Top 4 mistakes Medicaid health plans make when vetting solution vendors

6-minute read

Many of our clients are Medicaid health plan operational teams that manage vendor relationships. The article below is based on our experience working with Medicaid health plans who have been able to optimize their vendor management processes.

Mistake 1: Failing to have a process for managing vendor sales meeting requests

Most Medicaid health plans describe their vendor management scenario as “deluged” with vendor meeting requests. When our plan clients quantify the time they spend on each vendor sales effort, they realize that all the meetings and followup meetings and related correspondence and efforts add up to many hundreds (and sometimes thousands) of health plan staff hours. While some Medicaid plans have begun to implement more policies to manage this process, most plans still have room to optimize the return on this significant time investment.

A defined vendor-engagement process is critical

Mistake 2: Not setting up expectations on the front end for how your vendor engagement process works

Communicate expectations to vendors from the very first meeting

Few vendors (especially new vendors) understand the way your plan prefers to manage procurement efforts. Each plan is different in how it prefers to engage with vendors. Some plans only meet with vendors related to a problem they are actively trying to pursue. Some only meet with vendors they have invited to respond to an RFP. Other plans meet with vendors at any time, to learn more about solutions or to get new ideas.

Once a vendor is engaged in a potential solution discussion, they will need to know what to expect in terms of different business units involved in the decision, information and data that will be needed to support the business case, what to expect in terms of acceptable pricing models and how long the overall process normally takes. Most vendors have no idea what to expect, and most plans do not communicate what to expect. Setting expectations from the start will go a long way to keep everyone aligned and making the best use of your precious time.

Mistake 3: Not right-sizing the proposed project to the problem and the vendor’s current scale

Sometime you need a solution to close HEDIS gaps for 100 members. Sometimes you need an overhaul of an entire process, or a brand new critical technology system. Rest assured, whatever the size of your problem, any solution vendor engaging you in a sales process wants to maximize the size and duration of the contract. If you do not set quantified scope parameters correctly, you will end up with a solution that either doesn’t go far enough or goes too far. Best practices include using a member-level target list (for interventions / gap closure based projects), starting with an initial pilot, and breaking any effort more than 60 days up into phases.

Always fit the size and complexity of the solution to the size and complexity of the problem

Mistake 4: Not checking references in depth

Invest time in longer discussions with vendor references

Vendors pitching you their solution will only show you their very best results. While this information is important, this should not be the only data you use to kick the tires of their capabilities. Ask for more than three references – this way you have a better chance of getting a broad perspective of what other plans have experienced with the vendor.

How You Can Address The Risks of Partnering with Solution Vendors in the Medicaid Space

In addition to your own research into potential vendor partnerd, there are a few key tactics that can help you overcome some of the common challenges in the space.

  1. Engage a consulting firm with deep expertise in the space, but that also has a practice area focused on assisting Medicaid health plans vet solution vendors. We provide this type of assistance to our health plan clients, and are happy to have a conversation anytime. If our services and expertise are a fit for your needs as you develop or execute your strategy, engaging with us is a simple process. If we are not the right fit, we are happy to make a referral to another firm who may be.
  2. Consider adding a Medicaid-specific, independent vendor review product to your toolkit. While there are multiple options for vendor reviews in the healthcare space, most are not independent evaluations (they receive their revenues from the vendors reviewed). If you are considering enhancing your vendor review process, an independent review tool is critical.

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