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Just as providers have reimagined their clinical and business models in light of the pandemic, there is an opportunity to reimagine their relationship with health plans. Particularly in the context of evolving value-based contracts, there are a variety of “asks” that are likely to find receptive health plans. Three issues that are particularly important to health plans are administrative efficiency, quality measures, and overall cost of care. Each one creates opportunities for providers to offer and ask for help.

1. Administrative Efficiency

Providers complain about the administrative burden of prior authorization. What they may not realize is that the burden for the health plan is also significant. Because they require a large number of physicians and nurses, prior authorization programs represent a significant expense for health plans. Most health plans would also acknowledge that these programs are quite inefficient. Prior authorization denial or modification rates are generally in the range of 10-15 percent.  That means that 80-85 percent of the time, the entire process has no impact on the outcome. 

There are a variety of ways that providers, particularly larger groups, can offer efficiencies that benefit both parties. Considering direct access to the providers’ electronic health records (EHR) by a health plan nurse would save time and work for both parties. This has been done routinely between health plans and hospitals, but is much less common in ambulatory settings. Alternatively, asking the health plan for a dedicated nurse to serve as the clinical liaison can achieve some efficiencies by eliminating redundant requests for information, and establishing a trusted and accountable channel for communications.

A more progressive approach to this issue is for the provider to add auditable decision support tools to their EHR in return for special status that exempts them from clinical review (“gold carding”).  For example, a provider might implement decision support software for diagnostic radiology in return for gold carding of all their clinicians for radiology prior authorization.

2. Quality Improvement

Increasingly, both health plans and providers are at financial risk for performance of clinical quality measures. In parallel to providers, health plans have historically performed direct outreach to their members in an attempt to close gaps in care.  As providers have “skin in the game,” it is increasingly in their interest to do the same. They might consider leveraging health plan outreach resources by suggesting co-branding of communications.  Adding the primary care physician’s name to a health plan outreach reminder can significantly increase the likelihood of follow through by the patient, even as it lowers the administrative burden for providers1

Another potential ask to improve quality is for embedded or dedicated health plan staff to perform telephonic outreach to a provider’s patients with gaps in care on behalf of the doctor’s office. Dedicated support staff could directly book appointments for patients. This approach may prove particularly attractive for practices with large Medicaid or Medicare populations.

3. Cost Reduction

The final area for potential collaboration is in cost reduction. There are a variety of cost savings opportunities that are painless or beneficial to providers. Management of both prescribed and administered medications is one such area. For example, providers can ask for a different approach to paying for office-administered drugs. Rather than have the plan pay a percentage mark-up related to the cost of a drug, have them pay an absolute dollar mark-up, thus removing the financial incentive to use more expensive drugs. 

Expensive, out-of-area testing is another category of costs that providers might inquire about with their payers. The plan could save significant dollars if providers used a preferred lab for certain tests and should be willing to include these savings in a value-based arrangement.

Another creative approach to this issue is in the area of tertiary and quaternary care. Providers can ask the health plan if there is a particularly cost-effective hospital system in their referral region. Channeling patients in this way can generate significant gainsharing opportunities.  

Innovative Pilots

Health plans are always looking for ways to improve in these three arenas. As a result, they may be open to pilot projects with individual provider groups as a relatively inexpensive way to test a potentially scalable solution. This can be done successfully for practices of all sizes. These might include a new care model, back pain management, transitions in care, and emergency room avoidance. Any idea that can be tested on a small scale to achieve efficiency, quality improvement, or cost savings is a candidate for a health plan pilot. You won’t know until you ask your health plan.

Contact the NextGen Advisors at if you would like one of our experts to help you with health plan review. 

1Unpublished pilot in upstate NY resulted in significantly increased rate of screening colonoscopy compared to traditional health plan approach.

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Dr Lustick

Dr. Martin Lustick

Senior Vice President, NextGen Advisors

Dr. Martin Lustick is a principal and senior vice president with NextGen Healthcare focused on supporting provider organizations in their successful transition from volume to value-based care.

Dr. Lustick earned a BA in History from Cornell and an MD from Columbia. After completing his pediatric residency at Children’s Hospital National Medical Center in Washington, DC, he was in clinical practice for 17 years with Kaiser Permanente of the Mid-Atlantic States. While there, Dr. Lustick held various management and leadership roles, including chief operating officer for the 800-physician medical group. He oversaw development of their hospitalist program, population health capability, and open access delivery model.

Dr. Lustick then served as chief medical officer for ThompsonHealth—a small health system in Canandaigua, NY—where he provided clinical oversight for hospital, SNF, nursing home, IT, and out-patient physician practices.

In 2005, Dr. Lustick assumed the role of SVP & CMO for Excellus BCBS which covers 1.6 million lives comprised of Medicare, Commercial, and Medicaid. In his 13+ year tenure there he led a variety of strategic initiatives, including a patient-centered medical home program which served as the foundation for the plan’s value-based payment strategy. He also led the implementation of an automated authorization program for care management services, development of a clinical quality improvement strategy, and creation of innovative programs in management of low back pain, screening and prevention, opioid addiction, and chronic disease management.

Dr. Lustick has also been very active in the community, serving on boards and committees confronting issues such as: healthcare capacity planning, Health Information Exchange, mental health, substance use disorders, social determinants of health, and childhood obesity.