Getting Along or Going Along? Health Plan-Provider Contract Showdowns Subside

Although contract negotiations between health plans and providers have remained tense during the past two years, overt impasses have declined, according to new findings from the community Tracking Study. The balance of power stabilized during the period, with providers, particularly hospitals, solidifying their dominant negotiating positions and securing concessions from plans in the form of significant payment rate increases and more favorable contract terms. Many plans have recognized and accepted their weaker position relative to providers, suggesting the recent lull indicates plans have found it in their interests to accommodate provider demands for higher payments, rather than resist them and possibly trigger a contract showdown. Though no immediate change is likely in this environment, emerging forces could swing the power pendulum back toward plans.