Dana got the question on a Tuesday afternoon, in a hallway, from someone who had already made up his mind: "What would it take to just terminate them?"
She is the Director of Managed Care. She has run this plan's agreement for three renewal cycles; nearly 9 years And in that moment she understood that her job for the next two weeks was not to answer the question. It was to build the justification for an answer that had already been given.
She pulled the contract that night. Sixty-one pages. And somewhere around page nineteen she found what she was looking for, which was nothing. A payment timeliness provision with no consequence attached to missing it. An authorization turnaround expectation with no definition of what happens when it slips. A dispute process that requires her to raise issues in writing and requires the plan to do nothing in particular afterward.
Every obligation in that contract was real. Almost none of them were enforceable.
The reasons everyone gives are not reasons
Becker's Healthcare has been tracking health system exits from Medicare Advantage since 2023. This year the count is at twenty-five systems that have dropped or narrowed contracts, and the number keeps moving. The reasons cited are consistent across nearly all of them: prior authorization denials and slow reimbursement. In some cases the plan terminated first.
Read that list closely and something becomes clear. Those are not reasons to terminate. Those are descriptions of a contract that was never built to be enforced.
Prior authorization denials are a symptom. The disease is that nothing in the agreement converts a pattern of denials into a consequence for the plan. Slow reimbursement is a symptom. The disease is that the payment timeliness language sits in the contract as an aspiration rather than an obligation with a price.
When the only remedy available is the largest one, that is what gets used. Not because it is right, but because it is the only thing left in the drawer.
The failure happened three years before the hallway conversation
This is the part that is uncomfortable to say out loud, and I am going to say it anyway.
The termination decision Dana is now being asked to justify was made possible by a redline nobody fought for during the last renewal. Someone looked at a payment timeliness clause with no teeth, decided it was not the hill, and moved on to the rate conversation. That is a defensible individual decision. Repeated across four provisions and three cycles, it produces a contract that offers exactly one response to any grievance, and that response is nuclear.
I have signed agreements I later could not enforce. Every experienced contracting person has. You are managing a finite number of asks against a counterparty who is counting them, and structural terms feel abstract in the moment while rate feels concrete. So the structural terms go.
Then two years later a director stands in a hallway with no options.
Medicare Advantage now covers more than half of eligible Medicare beneficiaries. That makes the exit consequential in a way it was not five years ago. It also means the exit is being noticed, priced, and planned for by people on the other side of the table who read the same Becker's list you do.
Five questions before the word terminate
If the conversation has started at your organization, run this sequence before it reaches a board packet. It is not a defense of staying. It is a test of whether you are leaving for a reason you can defend or for a reason you ran out of alternatives to.
What did this contract entitle us to that we never enforced? Go provision by provision. Every obligation the plan owes you, and whether you have ever formally asserted it in writing. Most organizations discover they have been complaining about behavior the contract already prohibits, through channels the contract does not recognize.
Do we have an evidence file, or do we have frustration? Frustration is a feeling shared in a JOC. An evidence file is dated, quantified, and organized by provision. If you cannot produce a document that shows this plan's authorization turnaround times against the contractual standard for the last four quarters, you do not yet have an argument. You have a mood.
What is the smallest remedy that fixes this, and have we ever actually asked for it? An interest provision on late payment. A denial overturn rate above a stated threshold that triggers a joint review. A turnaround standard with a defined consequence. These are smaller asks than termination and they are almost never made, because nobody assembled Question Two.
What is our real walk-away number, and who has signed it? Patients, admissions, revenue, and the specific service lines that absorb the loss. Not an estimate produced after the decision to support the decision. A number produced before, reviewed by finance, and acknowledged by the executive who is going to be asked about it publicly.
What is the re-entry path, and what does it cost? Almost every one of these terminations ends in a new agreement eventually. The question is what position you re-enter from. Systems that leave without a defined path back tend to return on worse terms than the ones they walked away from.
If this is landing, follow me here: Kevin W. Barron, FHFMA, FACHE. What I publish is what I what I've learned over 30 years of payer-provider contracting experience.
What the exit costs that nobody counts
Termination is a one-time instrument. You can use it once with a given plan in a given market, and after you use it, the thing you spent is your credibility about ever using it again.
There is also a population that does not appear in the financial model which you must consider. The seventy-eight year old with an oncologist she has seen for nine years does not experience your negotiation as a negotiation. She experiences it as an ending. Her plan's advertised out-of-pocket protection was built around a network that no longer includes the place she gets treated. That is a real cost, it lands on real people, and it belongs in the board packet next to the revenue estimate.
None of that argues against ever walking away. Sometimes the math genuinely does not work and the honest answer is to leave. It argues against arriving at that decision by default.
What the other version looks like
The organization that runs the five (5) questions early usually does not terminate. It goes back to the plan with a specific, evidenced, and comparatively modest set of asks: put a consequence on the payment clause, define the authorization standard, agree to a joint review trigger at a stated overturn rate. Those asks land differently when they arrive attached to four quarters of documented performance rather than to a complaint.
The plan agrees to some of it. Not all. The relationship gets marginally more enforceable, and the next renewal starts from a stronger structural position rather than the same one.
That is not a dramatic outcome. It is a compounding one, which is even better.
Do this
Pull your three largest Medicare Advantage agreements this week. Mark every obligation the plan owes you that has no defined consequence attached. That list is your next renewal agenda, and it is also the reason a hallway conversation is currently your only option.
Contract termination is not a negotiating position. It is what is left when you never bothered to build one.
About the Author
Kevin W. Barron, MBA, FHFMA, FACHE is a nationally recognized healthcare contracting and payer relations executive with over 30 years of experience in healthcare finance. He is an author, speaker, and mentor to emerging leaders in healthcare finance. Follow Kevin on LinkedIn or subscribe to his weekly newsletter at https://www.KevinWatsonBarron.com
Disclaimer: This article is provided for general informational and educational purposes only. It reflects my personal views and observations based on professional experience in healthcare finance, managed care, payer relations, and revenue cycle operations. It should not be interpreted as legal, financial, regulatory, actuarial, or reimbursement advice. The content is not intended to represent the official position of my employer, any payer, provider, professional association, or other organization with which I may be affiliated. Readers should consult their own legal, financial, compliance, actuarial, or operational advisors before making decisions based on the issues discussed. Any references to payers, providers, regulations, market trends, or reimbursement practices are intended for discussion and education only and should not be construed as a statement about any specific contract, negotiation, patient matter, or confidential business arrangement.