A practice manager we spoke with kept her payer contracts in a binder in the bottom drawer of a filing cabinet. The binder had not been opened since the contracts were signed. Two of them had renewed automatically four times, at the same rates, because the notice window came and went every October without anyone noticing. This is not unusual. It is the normal state of payer contracts at independent practices.
November is late for some of this work and exactly right for the rest. Notice windows for a January 1 renewal have often closed already (90 or 120 days before the anniversary is common), but the review itself, the data gathering and the first conversation with a provider relations representative can all happen now. The practices that get better terms are the ones that start the conversation a full year before they need the answer, and the year starts today.
Key takeaways
- Build a one-page summary of every payer agreement: anniversary, term type, notice period, rate basis, filing and appeal windows.
- Calculate the effective percentage of Medicare your top 30 codes actually earn from each payer; it is usually lower than the number in the contract.
- Read the recoupment, unilateral amendment and "lesser of" clauses; they cost more than the rate exhibit over the life of a contract.
- Bring data to the rate conversation: panel size, quality results, cost position and a specific request with a specific date.
- A contract that already renewed can still be amended by agreement. Ask in writing now and calendar the next notice deadline.
Find every contract and build a one-page summary of each
Before reading anything closely, list every payer agreement the practice holds: direct contracts, delegated contracts through an IPA or network, Medicare Advantage agreements, Medicaid managed care agreements and any single-case or letter agreements. For each one record the effective date, the term, the renewal type, the notice period and the notice address. Put that in a single spreadsheet. This sounds basic and it is the step most practices have never done. If a contract cannot be found, ask the payer's provider relations department for a copy of the executed agreement and the current fee exhibit; they are obliged to know what they are paying you under.
| Field | Why it matters |
|---|---|
| Anniversary date | Sets the deadline for notice and the date new rates take effect |
| Evergreen or fixed term | Evergreen contracts renew silently unless you send notice |
| Notice period and method | Often 90 to 180 days, in writing, to a specific address; email may not count |
| Rate basis | Percentage of a named Medicare year, or a proprietary schedule that may never update |
| Timely filing limit | Anywhere from 90 to 365 days; drives your year-end sweep |
| Appeal window and levels | How long you have and how many tries you get |
| Amendment mechanics | Whether the payer can change the fee schedule with notice alone |
| Products covered | Which plans ride on the contract: commercial, exchange, Medicare Advantage, Medicaid |
The last row catches a problem practices rarely see coming. Many commercial agreements contain an "all products" clause that lets the payer add its Medicare Advantage or exchange plans to the contract at a different, usually lower, rate. If you have been wondering why a payer's Advantage plan pays less than its commercial plan for the same visit, the answer is often on page nine of a contract signed six years ago.
Read the rate exhibit, then reprice your actual volume against it
The rate exhibit is usually a short attachment and the most important page in the document. Take your top 30 codes by volume for that payer, list the contracted allowable next to your current Medicare allowable, and calculate the effective percentage of Medicare for each code and for the weighted average. Payers rarely present it this way, and the number is often lower than the headline percentage in the contract because the contract references an older Medicare year or carves certain code families out at a lower rate.
Here is the arithmetic on two codes, with illustrative figures. The contract says 115 percent of Medicare. For 99214, the exhibit shows $147.20 and the current Medicare locality allowable is $130.00, so the effective rate is 113 percent; the two-point gap is the older base year. For a common in-office procedure, the exhibit shows $88.00 and current Medicare is $96.00, so the effective rate is 92 percent; the procedure family is carved out. Weight each code's effective percentage by its annual volume and you get the number the contract is really worth. For most practices we have done this with, the weighted figure runs several points below the headline, and the carve-outs are where the money went.
Then compare to what the payer actually paid. Pull the remittances for the last six months and check allowed amounts against the exhibit line by line. A contract that says 115 percent of Medicare and a remittance history that averages 104 percent means one of three things: the payer loaded the wrong schedule, the contract references a year you didn't expect, or something in your billing (modifiers, place of service) is triggering reductions. All three are worth a phone call, and the first one is worth a written request for the difference.
