Will Healthplans Support the Healthy Contracts Legislation?
Summary of Healthy Contracts Benefits
Financial Interests: Healthplans maximize financial returns and control costs with their current contracts and policies, which the petition seeks to reform.
Competitive Advantage: Healthplans gain a competitive edge through selective enrollment and efficiency strategies that may be compromised by the petition.
Administrative Efficiency: Simplified processes which benefit Healthplans could become more complex and arbitrary under new regulations.
Increased Oversight and Accountability: The petition’s call for independent certified auditors would increase scrutiny and limit gaming practices.
Transparency and Fairness: Clear and enforceable contracts would reduce the exploitation possible with ambiguous terms, impacting Healthplans' financial strategies.
Enhanced Trust and Collaboration: Fair contracts could rebuild provider-Healthplan relationships.
Improved Care Quality: Aligning incentives with patient outcomes could achieve the goals of value-based contracting.
The likelihood of Healthplans supporting the Healthy Contracts petition is low, given their current financial, competitive, and operational strategies. Healthplans will almost certainly design value-based contracts to maximize financial returns, often by setting performance metrics and benchmarks that favor their interests. The Healthy Contracts petition aims to make those contracts transparent and fair, which will almost certainly reduce the financial benefits that Healthplans currently enjoy by gaming Provider practices. Furthermore, Healthplans manage risks and control costs through stringent contract terms that often shift financial burdens to providers. Legislative reforms requiring negotiation in good faith with fair dealing and independent oversight would limit their ability to do that.
Healthplans also gain a competitive advantage by selectively enrolling healthier populations and presenting themselves as efficient and cost-effective. Transparent and fair contract practices, as advocated by the petition, could diminish their ability to manipulate these factors for competitive advantage. Further, Healthplans streamline administrative processes in ways which benefit their operations and almost certainly compromise care quality. The Healthy Contracts legislative emphasis on fair and good faith contract practices could complicate those efficiencies, making Healthplans less inclined to support it.
Increased oversight and accountability are central to potential legislation, calling for independent certified internal auditors to monitor Healthplan practices. This would increase scrutiny and limit gaming practices, which Healthplans and Providers otherwise do. The requirement for clear, enforceable contracts would also reduce the ability of Healthplans to impose ambiguous terms that can be exploited for financial gain.
However, the potential benefits of these reforms for providers and patients are significant. Fair and transparent contracts could rebuild trust between providers and Healthplans, fostering better collaboration for patient care. By reducing gaming and aligning incentives with patient outcomes, the healthcare system could achieve the true goals of value-based contracting, improving care quality and sustainability.
In conclusion, while the Healthy Contracts petition addresses critical issues of transparency, fairness, and accountability, it poses a direct challenge to the financial and operational strategies currently used by Healthplans. Given the significant changes required and the potential reduction in financial benefits, Healthplans are unlikely to support the petition enthusiastically. Achieving these reforms will likely require strong legislative action and advocacy from providers, patients, and other stakeholders committed to ethical and sustainable healthcare practices.
References
Contract “Gaming”: Reasons Why Value-Based Contracts Can Fail
https://www.mentorresearch.org/contract-gaming-reasons-why-value-based-contracts-will-fail
DISCLAIMER and PURPOSE: This discussion document is intended for training, education, and or research purposes only. The information contained herein is based on the data and perspectives available at the time of writing. It is subject to revision as new information and viewpoints emerge.
For more information see: https://www.mentorresearch.org/disclaimer-and-purpose