For hospitals, health plans, and providers navigating a transformed reimbursement landscape, the dynamics of contract negotiation are hardening as financial pressures reshape the balance of power.
Government plan cuts and marketplace uncertainty are forcing providers to rethink how they secure revenue from commercial payers—and changing what both sides are willing to accept at the negotiating table.
In a recent article by Law360 Healthcare Authority, the publication examined how providers facing ACA and Medicaid headwinds are becoming more aggressive in pursuing better commercial rates and disputing underpayments, while payors grapple with the cost implications of those demands. Christine Burke Worthen, Member of the Firm of Epstein Becker Green and counsel to health plans, hospital systems, and providers on managed care contracting, reimbursement disputes, and value-based payment strategy, discussed the evolving tension between the two sides.
The pressure has not created new friction so much as elevated the stakes on existing disagreements over costs and reimbursement adequacy. As Christine noted, while the underlying dynamics are familiar, the urgency has shifted. "Payors have long pointed to high hospital costs, while providers point to under-reimbursement," Worthen said. "Today, the tension is still there. It may be that the themes are a bit different."
Hospitals are weaponizing their own data in contract renegotiations, pulling government payment cuts and rising uncompensated care costs into their pitch for higher commercial rates. Payors recognize the pressure but remain constrained by their own margins and utilization obligations. As Worthen explained, when providers bring these pressures to the table, payors face a difficult position: "While payors are sensitive to greater cost pressures, they also have a responsibility to manage their utilization rates."
The result is a more strategic dance on both sides. Providers are building their cases methodically, anticipating payors' concerns and assembling the evidence they need to justify their positions before sitting down to negotiate. "On the provider side, they're certainly tracking what's going on and then building that into their strategy for an upcoming negotiation to ensure that they've got all of the pieces of the story they want to tell," Worthen said.
Get in Touch
To discuss how reimbursement dynamics are reshaping your contracting strategy—whether you represent a provider negotiating for better rates or a payor managing cost pressures—contact Christine Burke Worthen at cworthen@ebglaw.com.
