What We’re Seeing: The Rate Isn’t the Whole Contract
When providers evaluate a managed care contract, reimbursement rates naturally get most of the attention. And for good reason. A few percentage points can make a meaningful difference. But the rate on the page doesn’t always tell you how well a contract will actually perform.
At SHP, we encourage providers to look beyond the headline numbers. A strong managed care agreement isn’t just about negotiating a better rate. It’s about understanding how the entire contract affects your organization once it is put into practice.
Here are a few areas worth a closer look.
1. Know what the rate is actually tied to.
An increase sounds good, but the details matter. Which fee schedule is being used? How does the contract address future changes to that schedule? Are certain services reimbursed differently? Understanding the methodology behind the rate can be just as important as the percentage itself.
2. Don’t overlook the language around the rates.
Some of the most important provisions in a payer agreement may have little to do with the negotiated reimbursement percentage. Amendment provisions, timely filing requirements, payment policies, termination language, and other contractual terms can influence how the agreement works in the real world.
The question shouldn’t simply be, “Did we get an increase?” It should be, “Did we improve the contract?”
3. Compare performance, not just contracts.
A signed agreement isn’t the finish line.
Looking at actual reimbursement and payer performance can help identify whether the organization is realizing the value it expected from the contract. That connection between contracting and actual financial performance is important. If the results don’t match expectations, it’s worth understanding why.
4. Make managed care an ongoing process.
Contracts shouldn’t disappear into a file until the next renewal notice arrives.
Organizations benefit from knowing when agreements renew, understanding where opportunities may exist, and having the information needed to approach negotiations proactively rather than reactively. The best time to evaluate a payer relationship isn’t necessarily when the payer tells you the contract is up for renewal.
The takeaway
Rates matter. But they’re only one part of the managed care picture.
A better question for healthcare organizations may be:
Is this contract actually working the way we need it to?
Answering that requires looking beyond a single reimbursement figure and considering the contract terms, actual performance, and the organization’s broader managed care strategy. At SHP, these are the kinds of questions we work through every day with healthcare organizations as they evaluate payer relationships and look for opportunities to strengthen their managed care strategy.