Your agency may be delivering excellent care, submitting clean claims, and working diligently to resolve denials but still leaving significant revenue on the table. The problem may not be your billing process. It may be your managed care contracts.
For many home health and hospice agencies, managed care reimbursement has become increasingly complex. Authorization requirements, delayed payments, denials, underpayments, and changing payer policies place significant demands on already stretched administrative teams.
But what if some of the biggest revenue challenges agencies face aren’t simply billing problems? What if they’re rooted in contracts that haven’t been reviewed, renegotiated, or actively managed in years?
On a recent episode of Home Health Revealed, HealthRev Partners CEO Hannah Vale sat down with Joe Russell, founder and CEO of Yield Health, to discuss the financial realities of managed care, the importance of contract management, and how agencies can position themselves for long-term success.
Their conversation revealed an important truth: Getting paid what you’ve earned requires more than effective billing. It requires understanding what your contracts promise, what your payers actually reimburse, and where the gaps exist.
1. Underpayment Is Often Hiding in Plain Sight
When an agency experiences revenue problems, denials and authorization issues are often the first places leadership looks. These problems are visible, trackable, and frequently demand immediate attention.
Underpayments, however, can be much harder to identify.
And that underpayment? It does not show up with a giant red “DENIED” stamp.
It shows up looking like a normal payment.
As Russell explained during the conversation, an underpayment can look exactly like a legitimate payment. A claim is submitted, a payment arrives, and the revenue cycle team moves on to the next account.
The problem? The payment may not reflect what the payer is contractually obligated to reimburse.
Are you confident your agency is receiving the reimbursement it has earned? Connect with HealthRev Partners to explore opportunities to strengthen your revenue cycle and improve financial performance.
Consider an agency that negotiated annual rate increases several years ago. If those increases were never communicated to the billing team or updated in the billing system, the agency could continue receiving outdated reimbursement without realizing it.
The claims may process correctly. The payments may post correctly. Yet the agency is still losing revenue.
Traditional billing workflows may verify that a payment was received without determining whether the amount matches the applicable contract terms.
This is why agencies need to look beyond claim submission and payment posting. Contract compliance and reimbursement accuracy must be part of the revenue cycle conversation.
What agencies should do:
Review managed care contracts and applicable rate schedules regularly.
Verify that contracted rates are accurately reflected in billing systems.
Compare expected reimbursement against actual payments.
Investigate recurring underpayments and unexplained reimbursement variances.
Ensure contract amendments and rate increases are communicated to the appropriate teams.
The goal is not simply to collect payments. It is to ensure the agency receives the reimbursement it has earned.
2. Your Managed Care Contract Portfolio Needs Active Management
One of the most significant risks Russell identified is the tendency for agencies to sign managed care contracts and then leave them untouched for years.
An agreement that made sense when an agency was smaller may no longer support its current operations, patient population, or financial needs.
Meanwhile, payer requirements, reimbursement structures, and market conditions continue to change.
Contracts with automatic renewals can be especially problematic. Without a deliberate review process, agencies may find themselves locked into outdated rates and unfavorable terms long after their original agreements were negotiated.
Russell recommends beginning with two fundamental questions:
When was the contract signed, and when does it expire?
These dates establish the agency’s opportunity to evaluate its agreement and negotiate better terms.
He also recommends starting renewal discussions approximately six months before expiration. This gives agencies time to evaluate performance, prepare supporting data, and negotiate updated terms before the existing agreement renews.
However, agencies do not necessarily need to wait until the next renewal period to request changes. Depending on the agreement, there may be opportunities to renegotiate earlier.
A contract is more than one document.
Russell also emphasized that agencies should review the complete contract package, not just the primary agreement.
Depending on the payer, that package may include:
- The base agreement and amendments.
- Provider manuals incorporated by reference.
- Rate exhibits and reimbursement schedules.
- Product participation schedules.
- Renewal, termination, and notice provisions.
- Each component can affect reimbursement, operational requirements, and the agency’s ability to protect its interests.
If your organization does not have complete copies of its agreements, obtaining them should be a priority.
3. Better Contract Terms Can Be Just as Valuable as Better Rates
When agencies negotiate with managed care organizations, reimbursement rates often dominate the conversation.
Higher rates matter, but they are only one part of a financially sustainable agreement.
Contract terms can significantly affect an agency’s ability to collect revenue, manage administrative workload, and avoid unnecessary write-offs.
During the discussion, Russell highlighted several provisions agencies should evaluate carefully.
Annual rate escalators: Multi-year agreements without annual increases can gradually lose financial value as operating costs rise. Agencies should consider negotiating predetermined annual adjustments when possible.
Timely filing limits: Short filing windows create additional risk, particularly when authorizations, documentation, or payer processing delays interfere with timely claim submission. Russell recommends pursuing longer filing windows when negotiating agreements.
