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Ms Mitchell,Thanks for asking for my input on this. I am sorry to be blunt but your statement neither hidden nor factual. Here’s why:In third-party payer agreements that I’ve helped analyze and negotiate for doctors, dentists, hospitals, and other healthcare providers, and also when I train on this topic in my Master Classes on contract analysis and negotiation, this falls under the Independent Contractor terms and conditions.Physicians, hospitals and other healthcare providers (HCPs) contract with insurers as Independent contractors. As such, the responsibility for independent medical judgment is theirs and theirs alone. To further support this, I negotiate (or supply my clients) the following language, and have done so since about 1997, (21 years). Suffice it to say, I know that I’ve moved the needle on this in 21 years because now I see my snippet of language in the boilerplate version of some contracts, while we still have to fight tooth and nail to get the third paragraph added to the agreement and stated for the record. The independent contractor rules grant this anyway, but I prefer to have it there in writing just the same for the person who may be unaware of the 21-question checklist that the IRS publishes as a guide to define independent contractor status.A. Independent Contractor Relationship1. This Agreement is not intended to create nor shall be construed to create any relationship between Health Plan and HCP other than that of independent entities contracting for the purpose of effecting provisions of this Agreement. Neither party nor any of their representatives shall be construed to be the agent, employer, employee or representative of the other.2. Nothing in this Agreement, including HCP and its Represented Physicians' participation in the Quality Management and Utilization Management process, shall be construed to interfere with or in any way affect Represented Physician's obligation to exercise independent medical judgment in rendering health care services to Participants.3. HCP represents that each medical staff member has the requisite training and education to make all decisions related to patient care and shall exercise independent medical judgment with respect to all such matters. Health Plan shall not interfere with any medical staff member’s independent medical judgment with regard to treatment or utilization issues. Any payment or absence of payment for services shall not constitute an opinion or affirmation by Health Plan that the services or procedures recommended or rendered by a member of medical staff are, are not, were or were not medically appropriate, but only that the service or procedure was not a Covered Service.I have trained more than 60,000 industry contracting specialists and healthcare executives mobilizing an army to insert this third paragraph into their contracts at every opportunity.A second failsafe is included in the contract because the language of the contract states:The validity, enforceability, and interpretation of this Agreement shall be governed by any applicable federal law and by the applicable laws of the state of [name the state] in which HCPs are licensed and have rendered Covered Services.As such, in most states there is a Corporate Practice of Medicine (CPOM) prohibition. So if a physician is “employed” instead of “contracted” as an independent contractor, the states often prohibit interference in medical judgment by a corporation that might be tempted to constrain services or treatments in favor of bottom line considerations.So, in closing, if something happened to interfere with clinical decision-making as you argue, you need to see an attorney to have your attorney determine if a breach of the independent contractor relationship occurred, or was it abdication of duty by the physician, inappropriate corporate practice of medicine, or a RICO violation if you paid and didn’t receive what you paid for, or another consumer protection violation which would be of interest to regulators.If the health plan was offered by a self-funded or self-insured employer ( more than 210,000 of these plans exist in the USA) then the IRS may also be interested in the breach of ERISA fiduciary duty.One last thing. Payment may be denied for any treatment or service not covered by the plan - even it the physician and or the patient deem the treatment “medically necessary”. Any patient can get any treatment they want at any time if they are willing to pay for it or assume financial liability. So the patient can receive ANY treatment as long as the physician will perform it and it won’t harm the patient.I hope this gives you a more realistic perspective of what may look like an insurer manipulating the treatments, when in reality, the decision-making of the a medically necessary treatment rests squarely with the attending physician.

For “How does”, which is the question you asked, that cannot be known unless you ask each physician one by one. I believe you may be asking your question using the wrong modal. If it is the right modal, then your question doesn’t belong on this forum. I am going to assume you meant to ask how “should” which would be used to express a necessity or a prediction or how “would”which would express an intention or a customary action.Customarily, most physicians approach this decision by assuming they should try to get on every insurance panel - usually to their detriment. This turns their business into a commodity seller.The steps should be as follows:Establish one’s own business rules (what’s acceptable or unacceptable, in terms of price, policies, procedures, and negotiable terms and conditions, etc.) These business rules should align with brand values, competitive advantages, differentiators, innovations, and reflect what would be relevant to the physician’s ideal patients. This is later used to compare and contrast what the payor offers in their contract. With my physician and hospital clients, I supply them a model checklist of about 40 such business rules to get them thinking along these lines. They take my list and rate the items in terms of importance to them (1= need to have; 2= nice to have; and 3= not critical but great if you can get it) and then add their own unique preferences.The business rules should also have some standard criteria to vet the plan in terms of due diligence. This includes good standing with regulators, good references from other physicians and their revenue management staff, and good feedback from patients. My model due diligence template used as a vetting checklist is 7 pages long.With these two tools, outreach to each health plan or network of interest is carried out with a letter of interest or a request to join the panel.Based on what they discover through due diligence and the draft offer and agreement, they prioritize what may need to be negotiated to more closely match their requirements in the business rules checklist.The discounts and rates offered may be too low for the “book of business” or other advantages and benefits or risks offered by the plan.The book of business should be examined by age, gender, and zip code and “product” if an all products offer is extended. An “all products offer” means that the contract applies to HMO, PPO, TPA, unions and employers, other insurers, individuals, and others such as Medicare and Medicaid, workers comp, auto accident insurers, city, state and county governments, etc., Zip code research from census data helps to identify patients with a propensity and ability to cover and