The Impact Of Successfully Managing Payer Contracting On Medical Practice Financial Performance

Medical practices currently face a number of new challenges to their established reimbursement strategies and revenue cycle management processes.  As bundled payments, value-based care contracts, and other risk-based models gain ground across the nation, practices are finding it challenging to maintain financial performance goals which depend in part on negotiating favorable terms with payers.

Full visibility into payer contracts, combined with the ability to manage these contracts in a proactive manner, is key to maximizing reimbursement for peak financial performance.  According to the Texas Medical Association, practices that do not adequately track and manage their payer contract rates experience revenue reductions averaging 4 percent (4%) below their peers who employ strong contract management processes.

The use of a comprehensive solution to manage payer contracts and identify opportunities for contract performance improvement boosts the sustainability of medical practices while simplifying contract management workflow.

Negotiating favorable contracts requires a complete understanding of the terms and conditions, including fee schedules for services and frequency of reimbursement increases. Practices must be able to easily evaluate how proposed contract terms will impact their financial performance.

Once a contract has been negotiated and is in effect, staff must be able to flag variances quickly and accurately in payment rates, contest underpayments or denials appropriately, and collect outstanding revenue in a timely manner.

Staff members must also stay aware of renewal windows, negotiation deadlines, and fee schedule changes so their practice can remain nimble and proactive when discussing contracts with payers.


Practices can begin by making sure they stay ahead of regular cycles of contract negotiation and fee schedule changes.  Most payers operate on the calendar year, making changes quarterly or yearly.

Perhaps most importantly, practices should ensure that all RCM and payer contract negotiation staff are on the same page about what role processes and tools can play in improving financial performance.


Taking a more structured approach to contract management, with the help of a well-qualified and robust solution, can allow medical practices to stay ahead of their finances today while preparing for tomorrow.

With the right technologies and workflows, bundled payments and risk-based models do not have to be prohibitively complex to administer.  Practices which prepare themselves now with strong contract management competencies will be well-positioned to take advantage of emerging innovative reimbursement models designed to bring benefits to payers, providers, and patients.

By keeping track of contract negotiation cycles, proactively identifying areas of financial focus, physicians can maximize their reimbursement opportunities as the financial landscape continues to evolve.

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