Recoupment provisions: Agencies should understand how far back a payer can seek repayment and consider requesting reciprocal time limits where appropriate.
Automatic renewal and termination notices: Some agreements require substantial advance notice to prevent renewal. Missing a deadline may mean remaining under unfavorable terms for another contract period.
Unilateral amendments: Some agreements allow payers to change policies or requirements under specified conditions. Agencies should understand how these provisions work, what notice is required, and how much time they have to respond.
These provisions may not attract as much attention as the reimbursement rate, but they can have a meaningful effect on the agency’s financial performance.
The takeaway is simple: Negotiating a contract means negotiating the entire relationship, not just the dollar amount attached to a visit.
4. Know Your Realized Rate, Not Just Your Contracted Rate
One of the most important concepts discussed during the episode was the difference between a contracted rate and a realized rate.
A contracted rate tells an agency what it is supposed to receive under an agreement.
A realized rate reflects what the agency actually collects after accounting for the financial impact of denials, underpayments, timely filing losses, and other reimbursement leakage.
The difference can be substantial.
For more on managed care contracts and payer negotiations, listen to Home Health Revealed episode with Joe Russell”
Need a clearer picture of where your revenue cycle is losing money? Connect with HealthRev Partners to discuss your agency’s reimbursement and collection challenges:
Consider a hypothetical example across a group of skilled nursing visits:
- The contracted rate is $120 per visit.
- The all-in cost is $97 per visit, including the administrative costs allocated to those visits.
- Before collection losses, the margin is $23 per visit.
Assume denial write-offs equal 9% of expected contracted revenue and separate, unrecovered underpayments equal another 4%. Both percentages apply to the original contracted revenue, and the losses do not overlap.
Average collections would fall to $104.40 per visit. With costs remaining at $97, the margin would drop to $7.40.
These figures are illustrative, not industry benchmarks. The point is that the contracted rate alone does not tell you whether a payer relationship is profitable.
If denials, underpayments, and other collection issues reduce the effective reimbursement, the agency’s actual margin may be dramatically smaller than expected.
The original rate may look attractive, but the economics tell a different story.
This is why agencies need to evaluate contracts alongside their revenue cycle performance and operating costs.
The questions every agency should be asking to evaluate the payer relationship:
What does it actually cost us to deliver a visit?
What reimbursement does our contract specify?
What are we actually collecting?
How much revenue are we losing to denials and underpayments?
Are we consistently receiving the rates and adjustments outlined in our agreements?
Does the contract produce an acceptable margin after accounting for the full cost of care?
Without these answers, agencies may enter negotiations focused on a rate that sounds good rather than one that supports sustainable operations.
Understanding realized reimbursement provides a more accurate foundation for financial decisions.
5. Data Is Your Strongest Negotiating Tool
Managed care negotiations can feel intimidating, particularly for smaller agencies competing against large national health plans.
But Russell offered an important perspective: Agencies should not approach negotiations relying solely on the argument that they deserve higher reimbursement.
Payers evaluate providers using data. Agencies need to bring their own evidence to the table.
That means understanding not only financial performance but also clinical quality, operational efficiency, and the value the agency brings to the payer’s network.
Relevant measures may include:
Realized reimbursement: What the agency actually collects under its contracts.
Cost of care: The full cost of delivering services.
Hospital readmission rates: How effectively the agency helps patients avoid unnecessary hospitalizations.
Quality measures and Star Ratings: How the agency performs against relevant quality benchmarks.
Total cost of care: How the agency’s services contribute to overall healthcare spending.
Timeliness of care: How quickly the agency can initiate services following a referral.
These measures help agencies demonstrate their value beyond the number of visits they provide.
For example, an agency that can demonstrate strong quality outcomes, timely starts of care, and reduced hospital utilization may be better positioned to explain how its services support a payer’s broader financial and clinical objectives.
As Russell summarized the concept, the strongest negotiating position comes from demonstrating that the value an agency creates exceeds the cost of its services.
Data transforms a negotiation from a request for more money into a business case supported by measurable performance.
6. Not Every Contract Is a Good Contract
Many agencies feel pressure to participate in every available managed care network.
The reasoning is understandable: Being in network may create access to referrals and help the agency serve more patients.
However, network participation alone does not guarantee financial sustainability. A contract with unfavorable reimbursement and burdensome administrative requirements may create more operational strain than value, particularly when the agency lacks the volume needed to offset those challenges.
Russell encouraged agencies to evaluate each payer strategically rather than pursuing network participation indiscriminately.
That evaluation should consider:
- The number of covered lives in the agency’s market.
- Expected referral volume.
- Contracted and realized reimbursement.
- Administrative requirements and authorization processes.
- The cost of delivering care.
- The agency’s ability to meet the payer’s quality and operational expectations.
