The behavioral health contracting landscape has transformed dramatically in the past five years. What worked in 2019 – operating out-of-network, negotiating once every three years, treating contracting as a purely transactional event – is no longer a viable strategy.
In a recent conversation between our SVP of Operations Brett Reed and Serif Health CEO Rafiq Ahmed, several uncomfortable truths emerged about where the market is headed and what providers need to do to stay competitive.
Here are five critical insights every behavioral health organization needs to understand – and the strategic actions you can take in response.
HARD TRUTH #1: Payer Networks Are Filling Up (And Some Are Already Full)
The Reality:
“We’ve seen the carrot – payers saying, ‘Hey, you serve a lot of our members, we’d like to have you in-network,'” Brett explains. “But we’ve also seen the opposite: some of our providers try to go in-network and the payers say, ‘Sorry, we’re full.'”
The shift from access to quality means payers are becoming more selective about who they bring into their networks. If you have a strong presence in your geographic region, you might still have leverage. But that window is closing.
What It Means:
The days of leisurely deciding whether to pursue in-network status are over. Payers are actively building their preferred networks now. Once they feel they have adequate coverage, they’ll close the door.
What to Do:
“Don’t be late to the game,” Brett advises. “Work with partners who have data, leverage your quality programs, and get to the payers that are critical to your mission now. You don’t want to be last in line because those networks are going to close. We’re going to see exactly what’s happened in general medicine – they’re not going to refer folks to out-of-network unless it’s an exception.”
HARD TRUTH #2: You’re Probably Negotiating Blind (And Payers Know It)
The Reality:
Before Prosperity brought contracting in-house and adopted price transparency data, their approach looked like most providers: “Last three years ago I was at $100 per unit. Now I want to be at $110 because it’s been three years and I should have a 10% increase.”
The problem? “We were using our own data, and for all we knew, we were completely underwater with our rates relative to our own customer base,” Brett admits. “We’d have a customer come and say, ‘My buddy says he’s getting this,’ and we had no way to validate the veracity of those statements.”
Meanwhile, payers negotiate contracts every day. They have comprehensive data. The information asymmetry is massive.
What It Means:
Brett uses a powerful analogy: “I remodeled my home and I’m doing it one time. Meanwhile, I’m dealing with people that do this thousands of times and have a lot of information at their disposal. How do I arm myself to have those conversations and even the odds?”
HARD TRUTH #3: Your Rates Might Be Better (Or Worse) Than You Think
The Reality:
One of the most immediate impacts of price transparency data has been managing customer expectations. “There’s a lot of emotion in our space,” Brett notes. “Many of our customers have come up through the recovery space, so they’re very passionate about the care they’re delivering. When there’s reimbursement pressure, they’re very passionate about making sure they’re getting paid appropriately.”
The data reveals surprising truths on both ends of the spectrum.
What It Means:
“Step one has been managing expectations around where providers are today and where we think they can get in the next couple years,” Brett explains. “In some cases, you’re already at the market leader position – you’re setting the benchmark. In other cases, it’s like, okay, you’re under market a little bit, but we can get you there.”
HARD TRUTH #4: Payers Are Figuring This Out Too (And They Need Partners, Not Adversaries)
The Reality:
Here’s what many providers miss: payers are also navigating price transparency for the first time. They’re also dealing with published rates becoming public, questions from employers and members, and uncertainty about competitive positioning.
“Some payers have told me, ‘I’ve had former payer executives come to us saying I have this payer transparency data now,’ and they’re trying to use it like a spear,” Brett shares. “We’re saying no – we want to use this in partnership.”
HARD TRUTH #5: Healthcare Moves in Decades, Not Days – And Your Strategy Needs to Reflect That
The Reality:
Brett shares advice from a mentor: “In healthcare, you don’t measure time in days and weeks. We measure time in quarters, years, and decades.”
This is perhaps the hardest truth for organizations facing immediate financial pressure. A provider who’s been undermarket for five years wants the problem solved now. But that’s not how sustainable change happens in healthcare.
What to Do:
“Think about 5 to 10 years from now, not just next year or two years from now,” Brett advises. “That has to inform your strategy. You’re not going to make up an undermarket rate overnight. It’s a journey, not a moment in time where you’re suddenly going to see a 50% increase.”
