you are turned down to be a par provider, you will need to both demonstrate specific service, product, geographic or strong referrals compared to those already in the payers’ network.  You will likely also need to beat their pricing. Since it will not be apparent what the competition’s pricing is, simply tell the payer to make you their best offer and you will seriously consider beating the pricing of their in-network providers by X%. You can always choose not to participate if it turns out that the pricing is too low to meet your profit margin goals. However, unless you ask for an offer and get assertive on pricing, there likely won’t be an offer forthcoming. But price competitiveness, alone, likely will not get you to the finish line. You will need to demonstrate other compelling benefits compared to the existing par providers.

For example, if you are an Orthopedist, a DME provider or wound care company, do you have service benefits compared to your competition? These benefits could be related to unique services (e.g., hand surgery), overnight or two-day shipping, home visits, certain kinds of therapists that you deploy (that your competitors don’t) who help insure product compliance and, therefore, create better treatment outcomes. Do you have a new product that breaks the treatment paradigm for disease management and care and, therefore, reduces hospital inpatient stay days, surgeries, etc.? Are you referring cases or services to a hospital, whereas if you were in network they would be performed in an office setting at much lower cost? Do you have a new technology with treatment benefits over existing treatment methods?

An often overlooked advantage may be geographic coverage. For example, if you are working on a contract with a payer in a specific state, and your products / services are deployed in other states, too, it is entirely possible that the payer may be looking to enhance its network and provide network coverage for your services in other states. Therefore, offering to help the payer by providing your services in other states may help you obtain a contract in the state or location that you desire most.

Having escalated many closed network scenarios, successfully, I have found that payers tend to fundamentally look for five reasons to add a provider to a closed or narrow network:

  1.  Cost savings and efficiency / treatment benefits.
  2.  Service / Product advantages leading to higher patient satisfaction (including coverage across multiple states and Medicare Localities).
  3.  PR benefits-will adding this provider to my network as a payer help me demonstrate that I care about the well-being and treatment benefits for my beneficiaries? While you may not often think about payers focusing on the PR benefits of their provider networks, this is a very important objective.
  4.  Geographic Coverage (particularly rural area coverage).
  5. Strong referral network from other practices and employers.

In a recent DME contracts’ negotiation with a large national payer, I found that the payer spent a lot of time and had a lot of interest in the service benefits of this company compared to its competition.  This payer was looking to add providers that differentiate its network by helping its beneficiaries achieve positive outcomes by providing assistance in the deployment and use of their products. While the DME providers’ products were similar to others in the payer’s network, this provider also had a national network that provided personal service to its patients and did not just drop ship its products and rely on the patients to utilize them.


Step 3-What to do if you still get turned down to be a par provider?

Often a first level contracts’ manager or negotiator at a payer is given specific guidelines to follow in specific areas including narrow and closed networks. As such, no matter how strong your value proposition is, based on the advice in step 2, above, you still may get turned down. Never despair, as my business partner says “if a payer says no you are not talking to the right person!” In this case, it will be necessary to get a meeting with the regional Director or VP of payer contracting to explain your value proposition directly. I do recommend transparency in doing so.  That is, ask the first level negotiator who

the Director or VP of payer contracting is and then write a short and to the point letter to this executive, no longer than about one page, that highlights the value to the payer of your inclusion in their network and explains that you have worked with the first level negotiator (copy the first level negotiator) and thought it would be a good idea for this person to hear about the benefits of your product(s) and or service(s) since this is a “win win” for the payer to have this provider in their network due to the efficiency and service benefits that the provider has. In this letter, it is best to indicate that you will work with their assistant to set up a brief phone discussion to explore the benefits to “payer’s name” of having you in their network.

 As an analogy to a famous Presidential speech “ask not what the payer can do for you but what you can do for the payer.”

While you may still get turned down at this point, I have seen this approach work many times and, in some cases, even enable national contracts for providers who were being turned down as a par provider in a single state due to the value proposition and geographic coverage offered by the provider.


Step 4- What else can you do if you still get turned down?

There are a large number of payers that operate as specialty networks for large national payers. Researching this option may help you find a way to service your customers’ / patients’ needs. There are also many payers who operate as TPAs (Third Party Administrators) or ASOs (Administrative Services Organizations). These are companies that act as the agent for large employers and administer the health insurance plans for their employers.  In any location, research can be done to figure out who the large employers are in a region and who the ASOs and TPAs are that service these large employers. In fact, some large employers even write their own policies directly!

You can potentially build a large book of business by contracting with the right combination of TPAs, ASOs, and employer groups that service large numbers of employees in your area.

In summary, when applying to a closed or narrow network, remember to follow the steps outlined above, methodically. Focus on the combination of the extra value you bring to the table compared to competitors who may already be in the payer’s network and be ready to be price competitive.

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