Evaluating Payor Plans

Valuing Insurance Contracts Beyond Rates

When you and your team gather around the table to evaluate a new insurance plan, how much time is spent on reimbursement rates compared to all the other aspects of the contract? My guess is it about an 90% rate conversation and a 10% “other” conversation. Am I right? 

Of course, the rates are important. They are the face value of the contract. And, frankly, they are also the most important contract element to the payor as well. However, there are two important considerations when taking the broad view of payor contracts. First contracting can be more than the quid pro quo of payment for services. And second, what payment for what services. I’m sure you consider the second element already, but purely on a rate basis or from a more expansive perspective of population health management.  

Back to the first. Payors control patients’ behaviors. And price and volume are interrelated. What if your contracting increased your volume by 25% for a given service-line or procedure. And, what are the spinoffs of that service line or procedure? Most contract analysis doesn’t go to the detail level of, literally, the utilization hierarchy, of given services and fees. But, they could, they can and they should. 

Second, then, again, the population health perspective. What is the value of overall better patient management, of compliance, of avoiding illness, of postponing typical issues of aging through better health management. Frankly, the big money in healthcare is in Pop Health, but most modeling keeps it as an inherently known but not well valued commodity.  

So, here’s the bottom line, Cost Effectiveness Analysis (CEA) modeling can put real numbers and real value to those negotiating points. That’s value in terms of analysis and assessment, and value in terms of negotiating, and perhaps even in adding some valuable element the payor knows is important but doesn’t know how to measure or monetize.  

The more you know, the more in control of the contracting process you become. CEA can expand your knowledge base exponentially – and possible do the same for your revenues.  

If your objective is to provide the best decision-making for your organization and take a global view of your business, expanding your sights beyond ROI, and educating other decision-makers, Cost Effectiveness Analysis can make your organization more competitive and more profitable.


William Matzner, MD. is a recognized expert in Healthcare and Neuro Economics. With a Ph.D. in Economics, MBA and Medical Doctor degree, Dr. William Matzner will provide you with expert analysis on health and wellness programming, populations health management, disease management, new program development, facility development, equipment acquisitions, and other healthcare programs, acquisitions and initiatives. For more information about cost effectiveness analysis and improved financial accountability for your organization, visit Dr. Matzner at http://healthcareanalytics.biz. Dr. Matzner is also available for speaking engagements, retreat presentations and topic specific addresses.