When to renegotiate your payor contracts, and how often

Armando Cardoso, CEO, Updated October 2026

Review every payor contract (also spelled payer) once a year and renegotiate when the evidence supports it, typically every two to three years for your largest payors. Start about a year before you need new rates, and no later than six months before the renewal date if you want the option not to renew: notice windows run 30 to 120 days, and the negotiation itself takes months.

This guide covers how often to renegotiate, the signs a contract is underpaying you, how evergreen renewals and notice periods work, when to start and how long it takes, which payors to take first, and what to have ready before you ask.

How often should you renegotiate payor contracts?

Once a year, review every contract. Every two to three years, renegotiate the ones that carry your revenue. The two are different jobs.

A review is a short exercise: confirm the effective date, the renewal structure, the notice window, the date of the last rate increase, and whether the payor is paying what the contract says. Most groups already do this. In an MGMA Stat poll of 389 medical group leaders (Aug. 15, 2023), 58 percent said they review payor contracts annually and 17 percent said they have no regular schedule (MGMA, 2023).

Reviewing a contract is not the same as reopening it. In MGMA’s Aug. 25, 2026 poll, only 29 percent of medical group leaders said their practice had received a commercial rate increase within the past year, and half said their last increase was three or more years ago (MGMA, 2026). Many commercial contracts renew automatically, so a year can begin with the same rates simply because nobody started the process.

Two to three years is the right cycle for your top payors because costs move every year and most fee schedules do not. The AMA’s analysis of Medicare physician payment, updated January 2026, found that payment adjusted for practice cost inflation declined 33 percent from 2001 to 2026 (AMA, 2026). A commercial contract written as a percentage of a past year’s Medicare fee schedule inherits that decline. One written as a percentage of the current year’s schedule moves with it, which is not the same as keeping pace with your costs.

Smaller payors can run on a longer cycle. As a rule of thumb, if a payor is under 5 percent of revenue and its notice window is years away, note it in the annual review and move on.

What are the signs a contract is underpaying you?

A contract is worth reopening when several of these are true at once.

• No rate increase in three or more years. Half of medical groups are in this position (MGMA, 2026). If you cannot name the year of your last increase, that is the first sign.
• Rates tied to a frozen fee schedule. A contract that pays “110 percent of the 2019 Medicare fee schedule” never moves. Check which year your percentage points to.
• Rates below the market for your codes. Payor negotiated rates have been public since the Transparency in Coverage rule took effect on July 1, 2022 (CMS), so you can see what other practices like yours are paid for the same codes in your market. The gap is real: in PayrHealth’s analysis of the August 2026 payor files for the five common office visit codes (99203, 99204, 99213, 99214 and 99215) across Texas, Florida, California, New York and Illinois, the median commercial rate sat about 19 percent below the 75th percentile, from 15 percent for new patient visits to 24 percent for a level five established visit. The gap varies widely by market. In Texas, for example, the median sits 8 to 10 percent below the 75th percentile on these five codes; in two of the other four states the gap is 25 to 34 percent. A contract paying the median could pay more; how much more depends on your market and your leverage. One honest caveat: the 75th percentile includes health systems and large groups, so for most independent practices the realistic target sits between the median and the 75th. (Method in Sources.)
• The lesser-of clause is catching you. Almost every contract pays the lesser of your billed charge or the contracted rate. If your charges for a code sit below the contracted rate, you are paid the charge and the higher rate never applies.
• Yield is slipping. Compare your paid amount to your allowed amount by payor. A falling ratio means denials, downcoding or policy changes are eroding the rate you negotiated, even if the fee schedule has not changed.
• A high share of your revenue sits on a low rate. Your payor mix decides where a rate change matters. A 10 percent increase on a payor that is 30 percent of revenue is worth more than a 25 percent increase on one that is 3 percent.

The 2026 Medicare fee schedule shows why the frozen-schedule test matters. CMS finalized a conversion factor of $33.40 for 2026 (3.26 percent above 2025), which includes a one-year 2.5 percent increase set by Congress, and applied a 2.5 percent efficiency adjustment that reduces work values for most non-time-based services (CMS, Oct. 31, 2025). Which of those changes reach your commercial contract depends entirely on how the contract defines its fee schedule.

In practice: Mississippi Urology Outpatient Surgery Center, a physician-owned urology ASC in Jackson, had four of five commercial payors paying below 100 percent of Medicare and no meaningful update from its top payor since 2016. Benchmarking and a fee schedule built on its top billed codes brought rates to market parity, with increases of up to 80 percent on its top payors, worth $235,675 in year one. Read the case study.

