Healthcare Payments Role in Relationships Between Payers and Providers

As the general cost of living continues to increase, healthcare is a top concern for many Americans. As a nation, we spend two to three times more than most developed countries each year, yet payment errors account for $300 billion in unnecessary healthcare spending. Health plans and healthcare providers share in the burden of determining ways to decrease inefficiencies while continuing to focus on positive, value-based care outcomes for their patients. Could healthcare payments and financial relationships between all parties involved be part of the solution?


Healthcare payments are stressful enough for patients without adding the inconvenience of how and where to make payments. Often it is the healthcare provider who bears the brunt of the patient's frustration over their explanation of benefits and payments. Recent studies suggest offering patients digital payment options helps ease this frustration for both providers and patients. Although this is one-way payers and providers can work together to maintain a positive relationship while delivering value-based care it is a complicated scenario to achieve. 

What is Value-Based Care?

Value-Based Care (VBC) is a healthcare delivery model where health plans and providers (hospitals, labs, doctors, and nurses ) are paid based on the health outcomes of their patients, and the quality of services rendered and patient outcomes, not by the number of patients they treat. Under some value-based contracts, health plans and providers share the financial risk. The "value" in value-based healthcare is derived from measuring health outcomes against the cost of delivering the outcomes. The focus of this care model is the member/patient and focuses on patient outcomes, prevention, and in turn, creates more positive relationships between the member/patient with their healthcare provider and their health plan. 

Value-Based Care Impact on Healthcare Payers and Providers

Value-based care enables payers to achieve stronger cost controls and reduced risks by spreading it across a larger patient population. A healthier population with fewer claims means less drain on payers' premium pools and investments. 

Value-based care enables providers to achieve efficiencies and higher patient satisfaction. While prevention-based patient services require more time from providers, overall, less time is spent on chronic disease management. When the focus is on value instead of volume, quality and patient engagement measures increase. Providers eliminate the financial risk that comes with a capitated payment system.

Systemic Mistrust between Healthcare Payers and Providers

In the past, before value-based care, the health plan was in control. For example, 90% of healthcare providers say health plans’ cost-containment efforts are a source of friction—a mistrust rooted in the fact that many of these efforts are one-sided and may not account for how they impact provider IT resources, patient experience, or financial processes. 

In an Institute of Medicine Roundtable on Evidece-Based Medicine, it was stated, "As physician practices spend an average of 3 hours a week interacting with health plans at a national cost of $23 billion to $31 billion a year, the administrative complexity created by multiple documentation requirements to varying billing, precertification, and credentialing forms takes time away from clinical care.”

Especially now that healthcare payers and providers are partnering to ensure positive patient outcomes, there is now also an expectation of collaborative and positive relationships between the payers and providers to a more equitable power structure. 

How Healthcare Payments Can Build Trust between Payers and Providers

Financial relationships are complex. In the healthcare industry, many financial transactions have been approached in a silo. However, if healthcare approached financial relationships the same way as their value-based care models the result could also be a more holistic and symbiotic relationship not only between health plans and healthcare providers but would expand the positive relationship to patients/members, government, and the community. That can happen with just a switch in the healthcare payment process toward:

  • Creating solutions that have the most impact on strategic challenges
  • Primarily solving urgent problems 
  • Holding all partners accountable for their commitments
  • Agree to continually raise the performance bar

Healthcare Payer-Provider Collaboration is Key

Maintaining positive provider relationships isn't just in the hands of healthcare payers though. When health plans and providers work together, it helps establish positive relationships between the payer and provider, as well as the provider and their members, ensuring a beneficial experience at all levels. 

Payers can create positive relationships with providers and members if they can:

  • Understand the impact areas and ROI of traditional vs. electronic payment, communications, and remittance
  • Learn the key challenges facing them in the current healthcare landscape
  • Learn what to look for in a payment partner 

To learn more about the areas health plans must consider in the payments process to maintain positive relationships, download our white paper, New Realities of Payment Relationships.

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