A Surge in Contract Disputes Since 2022

Provider-payer disputes have spiked noticeably since 2022, according to data tracked by FTI Consulting. Inflation following the pandemic caught both insurers and providers off guard, squeezing margins on long-term contracts that were negotiated before costs skyrocketed.

For providers, rising labor expenses, workforce shortages, administrative burdens, and supply costs have made existing reimbursement rates increasingly unsustainable. Many health systems argue that Medicare Advantage payments have failed to keep pace with the true cost of care delivery.

Some providers say they’ve reached a breaking point.

Hospitals report that restrictive coverage policies, prior authorization hurdles, and below-cost reimbursement rates are interfering with patient care—prompting difficult decisions to exit certain Medicare Advantage networks altogether.

Insurers Push Back on Rising Costs

Insurers, however, see the situation differently.

Payers argue that hospital billing practices, drug prices, and procedural costs continue to drive healthcare spending higher, making it harder to maintain profitability—especially within Medicare Advantage plans, which operate under tight federal benchmarks.

Many insurers underestimated the cost of deferred care during the pandemic and are now facing higher utilization and claims costs. As a result, they’ve turned to aggressive cost-containment strategies, such as increased prior authorization requirements—moves that have drawn criticism from providers, patients, and lawmakers alike.

Medicare Advantage Is Now a Dominant Payer

One reason these negotiations matter so much more today is simple: Medicare Advantage has become central to the healthcare system.

• More than half of all Medicare-eligible beneficiaries have been enrolled in Medicare Advantage since 2023.
• The U.S. population aged 65 and older grew 13% between 2020 and 2024, far outpacing growth among working-age adults.
• Employer-sponsored insurance is gradually declining as the population ages.

For hospitals and health systems, Medicare Advantage now represents a significant—and growing—portion of their payer mix. That reality has heightened concerns that patients transitioning from employer plans to Medicare Advantage will generate lower reimbursements over time.

Limited Negotiating Flexibility

Unlike commercial insurance, Medicare Advantage negotiations come with built-in constraints.

MA plans are generally not required to pay providers more than traditional Medicare rates for out-of-network care. This effectively caps how much insurers are willing to offer during negotiations and limits providers’ leverage when seeking higher payments.

As a result, even as costs rise, providers have little room to push MA reimbursement rates upward—fueling frustration and hardline stances on both sides.

Consolidation Raises the Stakes

Hospital consolidation is also reshaping negotiations.

Large health systems created through mergers and acquisitions have more negotiating power than standalone hospitals, particularly in markets with limited competition. While this can strengthen providers’ positions, it can also intensify disputes, leading to high-profile network exits.

Policy Uncertainty Adds More Pressure

Upcoming policy changes are further inflaming negotiations:

• Medicaid spending cuts are expected to reduce coverage and increase uncompensated care.
• Expiring Affordable Care Act marketplace subsidies could double premiums in 2026, leading to millions losing coverage.
• Providers could lose tens of billions in revenue if subsidies lapse, according to industry estimates.

With traditional revenue streams under threat, both payers and providers are racing to lock in favorable terms wherever possible—especially in Medicare Advantage contracts.

How No Surprise Bill Can Help

As Medicare Advantage contract negotiations grow more complex and high-stakes, providers need experienced advocates at the table. No Surprise Bill specializes in strategic payor negotiation services that help hospitals, physician groups, and healthcare organizations protect reimbursement, reduce revenue leakage, and navigate payer disputes with confidence.

Our team understands the regulatory, financial, and operational pressures shaping today’s negotiations. Contact us today to strengthen your payor strategy and safeguard your revenue.