Is it Time to Negotiate Your Contracts?

Strengthen Your Position for Equity and Financial Wellness

Join Andrew Harding, co-founder and VP of customer success at Rivet, as he delves into the intricacies of contract negotiations at the 2025 AAOE conference. Read on to learn more about Andrew’s presentation and how it can support your organization!

For healthcare organizations, payer relationships directly influence your organization’s financial health. Insurance payers may comprise up to 75% of your revenue, yet many practices don’t fully know the fees and rates are within their contracts. Without that knowledge, you’re likely leaving revenue on the table.

Effective payer contract negotiation and variance management are critical to maximizing revenue, ensuring fair reimbursement, and protecting your practice from hidden pitfalls in payer agreements. Whether you're a Revenue Cycle Manager, Practice Manager, or CFO, it’s time to take control of the terms that govern your payer relationships.

Here’s a quick summary (and more in the presentation) about how you can do it.

Why Optimizing Payer Relationships Is Crucial

Your contract with a payer defines the financial relationship between your organization and the insurance provider. While contracts may seem set in stone after they are signed, this mindset might cost your practice unnecessary revenue losses year after year.

According to the Medical Group Management Association (MGMA), U.S. healthcare providers are routinely underpaid by insurers, with an average discrepancy of 7–11%. Why? Outdated contracts, opaque language, and unchecked amendments that end up stacking the deck in the payer’s favor.

The Cost of Doing Nothing

• Outdated Contracts

A 2017 case study by HFMA revealed that many payer contracts are over a decade old, with only minor modifications made over time. For one Southern health system, those unoptimized contracts contributed to significant revenue leakage over years.

• Decreasing Reimbursements

Medicare reimbursements alone have dropped 22% between 2001 and 2021, adjusted for inflation. If your commercial payer reimbursement rates are tied to outdated CMS percentages, you’re likely losing revenue every year.

• Obscure Contractual Language

Contracts often include terms, such as the “lesser of” clause, which allow payers to reimburse for the lesser of either billed charges or the negotiated rate. Over hundreds or thousands of claims, revenue losses can accumulate substantially.

Without proactive contract management and negotiation, your organization’s hard work goes unrewarded, and your resources are stretched thin unnecessarily.

The Tools for Negotiation and Revenue Recovery

Negotiating payer contracts doesn’t need to feel like fighting an uphill battle. With the right knowledge and tools, you can level the playing field and put your organization in a position of strength.

Here’s what to focus on when building your payer negotiation strategy:

1. Analyze Your Key Data Points

• Understand the percentage of revenue you receive from each payer (e.g., Aetna, Blue Cross Blue Shield, CMS).
• Audit key metrics like underpaid claims, dollars lost to problematic codes, and your top denial reasons by payer.

2. Review Payer Contract Language

Carefully dissect your contracts for favorable or unfavorable clauses. For example:

• Favorable to Physicians

Any amendment to this agreement shall require the mutual written agreement of both parties.

What it means: You and the payer must agree to any changes before they occur, offering transparency and time for proper negotiation.

• Favorable to Payers

Payer may amend this agreement upon 45 days’ written notice. The amendment will take effect unless the provider objects within the notice period.

What it means: You have limited time to catch unfavorable changes.

Negotiate terms that protect your organization from unilateral payer adjustments or changes made without adequate notice.

3. Combat Sneaky Terms

Beware of clauses like the “lesser of” rule, which lets payers reimburse far less than what was contracted. For example, if the contracted rate is $150, but your billed amount is $100, the payer may only remit $100. Multiply such losses by yearly claim counts, and it’s clear why renegotiation is vital.

Payers may also use proprietary tools to override billed codes and adjudicate claims using lower-paying codes. Regularly audit claims to identify these patterns and correct underpayments.

4. Utilize Technology as Your Wingman

Centralized, intelligent platforms like Rivet make contract management and revenue recovery seamless by enabling your team to:

• Compare payer performance and benchmark reimbursement rates.
• Automate the detection of underpayments and appeal them in bulk.
• Model contract scenarios to simulate the financial impact of renegotiations.

With tools like Rivet, you gain the insight to focus on areas of significant revenue loss and negotiate with confidence.

5. Build a Data-Driven Case

Your value to payers goes beyond the patient volume you deliver. Showcase metrics that reflect your organization’s impact, like community benefit scores, quality of care, and efficiency benchmarks. Leverage these as negotiation points to improve reimbursement terms.

6. Maintain and Monitor Contracts

Negotiation doesn’t stop when the ink dries. Use contract management tools to track fee schedules, flag language changes, and set reminders for important renewal dates. Staying vigilant ensures your agreements remain fair over time.

Maximize Revenue, Minimize Risk

Taking ownership of your payer contracts through proactive negotiation and variance management can transform your revenue cycle and financial stability. Yes, this requires effort—but the payoff is worth it.

When you know your data, protect your terms, and utilize the right tools, you stop leaving money on the table. And in today’s healthcare environment, every additional dollar counts.

Start Fortifying Your Contracts Today

Your organization deserves fair reimbursement for the care you provide. Strengthen your revenue strategy by leveraging expert insights and tools like Rivet to simplify payer negotiations and maximize earnings.

Make sure you join the session at AAOE’s 2025 Inspire Conference if you are attending, and in the meantime, feel free to deep dive more into contract management and negotiation with Rivet’s free ebook.