Payor Contracting

What's Changing in Payor Contract Negotiations?

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Healthcare insurance in the United States is constantly in flux with the growth of technology, changing economy, and new discoveries in health. That also means changes to the terms and coverage in payor contracts. Payor contracts dictate reimbursement rates, revenue, and other major factors that go into how providers care for their patients.

These changes also mean changes in the negotiation process. Already complex and intimidating in its own way, negotiating your payor contract is important to the ongoing wellness of your practice. Learn more about changes to payor contract negotiations and strategies to help you get the most out of these negotiations.

Payor Contract Negotiation Changes to Watch For

Perhaps the biggest changes in payor contracting come as a result of the current pandemic. COVID-19 has had a major impact on every single person, business, and entity, and payors and providers are no exception. Health care services have been switching to telehealth as well as affecting new insurance contracts and contract renewal.The continued challenges created by the pandemic will naturally result in the types of agreements between payors and providers. Those effects will likely continue well after a vaccine is found.

Prior to the pandemic, providers generally expected steadily growing patient volumes, relatively broad health coverage, and reliable reimbursement for covered services. This allowed for value-based payment models between providers and payors. However, in the thick of the pandemic, things have grown increasingly unpredictable, forcing providers to adapt as best as possible. Read some trends that you can expect below.

Shoring Up Lost Revenue

Providers have borne the physical and financial brunt of the effects of the novel coronavirus. The lack of personal protective equipment and dwindling resources has left physicians and other healthcare workers floundering in unsafe work environments. By comparison, first quarter financial reports suggested that the novel coronavirus did not have a major impact on larger national insurers.

These results can, of course, vary from provider to provider and payor to payor, but most providers are losing revenue. In order to make up for this lost revenue, providers will likely be more aggressive in renegotiating their contracts with payors.

Force Majeure and Other Protections

A force majeure clause in a contract essentially allows a party or both parties to be excused from performing obligations that have been defined and outlined in the contract in the event of an unforeseen circumstance that makes it impossible or unfeasible. This is an older legal concept, and it may not even apply to COVID-19 in current negotiations (though it may be worth a shot to push for).

However, even if force majeure clauses may not be feasible, providers may negotiate contracts that enact other protections for themselves. It may be worth it now to include sections that address potential pandemics specifically and include protections like expedited payments or waiving prior authorizations during a global pandemic.

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Protections for Shared Savings

With upside-only risk payment agreements, providers get a share of any savings if they spend under a certain amount. However, to share in those savings, providers have to meet certain quality thresholds, which can include a certain number of cancer screenings or a minimum amount of preventive services provided to the community.

While COVID-19 likely deferred a lot of spending, the virus also delayed a wide range of services, meaning that many providers may not meet the quality threshold. The Centers for Medicare and Medicaid Services have waived these quality threshold requirements for some (but not all) shared saving models. It is worth asking payors to waive quality reporting until the pandemic has passed or to negotiate other protections into the contract.

Downside Risk Waivers

Unlike upside-inky risk payment, downside risk sharing programs allow providers to share savings if spending stays below a threshold but have to contribute to a health plan if spending surpasses that threshold. While most providers in downside risk agreements will not be responsible for COVID-19 claims, many providers want to see that stipulation go even further and waive downside risk agreements completely in new contracts. The frequency of deferred services means that providers will generally see medical cost savings, but it still may be worth negotiating a downside risk waiver.

Changes to Reimbursement

There is a growing shift from commercial insurance companies to government insurance as a result of rising unemployment and loss of health benefits tied to employment. Most people will end up on some form of state Medicaid or look to options presented by the Affordable Care Act. Unfortunately, some may have to go without insurance at all.

This will obviously impact healthcare and public health for many years to come, but it will also have a huge effect on payor contracts and healthcare contract management. Providers may be met with contracts with lower reimbursement rates, potentially well after the pandemic has ended.

Payor Negotiation Strategies

Strategies for negotiating payor contracts have changed over the years as agreements have become more complicated. Strategies can still vary from payor to payor, provider to provider, and the ongoing COVID-19 pandemic will likely make negotiations more difficult and fraught. Some simple strategies to keep in mind during payor contraction negotiations include:

Knowing Your Value

payors respond best to facts and data, so knowing your value and being able to quantify all aspects of your practice can go a long way to helping you get higher reimbursement rates. Private practices that present their facts, figures, and data during negotiations may end up with contracted terms that are up to 10 percent higher than those practices that go off of word of mouth alone.

The good news is that quantifying your value can come from just about anywhere. Use comparative data that shows your practice against a similar practice in your area or specialty. Show your payors outstanding quality metrics, patient satisfaction scores, and other numbers that show the success of your practice during the provider contracting process.

Knowing Your Payor

Along with bringing the data on your own practice, do some homework to better understand your payor’s specific concerns and areas of focus. If your payor is interested in minimizing hospitalization rates, come with numbers showing how your practice has increased patient turnover.


While many payors may be hesitant to increase reimbursement rates, you may get a small bump by asking for an increase in cost of living. This includes rent, staff salaries, and overhead costs. Most payors should be willing to lend a hand if you are experiencing higher expenses to keep your practice running. payors don’t want you to go out of business as that would lead to a loss of patients and decreased revenue. It may not be much, but asking for an increase in cost-of-living expenses can help your business stay afloat during these trying times.

The healthcare landscape is constantly evolving, and payor contract negotiations are likely to change and adapt with that evolution. The current pandemic has made things unpredictable, and the effects of the novel coronavirus are likely to have wide, sweeping effects on payor-provider relationships long after the pandemic has ended. PayrHealth can help you find the best contracts that offer the best value and reimbursement. To learn more about PayrHealth and how we can help your practice, contact us today.


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