Picture this: a skilled surgeon has decades of experience in their specialist field and a long track record of making the crucial decisions that save lives. But they’re heading into surgery without a full patient history or anywhere near an acceptable understanding of what caused the patient’s rapidly deteriorating condition. Seem unlikely?
Certainly. And yet, this is the exact position that many – if not most – healthcare providers find themselves in when it comes to understanding, managing, and especially, negotiating payer agreements.
Misunderstanding, or no understanding, of reimbursement rates and contract terms can inevitably lead to significant loss of revenue, and as a result, the ability to optimize and fund patient care. A recent study by the American Medical Association (AMA) suggests the phenomenon is widespread in the healthcare industry. Almost 85% of providers find payer contracts excessively complex and as many as 70% admit they just don’t understand them. Add to the fact that the average clinic or healthcare provider is juggling 15-20 contract agreements, as well as incoming alternative payment models (APMs) in 2025, and it’s easy to see why providers are losing millions of dollars in revenue that could be directed towards optimizing care. For anyone in a decision-making role with oversight of contract negotiations, there are four key steps to making payer contracts work harder on your behalf in 2025.
1. Consider the scale of the problem
While a lack of understanding of payer agreements seems like a nuanced issue, it’s actually a damaging problem for providers’ businesses and profitability. The knowledge gap can lead to, on average, 20 hours a week of crucial administrator time being redirected to managing ongoing insurance related tasks and challenges. And the problem is pervasive.
According to Revcycle Intelligence, ineffective contract management can cost healthcare providers an estimated $125 billion annually. Those aren’t abstract numbers on a P+L bottom line, they’re crucial funds that could be used to purchase critical and cutting-edge medical equipment, hire more doctors and nurses, or expand community health programs. With APMs, which are welcomed by many in the industry, providers must now juggle traditional fee-for-service agreements with new models that tie payments to outcomes and quality metrics. Without a comprehensive strategy for managing payer agreements, providers risk significant revenue losses and operational strain.
2. Understand key challenges with agreements
While contract negotiations can be more efficiently handled by a specialized partner like Aroris Health, a firm dedicated to healthcare contract optimization and reimbursement negotiations, providers should be aware of several key challenges.
- Complex contract language: Legal and technical jargon often obscures critical details, such as payment schedules, performance benchmarks, and penalties for noncompliance. Many providers don’t have the in-house expertise to interpret these terms effectively.
- Time-intensive negotiations: Contract review and negotiation require significant time and effort—resources that should be focused on patient care. A survey by the Medical Group Management Association (MGMA) found that 45% of providers spend more than 10 hours per week on contract negotiation alone, a process often repeated across multiple agreements.
- Lack of benchmarking data: Without access to industry benchmark data, providers struggle to determine whether their reimbursement rates are competitive or under market, potentially leaving millions on the table.
- Administrative overload: As contracts are renewed and renegotiated year-round and rates continually shift, ongoing vigilance is required. That means tracking compliance, monitoring performance metrics, and addressing disputes, all of which require either dedicated resources internally or the support of an expert partner.
3. Take immediate steps to change the model
Despite these challenges, providers can implement actionable strategies to regain, or gain, control of their payer agreements:
- Conduct a comprehensive contract audit: Start by reviewing all active contracts to identify discrepancies, outdated terms, and areas for renegotiation. Pay close attention to clauses related to reimbursement rates, quality incentives, and penalties. Ensure that agreements align with the practice’s financial goals and operational capabilities.
- Invest in benchmarking tools: Use industry benchmarks to assess whether your reimbursement rates are competitive. For example, the Healthcare Financial Management Association (HFMA) offers resources to help providers compare rates across regions and specialties. Armed with this data, providers can approach negotiations with a degree of confidence.
- Streamline administrative processes: Automate routine tasks, such as tracking performance metrics and generating compliance reports, to free up staff for higher-value activities. Consider using contract management software to centralize agreements and streamline workflows.
- Partner with experts: In today’s fast-changing healthcare landscape, digitizing payer contracts and data management isn’t just a good idea—it’s a necessity. For providers navigating the maze of complex payer agreements, partnering with a specialized team like Aroris Health can be a game-changer, especially when the expertise isn’t available in-house. Aroris Health, takes a customized approach to contract management, helping providers truly understand their agreements and secure fair reimbursement.
With the power of Aroris360—a proprietary data analytics platform—Aroris digitizes contracts and leverages data to uncover payment discrepancies, unfavorable terms, and fair market reimbursement rates. From start to finish—whether it’s contract negotiation or resolving disputes—Aroris provides comprehensive support so providers can focus on what matters most: delivering exceptional patient care.
Call to action: Take control in 2025
The financial and operational health of any practice depends on mastering the complexities of payer contracts. If your organization is struggling with administrative overload or the challenges of alternative payment models, it’s time to act.
Partnering with experts like Aroris Health can unlock new revenue opportunities, optimize your operations, and ensure that your contracts support – rather than hinder – your mission to deliver quality care.