How do evergreen renewals and notice periods work?

Most payor contracts are evergreen: after an initial term, usually one to three years, the contract renews automatically for another year on its anniversary date unless one party sends written notice before a deadline. The deadline is set by the notice period, which runs 30 to 120 days before the anniversary. Ninety days is common, and many contracts also allow termination without cause on 90 or 120 days’ notice at any time after the initial term.

Three details decide whether you can act:

1. The anniversary date. Not the signing date. Find the effective date in the agreement and count forward.
2. The notice deadline. Anniversary date minus the notice period. If the contract says notice must be received, not sent, build in another two weeks.
3. The initial term. Many contracts bar termination without cause until the initial term ends. On a three-year agreement with 90 days’ notice, the earliest you could give notice is about two years and nine months after signing.

How do I get out of an evergreen renewal? You do not need to leave the contract to reopen it. Send a written notice of intent to renegotiate, by the method the contract names (often certified mail to a contracts address), three to four months before the notice deadline. That gives both sides time to exchange proposals before the renewal locks in another year. If the payor will not engage, a notice of non-renewal or termination without cause sent before the deadline stops the automatic renewal and sets a hard date for the conversation. In PayrHealth’s experience most are withdrawn by mutual agreement once a new rate is signed, but a notice is not a private negotiating move. In many states the payor must write to your patients within weeks of receiving it, whether or not you later withdraw it. Colorado, for example, requires 60 days’ notice to terminate without cause, gives the carrier 15 working days to notify patients seen on a regular basis, and requires the practice to hand over its patient list within five working days (C.R.S. 10-16-705). Some payors also pull the practice from the provider directory on receipt. Price all of that, including the referral sources who read the letter, before you send one. Notice and continuity-of-care rules vary by state and by product (self-funded employer plans sit outside state insurance law), so check your contract and your state first.

Payors rarely start this conversation. As MGMA noted in 2026, many commercial contracts renew automatically, and if nobody tracks the dates the next contract year simply begins at the old rates (MGMA, 2026). Put every anniversary and notice deadline on one calendar, with a reminder 12 months out.

In practice: Delta Health System, an independent hospital system in Greenville, Mississippi, brought PayrHealth in as a major commercial agreement approached termination. The renegotiation kept the contract in place and added multi-year escalators: a 14.5 percent increase in inpatient MS-DRG rates over three years and more than 25 percent on select high-volume outpatient services. Read the case study.

When should you start, and how long does it take?

Start about 12 months before you need new rates in effect, and no later than six months before the renewal date if you want the option not to renew. Six months before the anniversary leaves 60 to 90 days of real conversation before a 90 to 120 day notice deadline; start later and the deadline arrives before the payor has answered. The notice window is the legal minimum. The negotiation is the real timeline.

• Month 0. Kickoff: pull claims data, confirm contract terms and dates, benchmark your rates, set goals and a target by code
• Month 1. Negotiations usually begin: written request sent, payor assigns a representative, first call scheduled
• Month 2 to 6. Proposals and counters. Some payors take months to respond; expect at least one round of “corporate policy” pushback
• Month 6 to 8. Agreement in principle, contract language, amendment signed
• Month 8 to 12. New rates take effect, typically on the first of a month or quarter after the payor loads the fee schedule
• Effective date plus 60 days. Audit paid against contracted, by code. Fee schedules are loaded by hand and errors are routine; a rate you do not check is a rate you may never receive

Negotiations usually begin about a month after kickoff. New rates typically take effect 8 to 12 months in. One group in MGMA’s 2026 poll reported waiting six months for a payor to respond after years without an increase, then two more months to negotiate (MGMA, 2026). If your renewal is in December, your kickoff is this December.

Effective dates follow your contract, not the calendar. Payor agreements renew on their own anniversaries, so there is no season for increases; tie the request to your anniversary and notice deadline. Ask for an effective date on the first of the month after signature and get it in writing, because a payor that agrees a rate but leaves the effective date open has not agreed to much.

Silence is a strategy, not an answer. Every month without a reply is a month at the old rate, and national payors often route requests through a shared contracting inbox or portal with no response deadline. Send dated written follow-ups every 30 days, and at 60 days escalate to the market or network director by name. Keep the trail; it is also your record if the renewal date arrives first.

Starting inside the notice window costs you leverage. With weeks left, the only tool is the termination notice, and a payor knows a practice is unlikely to walk away from a quarter of its revenue on short notice. Starting a year out lets the data do the work. If you do start late, you can still negotiate; you just do it without the non-renewal option this cycle, and the next deadline goes on the calendar now.

