In the complex world of healthcare, practice revenue can quietly erode over time due to hidden pitfalls in payer contracts. Auto-renewal clauses, outdated fee schedules, and overlooked contract terms can all conspire to reduce your bottom line without you even noticing.
As contract renewal windows approach, it’s essential to be proactive rather than reactive. To ensure your practice remains financially healthy and protected against revenue leaks, there are eight key questions you should always ask before signing off on the next renewal. These questions will help you identify what needs attention, correction, or negotiation—before you’re locked in for another year (or longer).
1. How Do Current Reimbursement Rates Compare with Your Cost Per Visit?
A contract may have provided favorable rates when it was originally signed, but that can change over time. It’s critical to compare what you are being paid today against your current cost per visit, especially for your highest-volume CPT codes. This calculation should include all costs—physician compensation, staff labor, medical supplies, and overhead expenses.
Once you have an accurate cost per visit, compare it directly with what each payer reimburses. The CMS physician fee schedule lookup tool is a valuable resource for identifying appropriate Medicare benchmarks. If you discover that a commercial payer is reimbursing significantly less than Medicare for your most-used codes, this should be the first area you address in your renewal negotiations. Allowing these contracts to auto-renew at subpar rates can mean years of lost revenue before you catch up.
2. What Are the Contract’s Term Length and Renewal Triggers?
Many payer contracts contain auto-renewal clauses, but the notice requirements and renewal triggers can vary widely. For example, a contract may require written notice 180 days before the end of the term to discontinue. If you miss that window—even by accident or oversight—you might find yourself locked into the same contract for another full term.
To avoid this, carefully review the renewal and termination notice sections for every contract. Put all critical dates and deadlines on a shared calendar that’s managed by someone other than the original contract negotiator—this way, nothing falls through the cracks. Don’t assume you’ll remember, and don’t rely on the payer to remind you. Missing a termination window due to inattention can result in another cycle of unfavorable terms.
3. Are Reimbursement Rates Indexed to Any Benchmarks or Adjustments?
A majority of commercial payer contracts do not include automatic rate increases tied to economic indices, Medicare adjustments, or inflation. This means a contract you signed in 2022 could still be paying 2022 rates in 2026—even as the costs of labor, supplies, and everything else have increased substantially.
While indexed rates are not standard, they may be negotiable, especially for practices with leverage due to size, specialty, or unique value. Even if you can’t secure full indexation, negotiating for an annual cost-of-living adjustment can help minimize the impact of multi-year revenue erosion. Don’t assume rates will keep pace with expenses—unless it’s written into the contract, they won’t.
4. What Modifier and Timely Filing Rules Apply?
Timely filing requirements and modifier rules are areas where practices often lose revenue through technical denials. Commercial payers’ timely-filing windows typically range from 90 to 180 days, while Medicare allows 365 days. Some payers—such as UnitedHealthcare for in-network claims—have even shorter deadlines, and certain Medicaid managed care contracts can be shorter still.
Modifier requirements also vary widely from payer to payer. The onus is on the practice to comply with these operational details, and any missed or misunderstood requirement can lead to denied claims. It’s crucial to review not just the contract itself but also the payer manual, as operational rules are often referenced in the contract rather than spelled out. If the contract obligates your practice to follow an external manual that the payer can update unilaterally, take note—this means the rules can change at any time, sometimes without notification.
5. What Does the Prompt-Pay Clause Actually Require?
Most states have prompt-pay laws that set payment timeliness standards for insurers, but contract language can either reinforce these protections or quietly work around them. A strong prompt-pay clause will specify a clear timeline for payment—often referencing state law or specifying a set number of days from claim submission.
Be wary of clauses that defer to the payer’s claims processing system or leave the timeline vague. Such language is functionally weaker and may allow payers to delay payments without consequence. Review the exact wording in your contract and, if possible, negotiate for language that provides the strongest protection for timely payments.
6. How Are Denials, Audits, and Recoupments Handled?
Understanding how your contract addresses denials, audits, and recoupments is critical for both financial planning and operational workflow. Look for details on the appeals process, the audit lookback period, and the payer’s rights to recover overpayments. Some contracts allow payers to recoup overpayments retroactively against your current claims, which can create unexpected cash flow disruptions.
It’s also important to check what the contract says about dispute resolution—specifically, whether arbitration is required, which party selects the arbitrator, and which jurisdiction’s laws apply. Clarity on these points can make a significant difference if a dispute arises over a claim or a payer-initiated audit.
7. How Does the Contract Treat Telehealth Services?
Since 2020, telehealth coverage and reimbursement have evolved rapidly, but policies and rates still vary widely among payers. It’s important to confirm that your contract explicitly addresses telehealth services. Key considerations include whether telehealth visits are reimbursed at the same rate as in-person visits (parity), what place-of-service requirements exist, and whether audio-only services are covered.
Medicare has extended certain telehealth flexibilities, but commercial payers are not obligated to follow Medicare’s lead, and parity is not universal. Make sure your contract outlines telehealth terms clearly so you can plan and bill accordingly.
8. What Does the Termination Provision Really Allow?
Termination clauses are not just about when you can exit the contract—they also define when and how the payer can remove your practice from their network. Examine what events trigger termination for cause, the required notice period, which obligations survive termination, and whether the payer can drop your practice without cause (and on what timeline).
Pay special attention to patient notification rights. If the contract does not specify how and when patients are notified of network changes, your practice may be left scrambling to communicate with affected patients according to the payer’s timeline instead of your own. This lack of clarity can disrupt patient care and harm your practice’s reputation.
Why Inertia Can Cost Your Practice—and How to Avoid It
Often, payer contracts are renewed not because someone reviewed and approved the terms, but simply by inertia. The auto-renewal clause activates, rates roll over, and a new planning cycle begins—sometimes without anyone pulling the contract for review. This can lead to years of suboptimal fee schedules and contract terms that quietly favor the payer rather than your practice.
Rather than letting the renewal process run on autopilot, use the upcoming renewal window as an opportunity to review every contract in detail. Use these eight questions as your checklist. Get answers not just from the contract itself, but also from the payer manual and—when necessary—by having direct conversations with your payer representatives.
Take Charge Before the Window Closes
Healthcare contracts are complex and can have far-reaching consequences for your practice’s financial health. Allowing fee schedules to stagnate, missing critical notice windows, or failing to clarify operational rules can quietly erode your revenue and operational flexibility. By asking these eight questions before every renewal, you put yourself in a position of strength, prepared to negotiate and safeguard your practice’s interests.
Don’t let auto-renewal clauses, outdated fee schedules, or unread contract terms undermine your hard work. Before the next renewal window closes, take the time to work through these eight questions—whether by combing through the contract, referencing the payer manual, or engaging in open dialogue with your network representatives. Proactive review and negotiation can help ensure your contract supports the sustainability and growth of your practice, rather than quietly eroding its value over time.
With thoughtful preparation and a clear understanding of your contracts, you can ensure your practice is positioned for financial stability and long-term success. Use this guide as you approach each renewal period, and make contract review an intentional, routine part of your business operations.
Source: https://www.physicianspractice.com/view/8-questions-to-ask-before-renewing-a-payer-contract