Maintaining strong relationships with insurance payers has become more critical as healthcare expenses continue to rise. According to the Medical Group Management Association, operating costs for medical practices have increased by 11.1% compared to the same period in 2024.(1) This surge is driven by escalating prices for medications and injectables, rising staff salaries and benefits, higher insurance premiums, and growing vendor fees.
Surgical specialty groups are among the hardest hit. They face additional financial pressure due to cost-of-living-adjusted staff compensation, competition for procedural space, and significant investments in advanced medical technologies. These challenges are not limited to one geographic area; rural, urban, low-income, and senior-heavy regions are all feeling the impact.
Additionally, a 2.93% cut to Medicare reimbursement, combined with medical inflation outpacing the national rate, has pushed practices and health systems to reexamine how they deliver value to both patients and payers.(2,3) Contract renegotiations have emerged as a key strategy, helping practices stay competitive and sustainable. A strong, collaborative relationship with payers significantly enhances negotiating power and supports long-term success.
Ancillary Services: Enhancing Access and Compliance
Implementing ancillary services such as in-house lab testing, durable medical equipment, and specialty programs (e.g., physical therapy, allergy care, and chronic care management) can improve patient convenience, satisfaction, and adherence to treatment plans. The American Hospital Association reports that 3.6 million patients forgo treatment due to transportation barriers.(4) Providing in-house services helps eliminate this obstacle and boosts treatment compliance — a key metric most insurers track.
Value-Based Contracting: Aligning Incentives
Value-based care (VBC) models are becoming essential to modern practice management, shifting the focus from volume to outcomes. These contracts offer opportunities for additional reimbursement and broader market access by rewarding improved patient outcomes.(5) However, entering a VBC agreement requires a thorough understanding of performance metrics, incentive structures, and the risks involved.
Procedural Site of Service: Leveraging ASCs
There is a growing trend toward performing eligible procedures in ambulatory surgical centers (ASCs) instead of hospitals. The number of Medicare-certified ASCs increased by 2.5% from 2022 to 2023, and a further 40% rise is projected through 2028.(6) ASCs offer substantial cost savings — Medicare and its beneficiaries save approximately $2.6 billion annually — and improved outcomes.(7) Payers often reward physicians who shift appropriate procedures to ASCs with enhanced reimbursement rates.
Administrative Excellence: Building Operational Trust
Payers closely assess a practice’s administrative and billing efficiency. Clean claims, complete documentation, streamlined scheduling, and integrated technology for patient engagement are critical for smooth coordination and care delivery. Robust EHR and billing systems promote data transparency and strengthen payer trust.
Clinical Standards: Avoiding Unnecessary Testing
Adhering to clinical best practices is equally important. Studies show that 40–60% of annual diagnostic tests may be unnecessary, contributing to excess costs, patient dissatisfaction, and further testing.(8) Payers monitor care episodes by diagnosis and scrutinize billing codes to detect patterns of overuse. Accurate documentation and clear clinical rationale can prevent unnecessary tests and reduce insurer pushback.
Conclusion
By focusing on operational efficiency, clinical quality, and strategic partnerships, providers can position themselves for stronger relationships with payers. Expanding ancillary services, leveraging ASCs, and maintaining clean workflows are critical steps in offsetting rising practice costs and securing favorable contract terms.
References
Harrop C. Medical practice operating costs are still rising in 2025—here’s how to control them. Medical Group Management Association. https://www.mgma.com/mgma-stat/medical-practice-operating-costs-are-still-rising-in-2025-heres-how-to-control-them . Accessed July 1, 2025.
Cottrill A, Cubanski J, Neuman T. What to know about how Medicare pays physicians. KFF. https://www.kff.org/medicare/issue-brief/what-to-know-about-how-medicare-pays-physicians/ . Accessed July 1, 2025.
Rakshit S, Wager E, Hughes-Cromwick P, Cox C, Amin K. How does medical inflation compare to inflation in the rest of the economy? Peterson-KFF Health System Tracker. https://www.healthsystemtracker.org/brief/how-does-medical-inflation-compare-to-inflation-in-the-rest-of-the-economy/ . Accessed July 1, 2025.
Social determinants of health series: Transportation and the role of hospitals. American Hospital Association. https://www.aha.org/ahahret-guides/2017-11-15-social-determinants-health-series-transportation-and-role-hospitals . Accessed July 1, 2025.
What are the value-based programs? CMS. https://www.cms.gov/medicare/quality/value-based-programs . Accessed July 1, 2025.
Ambulatory surgery center services: Status report. MedPAC. https://www.medpac.gov/wp-content/uploads/2025/03/Mar25_Ch10_MedPAC_Report_To_Congress_SEC.pdf . Accessed July 1, 2025.
ASCs: A positive trend in health care. Ambulatory Surgery Center Association. https://www.ascassociation.org/advancingsurgicalcare/aboutascs/industryoverview/apositivetrendinhealthcare . Accessed July 1, 2025.
Koch C, Roberts K, Petruccelli C, Morgan DJ. The frequency of unnecessary testing in hospitalized patients. Am J Med. 2018;131(5):500-503. https://doi.org/10.1016/j.amjmed.2017.11.025 .