Regional health plans may also present opportunities worth exploring, depending on the local market and the agency’s capabilities.
The objective is not to avoid managed care. It is to build a payer portfolio that supports the organization’s financial and operational goals.
Every contract should have a purpose, and every relationship should be evaluated against measurable results.
7. Revenue Cycle Management Is Essential to Contract Performance
Even a well-negotiated contract can underperform when the operational processes supporting it are ineffective.
Authorization gaps, missed filing deadlines, unresolved denials, inaccurate billing configurations, and incomplete follow-up can prevent an agency from collecting the reimbursement it expects.
These challenges also consume staff time.
Revenue cycle teams may spend hours contacting payers, escalating claims, researching payment discrepancies, and correcting administrative issues that could have been identified earlier.
For home health agencies, these delays are especially consequential. Organizations must meet payroll, pay clinicians, and maintain daily operations while waiting for reimbursement.
This is where contract management and revenue cycle management intersect.
Agencies need processes that connect contractual expectations with day-to-day billing performance. Teams should understand the requirements associated with each payer and have a reliable way to identify when payments or claim outcomes deviate from expectations.
At HealthRev Partners, we recognize that effective revenue cycle management extends beyond submitting claims and following up on outstanding balances. It requires visibility into the issues affecting reimbursement, a disciplined approach to resolving them, and the education needed to help agencies strengthen their processes over time.
When organizations understand where revenue is being lost, they can make more informed decisions about operational improvements, payer relationships, and financial priorities.
8. The Future of Home Health Requires a Broader Financial Strategy
The managed care landscape is changing, and agencies must prepare for more than traditional fee-for-service reimbursement.
As healthcare continues to emphasize value, quality, and total cost of care, home health providers will increasingly need to demonstrate how their services contribute to better outcomes and more efficient care delivery.
Russell discussed the importance of preparing for payment models that may place greater emphasis on outcomes across an episode of care rather than individual visits.
For home health agencies, this shift creates both challenges and opportunities.
Organizations will need reliable clinical and financial data, strong operational processes, and the ability to demonstrate their impact on quality and cost.
They will also need to understand the financial implications of participating in different payment arrangements before committing to them.
Simply entering a new network or value-based arrangement is not a strategy. Agencies must understand the requirements, evaluate the risks, and determine whether their operations are equipped to succeed.
The organizations best positioned for the future will be those that connect clinical performance, operational efficiency, and financial management.
Where Should Your Agency Start?
Your revenue cycle team can work hard to resolve denials and collect balances, but that work is more effective when the underlying contract terms are understood and reflected in your systems.
Start with these five steps:
1. Gather every contract. Obtain complete copies of your agreements, including rate schedules, amendments, provider manuals, and product participation documents.
2. Review the critical dates. Identify expiration dates, automatic renewal provisions, and advance notice requirements. Establish reminders well before each deadline.
3. Validate your reimbursement. Compare contractual rates against billing system configurations and actual payments. Investigate discrepancies and identify recurring underpayments.
4. Evaluate contract performance. Calculate realized reimbursement and compare it with your cost of care. Determine which payer relationships are supporting your financial goals and which may require attention.
5. Build a data-driven strategy. Use financial, operational, and clinical performance data to guide payer negotiations and future contracting decisions.
These steps can help leadership move from reacting to individual payment problems toward identifying the underlying issues affecting financial performance.
A Final Thought: You Cannot Manage What You Cannot See
Managed care reimbursement is too important to leave on autopilot.
A contract signed years ago may no longer reflect your agency’s needs. A payment that appears correct may be below the amount owed. A high contracted rate may produce disappointing results once reimbursement leakage and operating costs are considered.
The solution begins with visibility.
When agencies understand their contracts, validate their payments, and connect revenue cycle performance to financial strategy, they are better equipped to protect revenue and make informed business decisions.
As Hannah Vale and Joe Russell discussed on Home Health Revealed, success in managed care requires more than negotiating a rate. It requires an ongoing commitment to understanding the entire reimbursement picture.
At HealthRev Partners, we help home health and hospice agencies strengthen revenue cycle performance through expert support, technology, education, and consulting.
Our goal is to help agencies identify opportunities, address revenue challenges, and build the operational foundation needed for sustainable success.
Because the reimbursement your agency earns should support the care your patients deserve.
Continue the Conversation
This discussion is featured on Home Health Revealed, where HealthRev Partners brings together industry leaders and experts to explore the challenges, opportunities, and strategies shaping the future of home health and hospice.
Listen to the full conversation with Joe Russell of Yield Health to learn more about managed care contracting, reimbursement strategy, and the importance of actively managing your payer relationships.
Ready to strengthen your revenue cycle? Visit HealthRev Partners to learn how our team can help your agency improve billing performance, address reimbursement challenges, and build a stronger financial foundation.
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