Friction between providers and health plans is a long-standing issue with misaligned incentives at its core. However, this moment feels different. Tensions between the two stakeholders are undeniably heightened: We’ve seen a 69% increase in plan-provider negotiation disputes between 2022 and 2023¹ and a 56% increase in Medicare Advantage denials from 2022 to mid-2023, for example.²

Providers’ distrust of plans is driven by the financial and bureaucratic aspects of their relationship with frustrations around claims denials and prior authorization often topping their list of complaints.³ Health plan executives in turn highlight a lack of accurate and timely data sharing as a compounding issue for the relationship.³ What’s clear is that plans and providers both have money on the line that is lost due to administrative or operational pain points.³

Even though both parties have dollars at stake, most view plan-provider relationships with a clear asymmetry in urgency for fixing these abrasion points. Providers’ workflow and revenue cycle — that is, their ability to be paid — is impacted by the health plan relationship, which makes abrasions top of mind and highly pressing for providers. Comparatively, while provider frictions are still burdensome and increase administrative costs for health plan partners, their day-to-day operations are less impacted by these abrasions.

Administrative pain points occupy an outsized portion of resources allocated to the plan-provider relationship, leaving little time or money to invest in higher-level strategy or partnerships. This lack of focus on the big picture makes improving the overall relationship even more difficult.

Perhaps because of these dynamics, providers often feel little agency to change the tenor of their relationships with health plan partners. Plans control cash flow and historically hold the upper hand with investments in data & analytics and contracting. Therefore, providers often fixate their leverage in the plan-provider relationship on winning rate increases during contract negotiations.