The clauses people skip
Read the sections on unilateral amendments, recoupment, and "lesser of" language. A unilateral amendment clause lets the payer change the fee schedule or policy manual by mailing you a notice; some contracts give you a window to object, and if you miss it the change stands. Recoupment language sets how far back the payer can take money for an overpayment, which in some contracts exceeds the window you have to appeal a denial. And "lesser of billed charges or the fee schedule" is the reason your charge master must sit above every contracted rate; we covered that in the article on fee schedule preparation for January.
We think the recoupment asymmetry is genuinely unfair to practices, and it is also negotiable more often than people assume. Asking for a 12-month limit on recoupments and a matching 12-month window on your appeals is a normal request. Several states also cap payer recoupment periods by statute, so the payer's contract language may already be unenforceable in your state; that is a question for counsel, and it is worth asking.
What to bring to the conversation
Provider relations representatives respond to data, not to complaints. In our experience the useful package is short: your panel size for that payer's members, your quality results if the payer runs a program you participate in, your cost position (a primary care practice that keeps members out of the emergency department is worth more to the payer than one that does not), and a specific rate request with a specific effective date. "We would like the rate exhibit moved to 120 percent of the CY 2026 Medicare fee schedule, effective April 1" is a conversation. "Our rates are too low" is not.
Ask about the payer's value-based programs at the same time. A practice with PCMH recognition or a track record on care gap closure often qualifies for a per-member-per-month payment or a quality bonus that is worth more than a two-point rate increase, and it is frequently offered only to practices that ask. Our closing gaps in care work exists partly because those programs pay. Bring the numbers: how many of the payer's members you saw this year, your gap closure rate on the measures the payer tracks, and the reports that support them.
Deciding whether to keep the contract at all
Not every contract deserves renewal. Take the weighted effective percentage of Medicare, the denial rate for that payer, the average days to payment and the administrative time your team spends on it, and put the four numbers next to the payer's share of your visits. A payer at 92 percent of Medicare, with twice the practice's average denial rate and a 45-day payment cycle, that accounts for four percent of visits is a candidate for termination, and saying so in writing is often what gets a rate review scheduled. A payer with the same rates and a third of your visits is a different conversation, and one to have over a year rather than a month.
If you do terminate, the contract's continuity-of-care language decides how long you must keep seeing members in active treatment and at what rate, and most states have notice rules for patients. Plan the exit as carefully as the negotiation, and get counsel to read the termination clause before you send anything.
Questions we hear
The notice window closed in September. Have we lost the year?
No. A contract that renewed automatically can still be amended by agreement at any time. Send a written request for a rate review now, ask for a specific meeting date in January, and put the next notice deadline on the calendar with a 30-day warning. Most payers will discuss rates mid-term if the practice comes with data; the ones that won't have at least told you something about the relationship.
Should we hire someone to negotiate for us?
For a practice with several large commercial contracts and no one who has read them, an outside negotiator or a healthcare attorney with payer contracting experience often pays for itself. For a small practice with two or three contracts, the spreadsheet in this article and a well-prepared practice manager get most of the value. Either way, the practice has to do the data work; nobody else has the remittances.
The payer says rates are "not negotiable for a practice your size." Is that true?
Sometimes. Some payers have a standard schedule for small groups and will not move it. Even then, the non-rate terms (timely filing, recoupment period, appeal window, the all-products clause) are frequently negotiable, and the value-based programs are open to any practice that qualifies. Ask for those in writing and decide on the rate question separately.
What to do this month
- Locate every payer agreement and build the summary spreadsheet with anniversary, notice period, rate basis and products covered.
- Reprice your top 30 codes against each exhibit and against six months of actual remittances; calculate the weighted effective percentage of Medicare.
- Flag any contract with a notice window in the next 120 days and decide now whether to renew, renegotiate or terminate.
- Send written rate review requests to the two payers with the largest gap between contract and Medicare, with a proposed meeting date.
- Have counsel look at recoupment, amendment and termination language before you sign anything new; this article is operational guidance, not legal advice.
