Equity versus adequacy of managed care contracts

Healthcare finance leaders can use a methodology and metrics to compare managed care payments against those of their local and regional peers. Depending on payment levels, they should adopt one of the following negotiation stances with payers: If payment levels are both equitable and adequate, they should view a continuation of the present structure as desirable. If payment levels are adequate but not equitable (e.g., payments are lower than payments peers are receiving for similar services), they should seek increases in payment to level the payment structure among providers. If payment levels are neither adequate nor equitable, they should demand correction in the near future to avoid the need to cease operations. If payment levels are equitable but not adequate, however, they should question the viability of the delivery system.