As reimbursement pressures mount and administrative burdens grow, hospitals and health systems are adopting a firmer stance in negotiations with payers — especially around Medicare Advantage. Some are even walking away from low-yield contracts, prompting renewed urgency from some payers at the table.
Brad Gingerich, vice president of payer strategy at Ensemble Health Partners, joined the Becker’s Healthcare Podcast to break down the key trends driving this shift — from rising denial rates to looming ACA changes — and how data-backed strategies are helping providers regain leverage.
Editor’s note: This is an excerpt from an episode of the Becker’s Healthcare Podcast. Responses were lightly edited for length and clarity.
Question: What are the top three trends you’re following in healthcare today?
Brad Gingerich: The challenges in contracting have been getting significant attention for years, but the focus is greater than ever. Three key priorities stand out.
1. Heightened payer-provider friction. Coming out of COVID-19, we’ve seen a sharp rise in denials, prior authorizations and other administrative burdens, though this trend began before the pandemic. Increasing requirements for itemized bills, medical records and other documentation have made reimbursement more difficult for providers. Unfortunately, we don’t see these challenges slowing down soon.
2. A shift in power dynamics. Health systems are taking more aggressive stances in response to payer friction, especially in low-yield arrangements such as Medicare Advantage. This shift is forcing providers to make tough decisions that they historically have not. An example of this is rethinking who and how they will participate with payers. We’re seeing a lot of providers take a strong stance against, for example, Medicare Advantage plans, and start to limit who they participate with. There’s really not a need to sign a contract with every Medicare Advantage plan that comes knocking on your door; by being more discerning [health systems] have an opportunity to partner with =plans that are focused on removing friction and taking the administrative cost and burden out of healthcare. As a result, many providers are exploring new partnerships and alternative approaches to sustain financial stability.
3. Looming macroeconomic shifts. We’re closely watching macro trends that could significantly impact healthcare economics. For example, Affordable Care Act subsidies are set to expire at the end of the year, which will affect payer mix. These subsidies have made ACA plans a more viable option for many families, often providing better reimbursement to hospitals than Medicaid. An ACA plan compensates a hospital much better than a Medicaid product does. If the subsidies lapse, many patients could lose coverage, leading to financial strain on providers. Additionally, we’re seeing more business shift into commercial Medicare Advantage, which does not reimburse at the same level as traditional Medicare. While providers may be contracted at Medicare rates on paper, denials and utilization management protocols often result in lower actual reimbursement. Understanding these macroeconomic shifts and preparing for their impact is imperative for providers moving forward.
Q: Recently, we’ve seen several hospitals and health systems take a firmer, more aggressive stance in contract negotiations with commercial payers — especially in Medicare Advantage. As you mentioned, some providers have even chosen to drop certain plans altogether. Have these tougher stances made an impact? Are payers more willing to compromise at the negotiation table as a result of these strategies?
BG: Yes, to some extent, though it varies by payer. Each one operates differently. Some focus exclusively on Medicare Advantage, while others have a more diversified portfolio that includes commercial products, employer-sponsored plans and Medicaid. For payers with multiple lines of business, there’s sometimes room for trade-offs. If we raise concerns about friction in Medicare Advantage, for instance, they may look to make concessions in their commercial or employer-sponsored plans.
However, for payers that deal exclusively in Medicare Advantage and lack the ability to offset adjustments elsewhere, we’re seeing a different kind of response. In some cases, these payers are showing a greater willingness to engage in meaningful discussions, particularly at the level of medical directors and utilization teams. There’s more effort being made to align expectations and clarify interpretations to reduce denials, which are costly for both parties.
Some payers are starting to recognize that these ongoing disputes create inefficiencies, and we’re seeing early signs of greater collaboration. Whether this translates into measurable improvements remains to be seen, but there is a growing acknowledgment that providers have reached a breaking point. Many are prepared to terminate contracts, and that pressure seems to be driving some payers to reconsider their approach.
Q: How can hospitals better position themselves at the negotiation table with payers?
BG: The key is data. I often emphasize to my clients that data is their greatest leverage. One of the most important steps is proactively holding payers accountable. The moment a payer fails to meet its contractual KPIs, we flag it immediately — whether through formal demand letters or direct discussions. This approach sets a precedent that every contractual change, even seemingly minor ones, will be scrutinized and challenged if necessary.
By the time we enter contract negotiations, we’ve already been tracking the payer’s performance for months, consistently raising concerns about denials, response times and administrative burdens in our monthly joint operating committee meetings. We use payer scorecards to compare their responsiveness and performance metrics against competitors, quantifying every friction point throughout the process.
When it’s time to negotiate rates, we present a comprehensive, data-driven case. If we’re asking for a significant rate increase, it’s backed by a year’s worth of documentation proving the payer’s shortcomings and the costs imposed on providers. Additionally, our negotiation toolkit includes transparency measures — showing how the payer’s rates compare to other providers in the market — and a clear value proposition demonstrating why adjustments are necessary. By laying this groundwork, we build credibility and ensure that our proposals are taken seriously.
Click here to listen to the full podcast with Mr. Gingerich.
