Keep an Eye Out for These 11 Sneaky Payor Contract Negotiation Tricks

Ever feel like your payer contracts aren't pulling their weight? Or worse, could they be working against you? Your payor reimbursements are the lifeblood of your practice’s revenue, but some tricky contract terms could quietly drain thousands of dollars from your bottom line. We know that negotiating payor contracts—or even renegotiating them—can be a daunting task for healthcare providers. It's easy to let a few unfavorable terms slip through the cracks, but those small details can have a big impact.

The good news? PayrHealth is here to help you navigate these waters. We've put together some friendly tips on how to spot and counteract some of the sneakiest tactics payors might use to tip contracts in their favor during the negotiation process. Let's dive in!

Tip 1: Be Cautious with “Percentage of Medicare” Rates

When a payor offers to reimburse you at, say, 160% of Medicare, it sounds like a sweet deal, right? But hold on—make sure to dig a little deeper. Often, this percentage is an average across your entire fee schedule, which could mean that the medical services you provide most frequently are actually being reimbursed at much lower rates. Always review the specific codes that drive your practice’s revenue before agreeing to any percentage-based deals during the payer contract negotiation process. It can help you retain fair reimbursement rates and even enhance your financial performance.

Tip 2: Double-Check Your Billed Charges

This one’s a bit sneaky. Some payor contracts include a clause that allows them to pay the lesser of your billed or contracted charges .If you’re billing at a lower rate than what’s in your contract, the payor can choose to pay that lower amount. Make sure your billing practices align with your contracted rates to avoid any unpleasant surprises to your revenue cycle management.

Tip 3: Watch Out for Tight Timeframes

Some payors might include a 30-day filing deadline for claims in your contract. Miss that window, and you could lose out on payments. If your practice is understaffed or facing any disruptions, these tight deadlines can be a real headache. Try negotiating for exceptions during special circumstances or, better yet, see if you can extend that filing period during the contracting process.

Tip 4: Be Wary of Hold Harmless Clauses

A hold harmless clause, or indemnification clause, is pretty common in contracts. It means that one party agrees not to hold the other responsible for certain liabilities. But be careful—payors often use this to shift financial risk onto your practice. Push for a mutual clause where both parties share responsibility, ensuring the payer contract is fair for everyone involved.

Tip 5: Look Closely at the Arbitration Clause

Arbitration clauses require you to settle disputes outside of court, which can sometimes favor the payor. Make sure you have a say in choosing an arbitrator and that the location of the arbitration is convenient for you. These small details can make a big difference if a dispute ever arises.

Tip 6: Be Cautious of Evergreen Clauses

An evergreen clause allows a payor to automatically renew your contract at the end of each term. While it might sound convenient, it could lock you into terms that no longer meet industry trends or serve your practice well. Consider negotiating for the removal of this clause so you have the opportunity to review and renegotiate the contract regularly, getting better reimbursement rates each time you renegotiate.

Tip 7: Address Restrictive Credentialing and Licensure Requirements

Some contracts state that if any clinician in your practice loses their license, the entire agreement is terminated. This can be overly restrictive, especially if you have multiple practitioners. Make sure the contract reflects that the rest of your team can continue to provide services even if one clinician faces issues.

Tip 8: Don’t Fall for Hypotheticals

During payer contract negotiations, payors might throw out hypothetical questions to gauge your responses. Remember, these aren’t actual offers, and you don’t have to answer them. Stay focused and only respond to genuine contract proposals.

Tip 9: Clarify Termination Terms

Contracts usually allow termination “for cause” (due to a breach) or “without cause” (for any reason). Make sure the contract clearly defines what constitutes “cause” and that you have an opportunity to correct any issues before termination.

Tip 10: Plan for Post-Termination Obligations

Even after a contract ends, you might still have obligations, like continuing to provide care for patients until they’re reassigned. Make sure the contract gives you enough time to fulfill these duties, so you’re not left scrambling.

Tip 11: Verify Contract Terms

Before signing, make sure everything you negotiated is included in the final contract. Double-check all the details, including any addendums or exhibits, to ensure nothing was overlooked.

Payor Contracting with PayrHealth

We know that payor contract negotiations can be overwhelming, but you don’t have to go it alone. PayrHealth is here to help you secure fair and favorable contracts that protect your practice’s revenue. With our expertise, you can focus on what you do best—caring for your patients—while we handle the complexities of the payer contracting process.

Ready to take the next step? Visit PayrHealth.com to learn more about how we can support healthcare organizations and help you navigate the world of payor contracts with confidence. 

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