3 Reasons To Update Your Managed Care Contracts

Payer revenue fuels medical practice operations, which is why practices’ managed care contracts require proper maintenance. We still see clients with stale 5 to 10 year old fee schedules and costly issues left unresolved. As a general rule, physicians should review their payer contracts at least annually.

Here are three key reasons to consider updating managed care contracts:

#1. If the practice has not evaluated the contract in more than three years.

Practice’s must review payer reimbursement rates frequently or miss revenue-raising opportunities. Most offices have never renegotiated their contracts and very few renegotiate them on an annual basis, missing out on additional revenue that can be substantial and greatly impact the practice’s revenue.

#2. If the payer’s reimbursements and performance are deficient.

Evaluations (e.g., benchmarking) of payers allows physicians to discern which perform at higher levels. Key factors include reimbursement levels, the rate and frequency of claim denials, etc. Real-time analytics allows healthcare providers to understand the true value of their payer contracts. Physicians need the ability to visualize their existing contracts and how commercial payers stack up against each other. For example, why does Payer One pay 85 percent of submitted dollars when Payer Two only pays 70 percent for the same service?

#3. Managed care reimbursement is not going to get any better any time soon.

Decreasing provider reimbursements demand a proactive approach to your payer relationships. We all know the major impact payer fee reductions have on practice cash flow. This is why all medical practices should develop a managed care strategy to address the issue of declining reimbursement. Now is the time to do something about it. What’s it going to be?


The purpose of the managed care contract is to help physicians manage their relationships with payers. By recognizing these reasons to consider updating managed care contracts more frequently, providers can enhance their relationships with health plans, leveraging opportunities to increase revenues and meet their business objectives.

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