pay their deductibles and copayments, or a propensity to leave a trail of bad debt on deductibles and copayments. Why fill your office appointment schedule with patients from a low pay plan where its members don’t pay their cost shares timely? To do so displaces higher paying plan’s members with the propensity to pay their bills timely from access to appointments because the physician’s rate limiting factor is time and appointment slots. The higher plan generates more revenue per hour for essentially the same labor.Part of what I include in their model checklist is also a key performance indicator set that includes timely payment, incidences of refund requests and chargebacks, offsets or denied claims which must be appealed. Currently, US costs to collect is about 28% of revenue, so the fewer hassles, the more value of each service rendered. Wrongfully denied claims are about 15% of all claims submitted which must be reworked and followed up at great labor expense and time value of money delay that results in lower value per claim eventually paid. So even if the denied claims are overturned, I assign higher demerits for wrongfully denied and overturned claims because my clients end up working hard for the same money or higher risk.I hope that helps. I could, did, and will write another book here. I wrote the first edition of the “Managed Care Contracting Handbook” in 1995, the second edition in 2009, and my publisher has asked for a 3rd edition of the book this year, which I have agreed. It will likely release in 2020. Many articles and checklist are available at no charge by visiting my website AskMariaTodd™[1][1][1][1] and using the search tool to find articles on contracting and managed care.A technicality to note: the providers don’t accept “insurance” they accept “assignment of benefits” or “assignment of payment.” They are not a named beneficiary of the insurance policy so they cannot accept “insurance”.Footnotes[1] Home - AskMariaTodd™[1] Home - AskMariaTodd™[1] Home - AskMariaTodd™[1] Home - AskMariaTodd™

I work as a healthcare consultant, so I have some idea of what goes on behind the scenes. This list is by no means exhaustive, it's just a taste of how you should be thinking about this.Fundamentally, there are only two things they can do: 1) Increase revenues by increasing premiums or 2) Reduce costs paid to the hospitals/providers. Increasing premiums is easy to understand. Reducing costs is more complicated.Payers, like Blue Cross Blue Shield, have a number of ways they can try to reduce costs. Let's look at it in terms of managing the patient and managing the provider (hospitals, physicians, those who provide service).Managing the Patient:1) Leverage Rebates from Big Pharma: Payers can try to leverage more rebates from big pharma to reduce their effective spend for drugs. If Payer A covers all the patient costs for Drug A and Payer A spends $100M on Drug A for the year and Payer A get $50M in rebates from Drug A's manufacturer, effectively Payer A is only spending $50M on Drug A for the year.2) Increase Tiering and Cost Sharing: Payers can be more restrictive on their formulary to reduce their costs and increase the costs for patients.The formulary lists out every drug that is covered and puts the drugs on tiers. Some health plans have three tiers; others have five or six tiers. The higher the tier the drug is on, the more the patient has to pay. The exact cost share split in terms of percentage paid by payer versus patient is determined by the patient's specific health plan.For example, Tier 4 drugs are always more expensive for the patient than Tier 3 drugs. But how much more expensive is based upon the patient's health plan. If the patient pays higher premiums, Tier 4 is probably not much more expensive than Tier 3 in percentage paid by the patient. But if the patient pays low premiums, the patient may have to pay for Tier 4 drugs out of pocket.3) Restrict Access: Payers can also use prior authorizations and step edits to restrict access to a drugs.Prior authorizations are forms that have checklists of requirements before the requested drug can be dispensed. For example, payers can mandate the use of a specific specialty pharmacy. They can also require that a specialist write the prescription or that the drug is administered in the hospital. Payers can filter diagnoses, so that only patients with a certain disease have access to the drug. All other patients who want the drug must go through step edits or the drug is simply not covered.A step edit is when a payer requires the use of a generic or a preferred brand (lower tier) before the patient is allowed to use the requested brand (higher tier).Managing the Provider:1) Reduce Reimbursements to Providers: Large payers try to negotiate better discounts on hospital chargemasters. Each hospital has a chargemaster that contains the list price of all their goods and services. However, payers only pay a fraction of that price - the fraction is determined through contract negotiations.2) Increase Cost Sharing and Restrict Access: When you see out-of-network and in-network, that's what this is. Depending on the payer-provider relationship (that is probably largely dependent on the discounts that the payer gets on the chargemaster), providers are grouped into two buckets: in-network and out-of-network. Patients try extremely hard to go to in-network providers, as payers cover a lot more of the costs for in-network providers.Overall Capabilities:1) Reducing Risk: Many payers, especially Blue Cross Blue Shield payers, either do not have the capabilities to better manage their costs or they are in a state that is very restrictive when it comes to managing their costs. For example, maybe the state doesn't allow five tier formularies, which greatly limits the payer's ability to manage their costs. In these cases, the payer might try to get more ASO (administrative services only) business, where they manage the claims for a large company/employer that underwrites their own risk. Most national plans have a lot of ASO business from the IBMs of the country. For the ASO business, they are paid for their service rather than their ability to manage their spend and costs.2) Increase Health Economics Capabilities: This involves being more able to evaluate the value of certain treatments and drugs. Payers are trying to increase their ability to evaluate what the price for medical goods should be in terms of outcomes and actual effectiveness. This helps in terms of discounts and rebates negotiations.3) Purchase Providers: More payers are trying to really evaluate all monetary risk that comes with each patient by purchasing hospital systems. Even though payers have many levers they can use to restrict drugs and restrict which providers the patient can go to, in the end the flow of goods is still not under their control. They can't prevent physicians from writing certain prescriptions. They can't force patients to switch drugs or providers. They can only try to minimize the impact through their formularies and step edits and prior authorizations and network agreements. That's why the purchasing of providers is a huge step from simply contracting with providers.4) Align Incentives through Value Based Agreements and Health Information Technology: There is also a trend to shift risk from purely the payer to the provider by utilizing value based payments and quality metrics. This requires information transparency between the payer and provider. Ideally, the effect should be lower cost of care and therefore lower premiums for patients.