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Provider networks are a critical asset for payers and health plans. This includes helping to attract employer business, increase customer retention and satisfaction, and keep members healthy. However, payers must consider that providers are operating in the red due to the ongoing pandemic, labor constraints and higher operational costs. Payment experiences can be a simple, yet effective way for payers to keep their provider networks strong with faster, streamlined payments.

Arguably, provider networks are one of the strongest assets for any payer organization. These networks play a crucial role in shaping the bottom line of these entities, impacting both financial performance and member satisfaction. Most importantly, with a strong provider network, payers have a competitive advantage in attracting and retaining both employers and members.

However, providers have been navigating a perfect storm of challenges that have resulted in negative margins and unstable financial outlooks. Healthcare trends show a connection between challenges faced by providers and a payer’s bottom line. For example, turnover among primary care physicians can cost payers $979 million annually. This could be why 72% of payers want to improve relationships with provider networks.

Even as consumer payment responsibility increases, claim payments still represent a major portion of a provider’s income. Many of the payment options from payers either come with fees or take time and money to process. In 2021, more providers listed getting paid by payers as a primary financial concern more than the ongoing COVID-19 pandemic and patient bad debt.

Payers are in a unique, powerful position to both strengthen their provider networks and help boost financial recovery for provider organizations. To that end, payers can increase free, electronic payment transactions to providers and strengthen their provider networks.

In this blog, we will explore the importance of provider networks to payer organizations. Plus, we’ll examine how payments factor into strengthening the relationship between payers and providers.

Why Provider Networks Are Critical for Payers
Provider networks play a pivotal role in the success of payer organizations and health plans. By focusing on provider networks, payers can position themselves for long-term success in an ever-changing healthcare landscape.

1. Access to Quality Care: Provider networks ensure that members have access to a wide range of healthcare professionals and facilities. With a strong provider network, payers can offer their members a comprehensive network that spans various specialties and regions. This accessibility to quality care enhances member satisfaction and loyalty, ultimately benefiting the bottom line.

2. Value-Based Care: In recent years, there has been a shift towards value-based care models, which prioritize quality and outcomes over the volume of services provided. Provider networks play a vital role in facilitating this transition by aligning on value-based care principles and achieving those shared goals. When payers work with providers to focus on preventive care, chronic disease management, and care coordination, payer can improve health outcomes for members while reducing wasted healthcare spending.

3. Network Adequacy and Member Retention: Maintaining a network of providers to meet member healthcare needs is a critical component of a payer organization. If members encounter difficulties in finding in-network providers or face long wait times for appointments, they may become dissatisfied and seek alternative insurance options. Ensuring network adequacy boosts member retention rates and reduces the costs associated with acquiring new members.

How the Claim Payments Impact Provider Networks

Healthcare providers face financial difficulties due to various factors. According to a MGMA Stat poll, 89% of medical groups saw operating costs increase compared to 2022, highlighting the financial strain providers now face. With rising costs and an increase in patient responsibility, providers are often left with narrow margins and are often operating in the red. Each dollar of a claim payment is vital to provider’s financial stability – making the payment experience a crucial aspect of their operations.

The claim payment experience for healthcare providers is a critical component of their overall financial stability and ability to deliver quality care to members. However, the payment process for providers can be a challenge. There are often hidden costs that can create considerable friction in the claim payment experience for providers. This could be why more than half of payers reported calls due to provider confusion and payment questions as a top challenge.

Provider Networks and Claim Payment Types

To improve the relationship with providers, the payment experience should be closely examined for opportunities to eliminate negative experiences. Current payment methods are paper based and expensive. In fact, according to trends in healthcare payments:

  • 29% of providers saw fees increase.
  • 72% of providers receive paper checks from payers.

However, 87% of providers prefer free electronic funds transfer (EFT) from payers for their claim payments. When payers focus on increasing ERA/EFT transactions for their provider networks, the benefits include eliminating costs associated with virtual cards and paper checks, reducing provider call volumes associated with claim payments, and ultimately improving relationships with provider networks.

In the past decade, a trend has emerged where payers are using payment methods that charge providers to receive payments, including virtual card payments and ACH payments with fees. These payment methods place an additional cost burden on providers. In a recent MGMA survey, more than half of medical practices report having to pay fees associated with electronic payments.

The intent of CAQH CORE Phase III rules is to move the industry to electronic delivery of data and funds to drive down cost and friction. Providers have indicated they are dissatisfied with processing fees associated with virtual cards. The ability to opt out of receiving virtual cards was often noted to be a trying experience for providers. Payers have an opportunity to optimize operations and uplift the entire healthcare economy with a better claim payment experience.

A Path Forward for Payers and Provider Networks

Payers have the opportunity to create a better healthcare economy by prioritizing the payment experience for provider networks. When providers receive timely and accurate claim payments, their financial stability improves, enabling them to invest in technology, infrastructure, and ultimately deliver better care for a payer’s members. Additionally, electronic payment adoption reduces administrative burdens for providers and minimizes the need for manual claims processing. This efficiency benefits both payers and providers, leading to improved relationships and a stronger healthcare economy. 

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