The Challenges of Building and Maintaining a Provider Network for Federal Health Plans

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By Helen Roberts-Niemi, Manager Provider Relations Karna WTC HPS and co-author Scott VandeSand, Senior Director Karna WTC HPS

There are several unique challenges that occur when building / maintaining an adequate provider network for Federal Health Programs (FHPs). We first run into legislative mandates, such as regulated reimbursement and administrative requirements. With FHPs we usually cannot negotiate rates or language, as providers are accustomed to doing with Commercial Plans. Secondly, Providers sometimes mistakenly equate FHPs with other large payors with whom they have experienced bureaucratic “slowdowns” such as approvals, appeals, payments, etc.

Often FHPs have their administrative contractors build a custom single-purpose network for the FHP. The advantage to this approach is that the provider network complies with the FHP mandates by design. The disadvantages of this approach are that it is expensive, labor intensive, prone to access gaps and often these single purpose provider networks’ contracts are on “proprietary paper”, so they are owned by a contractor, and not the FHP. This is a problem if the FHP wants or needs to change contractors. They would have to have a new contractor rebuild a provider network from scratch.

Other FHPs leverage existing proprietary commercial provider networks, a solution termed “rented network”. While commercial networks are often bigger and better maintained, they most likely do not comply with the FHP mandates or desired rates. Some FHPs modify these rented networks using FHP specific riders or amendments/addendums which add FHP language and rates. This “modified-rented network” approach promotes compliance and is a good option where the FHP has a large enrollment. Providers are more likely to accept changes to their commercial agreements for increased patient volume. However, an FHP with smaller enrollment will not have the negotiating power of larger FHPs and thus may find providers unwilling to accept these amendments/addendums. In both the rented and modified-rented network solutions, the provider network is still proprietary and controlled by the commercial contactor/vendor. Therefore, both solutions again create barriers if the FHP wants to change contractors/vendors.

One of the best solutions is to leverage the network of approved Medicare Providers (the nation’s largest FHP), while then establishing a standard agreement between the Medicare approved provider and the FHP. The provider agreement’s terms and conditions are based on the FHPs mandates/rules. These agreements can be expedited because they are not full provider contracts. The providers simply agree to the FHP terms and conditions or rules of the FHP. Because most FHPs are somewhat benchmarked on Medicare, we can leverage the existing Medicare Provider Network to identify providers likely to accept the FHP terms and conditions. FHPs can also reuse Medicare’s provider credentialing data which further reduces complexity and costs. Additionally, ongoing updates from Medicare allow “bad actors” to be removed from the network upon notice. Where providers are not in Medicare FHPs can utilize an expediated process based on the same terms and conditions to establish an agreement between providers and the FHP.

In conclusion, there are several options that can be used when building a provider network for an FHP.  FHPs must understand and prioritize their business requirements so they can clearly analyze how these options will and will not address each driver.  Undoubtedly some trade-offs will be required, but it is possible to tailor a provider network solution that best addresses each FHP’s specific needs.

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