Preparing for Upcoming Payer Negotiations – What You Need to Know

With contract deadlines on the horizon and the looming impact of the One Big Beautiful Bill Act (OBBBA), now is the time to reassess your managed care strategy. Health system executives must lead with intent by setting clear goals, challenging assumptions, analyzing market and payer trends, and ensuring alignment from the boardroom to the negotiation table to protect both patient access and financial stability.

• Preparation is key: Executives must have a deep understanding of service line performance, contract yield, and cost structures to justify reimbursement rates effectively. Align on key decision points, notice periods, and effective dates to build a disciplined negotiation timeline. A well-structured plan helps ensure internal alignment and positions the organization for success.
• Build a data-driven case: Leverage benchmark data, price transparency, and competitor insights to validate your position. Analyze payer enrollment, utilization trends, cost and quality metrics, and revenue cycle performance to strengthen your negotiation strategy. This will demonstrate your organization’s value and support a compelling case at the table.
• Reassess your economic model: Identify where revenue and margin are generated across contracts, services, and sites. Quantify risks tied to portfolio mix, regulatory shifts, and market dynamics. Define the future-state portfolio needed to sustain growth and resilience.
• Define an escalation path: If negotiations reach an impasse or delay, familiarity with the hierarchy of the payer can help to reach a mutually beneficial agreement. Map your relationships and align with executive leadership to create a prescriptive, well-thought-out route in this challenging environment.
• Stay ahead of regulatory risk: Due to the OBBBA’s passage, health systems face mounting financial pressures driven by declines in Medicaid and exchange enrollment, growth in self-pay and uninsured populations, and reduced provider tax support. Executives should optimize commercial payer contracts to secure enhanced rates and stronger terms and mitigate out-of-network risk.

Given the uncertain financial outlook for health systems, effective payer-provider contracting requires a strategic approach that combines clear objectives, data- driven insights, strong relationships, and organizational alignment. Preparing for your end-of-year contract deadline is critical and will help your organization be agile and strategic at the negotiation table.