Understanding The Way Payor Contracting Works

A Double-Edged Sword

Payor contracting is basically a term relating to your agreement as a business providing healthcare services to insurance groups your patients use to cover their expenses. This can extend from individuals to groups; there can be many different configurations of such arrangements.


Essentially, in broad terms payor contracts refer to agreements of an official nature between what’s known as a “seller entity” and a health insurer. You’re the seller entity, the health insurer or health maintenance organization is who your patient or patients use to cover their costs. This can be an HMO, PPO, welfare plan, or any other type of associated contract.

Reimbursement Can Take Time

Here’s the issue: payor contracting doesn’t always result in immediate outcomes. Also, consistency can vary. Some payors offer rates that are different from other services that are similar. Different networks have different levels of participation. Legal requirements are similarly variable. Also, contract wording can be downright indecipherable.

As a healthcare provider, the likelihood is, you’ll have to contend with multiple payor contracts. Knowing this, there are quite a few payors who will take advantage of healthcare institutions as a means of saving their own resources. Essentially, they’ll change contract terms on a rolling basis, making it hard for healthcare providers to keep up.

That’s one reason you want to work with businesses who understand the situation, and can cut through the morass of convoluted contract terms to assure the payors with whom you work aren’t cheating you. For example, check out this link to an HPA payor contracting and credentialing specialist.

Retaining Operational Profitability

With solid payor credentialing and contracting, you’re going to preserve operational resources. Outsourcing such work makes the most sense for best outcomes. As you go through this process, you’ll likely find some payors you would have worked with before are no longer the types you want to associate with.


Similarly, you’ll find some groups you didn’t work with are actually a bit more desirable than you realized. Overall it’s a purification process, and you want to stay on top of it because businesses involved in payor contracting will very likely have changes in management every couple years. That can disrupt how contracts are put together.

Solutions that once worked can become a liability in terms of associated expenses. Given the vast variety of difficulties defining the healthcare industry to begin with, you can’t afford to play around here.

Malpractice lawsuits, insurance to prevent them, HIPAA compliance (and the cost of mistakes in that area), economic woes, political intrigue, and more work together to make any healthcare business an adventurous proposition.

Managing Payor Contracts Efficiently

With payor contracting, it pays to have some sort of contract management system and keep information on varying contracts so you can “flush” those that change terms in a way which isn’t conducive to your healthcare business. There can be negotiations when it comes to managed care contracts; you’ll want to be prepped for that.

The thing is, most people don’t tend to pay “out of pocket” for medical care. They lean into their insurance provider; and that provider will only reimburse your healthcare business under the auspices of whatever contract they have with you via payor contract. So there’s a lot of benefit to consultation regarding payor contract management.

Given the intrigue defining healthcare in the last few years, you want to pursue any angle you can find. When it comes to payor contracting, that means exploring what the experts say, and assuring you keep an eye on the contracts you’ve signed onto.

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Christophe Rude

Christophe Rude

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