The shift from out-of-network to in-network contracting in behavioral health isn’t just a trend – it’s a fundamental transformation that’s reshaping how providers position themselves and negotiate with payers.
In a recent conversation with Serif Health CEO Rafiq Ahmed, our SVP of Operations Brett Reed pulled back the curtain on how Prosperity Behavioral Health is navigating this transition using price transparency data.
Here are the key questions and insights from that conversation.
Q: Let’s start with the basics. What does Prosperity Behavioral Health do?
Brett Reed: We’re a full-suite revenue cycle management firm providing technology and services to the behavioral health space, with a specific focus on substance use disorder and addiction treatment. We were founded in 2017 by investment bankers who were evaluating treatment facilities for acquisition and kept seeing the same problem: opaque financials and unhealthy books. They realized there was an opportunity to help these providers get paid efficiently. Since then, we’ve evolved into a tech-enabled service business, we serve the full continuum of care, and we’re now backed by New Spring Capital.
Q: How has your role evolved at Prosperity?
BR: When I joined about two years ago, my focus was helping ensure our customers get paid in a timely fashion – getting claims on file, making sure they get paid efficiently through tech-enabled services. But my role has evolved into being more of a thought partner for our customers. Getting claims paid is table stakes. What’s more important now is helping our customers see where the market is moving and skating to where the puck is going instead of where they are today.
A big part of that evolution has been bringing our contracting work in-house. When I joined, we had completely outsourced all contracting to third parties – we had no insight into our customers’ reimbursement rates, their contracting processes, nothing. We’ve turned this into a strategic subscription model we call “payer relations as a service.” We firmly believe this isn’t a one-time event every three years. It’s an opportunity to have ongoing relationships with payers.
Q: What are the biggest challenges you’re seeing in the behavioral health space right now?
BR: There are two macro challenges. First, payers are increasingly looking at their networks and saying, “How do we best serve our members?” The answer is making sure they have a really strong network of service providers in the SUD and addiction treatment space. They’re actively moving folks in-network, so we’re advising our customers: don’t be late to the game. You don’t want to be squeezed out, especially if you have a large presence in your geographic region.
The second challenge is about quality. When COVID hit, access was the big problem – everyone wanted to make sure treatment was available and covered by insurance. That’s shifting. Payers feel good about access now and are focused on quality. How do we make sure in-network providers are the best ones possible for their patient populations? It’s not just about being in-network anymore – it’s about demonstrating the quality of treatment you provide.
Q: What made you seek out price transparency tools? What problems were you trying to solve?
BR: The macro focus was: if we’re seeing the market move to an in-network posture, how do we be out in front of this and best support our customers? First, we needed to own that work, not outsource it. Second, we needed to differentiate ourselves because a lot of folks were treating contracting transactionally – “Don’t talk to me again till three years go by.”
We saw this as an opportunity to flip the script through a subscription service. But if we were going to serve our customers well, we needed to know where they stood not only within their own contracts but also relative to their peers and national averages. We didn’t know how to do that. We have a large customer base with great data, but for all we knew, we were completely underwater relative to the broader market.
The other component is that we view this as a two-sided conversation. We didn’t want to go to payers and upset them by demanding 30-40% rate increases. Payers have P&Ls, budgets, and stakeholders too. If they authorized a bad contract three years ago, we’re not going to make that up in one conversation. We have to get there together and leverage quality data to inform that conversation. The transparency data is critical to that.
Q: Can you share an example of how those early payer conversations went?
BR: The earliest one that sticks out is a customer in Florida who’d been pretty certain they were getting paid less than their peers and hadn’t seen a rate increase for five years, probably because they didn’t know how to navigate that conversation.
When we had that first conversation with one of their payers, it was exactly what you’d expect: “Okay, we get it. They’re underwater. However, we can’t make this up tomorrow.” Being able to say, “Here’s where we’re at, here’s the benchmark,” and having the payer agree that the benchmark was correct – that validation was critical. It focused the conversation less on whether we were right or wrong about rates and more about what we can do to get this provider to the right spot.
At the end, the payer thanked me for how we approached it because they’d had a lot of experiences with folks shooting from the hip or not doing it thoughtfully. They don’t want to underpay providers relative to everyone else, but they’re also figuring out what transparency data means for their business. They need good partners in that process, and that’s what we’re trying to be.
Q: What advice do you have for other behavioral health organizations thinking about this?
BR: A couple things. First, I had an advisor tell me once: in healthcare, you don’t measure time in days and weeks. We measure time in quarters, years, and decades. Having a long vision is really important. If we were in a B2C space or serving small businesses, we could have a shorter timeframe, but we have to think long-term. Think about five to ten years from now, not just next year. That has to inform your strategy.
Second, when it comes to transparency data specifically, look at it as a win-win-win. In our case as the service provider, it’s a win for us, for our providers, and for the payers. If you treat this like a “gotcha” with payers, it’s not going to set you up for success. You have to understand their perspective too.
When you combine transparency data with that 10-year vision, it helps reduce the anxiety in conversations together. You’re not going to make up an undermarket rate overnight. Conversely, if you need to get in-network, you have to think about what that means three, five, ten years from now.