Which payors first?

Rank every contract on four things, then take the top two or three at a time.

1. Share of revenue. Pull 12 months of gross collections by payor. The top five usually cover most of your revenue and all of your leverage.
2. Gap to the market. Compare each payor’s rates on the codes that generate 80 percent of your revenue with the best-paid quarter of practices like yours, for the same codes, in your market. A wide gap is an argument; a narrow one is not.
3. Timing. Which notice deadlines fall in the next 12 to 18 months? A contract you can act on this year beats one locked for two more.
4. Member disruption. This is the number the payor runs before it answers you, and you can estimate it first. Three questions: How many of this payor’s members did you see in the past 12 months? How many other practices in your specialty within a normal drive does the payor have in network? If you left, could the payor still meet its network adequacy standard for your specialty in its service area? Many members, few alternatives and a thin network mean a rep will call you back. Add what you save the payor where you can show it: fewer ER visits, lower site-of-service cost, shorter waits.

Commercial contracts are where rates move. Medicaid managed care agreements usually follow the state schedule, so put them on the annual review list unless the contract language itself is the problem. Medicare Advantage is different: MA plans set their own rates and are generally negotiable, so treat your top MA plans as commercial payors rather than as fixed, especially in specialties where MA is a large share of volume (urology, ophthalmology, DME and other ancillary services).

Sequence the top five. Settle the payor second in revenue first, then use that signed rate as the market reference when you open your top payor. A rate you have already been paid is a stronger argument than a benchmark alone.

Do not open every contract at once. Two or three negotiations at a time is what a practice can staff; PayrHealth clients on a portfolio engagement typically work five at a time with a dedicated team.

What do you need ready before you ask?

The payor’s first question is “why”, and the answer has to be in numbers. Before you send the request, have these in hand.

• Your data. Twelve to 36 months of claims by payor, with a 60 to 90 day run-out so claims have settled. For each payor: allowed amount against billed charges, paid amount against allowed (your yield), and share of revenue.
• Your contract facts. Effective date, renewal structure (hard term or evergreen), notice period and method, inflators if any, termination rights, and the date and size of the last increase.
• Your top codes. The codes that produce 80 percent of revenue, with volume and current rate by payor. Ask for increases on what you actually bill, not on a whole fee schedule.
• Your benchmark. Where each payor’s rates sit against the best-paid quarter of practices like yours, for the same codes, in your market, and what the contract could pay at that level.
• Your cost. Cost per visit or procedure for those codes, so you can show when a rate no longer covers delivery.
• Your value. What you do for the payor’s members: access in your geography, specialty capacity, quality measures, and lower total cost of care where you can show it.
• Your targets. A target rate and a walk-away point for each payor, agreed internally before the first call.
• Your whole schedule. The rates and volume for every code you bill to this payor, not only the top ones. You need it to test the payor’s counter (see below).
• Your asks beyond rate. An annual escalator (commonly 2 to 3 percent) so the next three years do not repeat the last three; codes missing from the schedule added; carve-outs for high-cost drugs, implants or supplies that a percentage-of-Medicare rate does not cover; and terms you want changed. Sort them into financial, operational and strategic so you know what to trade.

The request letter is short. Send it by the method the contract names and keep the receipt.

Subject: Request to review the fee schedule, [Practice name], Agreement [number], effective [date]

[Practice name] requests a review of the professional fee schedule under the above agreement, covering [products]. Our rates on the codes that make up 80 percent of our volume with [Payor] have not changed since [year]. Attached are the codes in scope with current and requested rates, a summary of our market position in [service area or metro], and our cost basis. We would like to begin discussions by [date] and to agree new rates effective [first of the month after signature]. Please confirm the contracting representative assigned to this request.

Attach the code schedule, the one-page market summary and the cost summary. Nothing else.

What the payor will offer, and what it will ask for

Expect a counter, not a yes. The standard counter is rate shifting: an increase on the codes you asked about paid for by cuts across the rest of the schedule. Price every counter against your full code mix before you respond, and say so in writing. Expect the payor to ask for term in exchange for rate, which is a fair trade if it comes with an escalator, and to ask for participation in every product it sells, which is not: an all-products clause can put you in a narrow-network or Medicare Advantage product at rates you never saw. Regional plans and Blues usually assign a named market representative; national payors often work through a contracting inbox or portal, which is why the written trail matters.

