Tips on negotiating payor contracts for your medical practice

Payor contracts are vital to insurance reimbursement claims and other important measures and guides. However, most insurance companies don’t automatically update your changes to the Medicare fee schedules. Because of this, it’s hyper important to keep your information up-to-date and ensure you are setting reminders to review your contracts every one to two years.

negotiating payor contracts in healthcare
Following these steps will take the stress out of negotiating your payor contracts.

You may not know where to begin, and that’s ok! We’re here to help. Before you start, you’re most likely going to have to do some data collection. From there, follow these tips when considering when to analyzing your current insurance contracts:

  1. Start by reviewing the numbers and your payer mix. Calculate revenue per visit and CPT comparisons. Being aware of this number will be helpful when trying to negotiate.

  2. Decide which companies to start with. Determine what your breaking-even point is (average monthly expenses divided by the average number of patients per month) then what companies fall below this point are the ones to start with.

  3. Read your contracts thoroughly. If you aren’t sure what the current contracting language is you can even reach out to your local representative, and arrange a meeting with the payer.

  4. Know your alternatives. Understand the negotiated agreed-upon rates and what alternatives and leverages you have. For instance, if you see a large volume of patients of a certain company. Depending on if you have leverage or not, you can decide how aggressive to be with the company.

  5. Prepare. Write letters to the insurance company stating your case and why you feel your rates should be better.

  6. Be realistic. Before you begin, know that this is a project that will take approximately 6 months and 100+ man hours to complete.

  7. Focus on the overall rate increase. Try to pay attention to the rate increase, not selected codes- ideally a percentage of Medicare.

  8. Avoid increases. Understand the role of RVU rates and how it will affect medical bills.

  9. Be knowledgable. Know your area and what your competitors are receiving. The more prepared you are, the more likely you will be able to negotiate your contracts.

  10. Avoid forever renewing contracts. Always ask for contracts that need to be renewed every 2-3 years. Contracts that automatically renew, you might lose sight of these, and they can just auto renew and you won’t ever get the chance to update and review them.

  11. Know what else to negotiate. Fees are not the only thing to negotiate. You can also work on the authorization process, the period allowed for denials or the period for submitting a claim. If there’s something you aren’t happy with, do your research and find out if this is something you can renegotiate in your contract.

Once you start, you need to decide you are going to do it, and follow through! Don’t avoid it just because it can seem intimidating. If you don’t have the resources in-house to accomplish it, we’d love to talk about how our team of experts can help assist you with the process. Shoot us a note at or schedule some time to chat here!