If the answer is no

Most first answers are no, and half of medical groups have lived with that answer for three or more years (MGMA, 2026). Four fallbacks, in order:

1. Ask for the reason in writing, and whether a smaller increase on your top codes alone is possible this cycle.
2. Offer a multi-year term with an annual escalator in place of a one-time increase.
3. Ask for the non-rate items on your list: missing codes, carve-outs, timely filing and amendment notice terms. They cost the payor less and they are worth money.
4. Set the next window: confirm in writing the date you will reopen the request and whether a notice of non-renewal is on the table before then. If the payor’s network depends on you, that is the point to say so, with your disruption numbers.

A free rate review from PayrHealth covers the benchmark step: your contracts compared with the best-paid quarter of practices like yours, for the same codes, in your market, and what each could pay. Request a free rate review. If you would rather hand the whole process to a team that does this every day, see our payor contracting services.

Frequently asked questions

How often should a practice renegotiate payor contracts?

Review every contract once a year. Renegotiate your top payors by revenue every two to three years, or sooner when rates have not moved in three years, the contract is tied to a frozen fee schedule, or your rates sit well below the market for your codes. Smaller payors can run on a longer cycle.

Can a payor contract renew automatically, and how do you get out of an evergreen renewal?

Yes. Most payor contracts renew automatically each year after the initial term unless one party gives written notice, usually 30 to 120 days before the anniversary date. To reopen rates, send a written notice of intent to renegotiate three to four months before that deadline. If the payor will not engage, a timely notice of non-renewal stops the automatic renewal and can be withdrawn once new terms are signed.

How long do payor contract negotiations take?

Plan on 8 to 12 months from kickoff to new rates in effect. Negotiations usually begin about a month after you send the request, proposals and counters run two to six months, and the payor needs time to sign and load the new fee schedule. Some payors take months to respond at all, so start about a year before you need the new rates.

How much notice do you have to give?

Most contracts require 30 to 120 days’ written notice before the anniversary date, and 90 days is common. Check whether notice must be received or sent by the deadline, which method the contract requires, and whether the initial term must end first; state law and the product type can change the rules. The notice period is the legal minimum, not the planning horizon: start at least six months before the renewal date if you want the option not to renew, because the negotiation itself takes months.

Does asking for higher rates risk the relationship?

No. Rate requests are routine for payor contracting teams, and the payors that granted increases in MGMA’s 2026 poll responded to market data, a clear value case and persistence. What damages a relationship is a termination notice sent without a plan: in many states it triggers letters from the payor to your patients within weeks, whether or not you withdraw it. Make the request in writing, support it with data on your codes and market, and keep termination as a last step you have priced.

How do you write a renegotiation request?

Keep it to one page. Name your organization, the agreement and products covered, and the codes in scope. State that you are requesting a fee schedule review, give the basis (your market position, your benchmark against practices like yours, and your costs), and ask for a named contact and a meeting date. Send it by the method your contract specifies and keep proof of delivery.

Read next

• Payor contract terms that decide what a rate is worth: the fee schedule, lesser-of, products, amendment, recoupment and silent PPO clauses, with the fixes.
• What to do when a payor says its network is closed: what reopens a network, and the letter of interest.

Prefer a copy to keep? Download this guide as a PDF below.

Sources

• MGMA Stat, Aug. 15, 2023: how often medical groups review their contracts (389 responses). mgma.com
• MGMA Stat, Aug. 25, 2026: when medical groups last received a commercial rate increase (203 responses). mgma.com
• American Medical Association, Medicare physician updates compared with inflation in practice costs, 2001 to 2026, updated January 2026. ama-assn.org
• Centers for Medicare and Medicaid Services, Transparency in Coverage public data page, machine-readable files required as of July 1, 2022. cms.gov
• Centers for Medicare and Medicaid Services, CY 2026 Physician Fee Schedule final rule fact sheet, Oct. 31, 2025. cms.gov
• PayrHealth analysis of payor Transparency in Coverage files. Method: in-network negotiated rates, professional claims, commercial payors, August 2026 payor files as of Sept. 23, 2026; codes 99203, 99204, 99213, 99214 and 99215; Texas, Florida, California, New York and Illinois; about 2.9 million rates. Median and 75th percentile computed on the pooled rates for each code; the gap is the median’s distance below the 75th percentile.
• Colorado Revised Statutes 10-16-705(7), notice of termination without cause and patient notification. colorado.public.law
• Armando Cardoso, “Contracting: Consider three key questions,” HME News, May 13, 2020, and “Contracting: Understand contract terms,” HME News, June 10, 2020.