Deciding to Contract with a Payor: Joining "the Network"

Alex Yarijanian [00:00:01]

Picture this: you’re three months into building your telebehavioral health operation in a new state. You’ve got your clinicians credentialed, your tech stack running, and your compliance program buttoned up.

Then an email lands in your inbox from a regional Medicaid managed care plan — one of the big ones — and they want to talk about getting you contracted into their network.

Your first instinct is, “Great, let’s do it. More access, more members, more revenue.”

But then someone on your team pulls up the contract. It’s 40 pages. There’s a prior authorization matrix in the appendix that covers 43 service codes. There’s a data-sharing provision on page 31, and you’re not sure how it interacts with your 42 CFR Part 2 obligations. The fee schedule is fine — not great, but fine.

Now the question isn’t, “Can we do this?” The question is, “Should we? And on what terms?”

That’s what we’re talking about today.

Welcome to the Value-Based Care Advisory Podcast, powered by Carenodes. I’m your host, Alex Yarijanian.

This show is for healthcare operators, investors, and practitioners who are building in the value-based care space and want to understand the business, policy, and market dynamics that shape outcomes.

Today’s episode is about network decisions: whether to contract with a payer, how to think about it strategically, and what most practices get wrong when they approach it.

Let’s get into it.

I want to start by reframing what we’re talking about when we talk about payer contracting.

Most practices treat it as a rate negotiation: get in, negotiate the rates, sign the contract, and you’re done.

That framing is incomplete. It’s one of the reasons practices end up in contracts that look fine on paper but create real operational drag within 12 to 18 months.

The network decision is more accurately described as a market entry and operational alignment decision that happens to include a rate negotiation inside it.

Once you’ve made it, you’re largely locked in. Credentialing takes time. Patient panels expect continuity. Notice periods can run 90 days or more. Getting out isn’t clean.

So the discipline I want to encourage is this: treat every payer contracting decision like a significant strategic commitment — because it is one — and build your evaluation framework accordingly.

Here’s the core structure I use. There are really six dimensions you need to evaluate before you sign anything.

I’m going to walk you through each one.

Dimension One: Market Access and the Concentration Reality

Start with this question: how many members does this payer actually cover in my target market?

In a lot of markets, this isn’t a subtle analysis. Health insurer concentration is high. There are regions where a single plan covers 60% or 70% of the commercially insured and Medicaid managed care members.

In those markets, staying out of network isn’t a strategic position. It’s a decision to lock yourself out of the majority of the addressable population.

For telebehavioral health operators specifically, you need to map payer penetration against your service geography, particularly against HPSA-designated counties — Health Professional Shortage Areas.

If you’re serving Medicaid populations, the density of payer membership in your geographic footprint is the starting point for any market access conversation.

The reason this comes first is that it shapes your negotiating posture.

If you’re operating in a market where one plan dominates and you need members to hit your volume targets, you’re not negotiating from a position of unlimited leverage. You need to understand that clearly before you walk into the room.

Dimension Two: Understand Your Value Proposition

Okay, so let’s say you need this payer. But what do they need from you?

This is where most practices undersell themselves.

Your value proposition is a negotiating asset.

In behavioral health particularly, there are real differentiators that payers genuinely care about:

• Clinician availability and time to appointment
• Licensure coverage, especially under PSYPACT or the ASWB Compact for multi-state telebehavioral health delivery models
• Measurement-based care infrastructure
• Outcomes data
• HEDIS quality performance
• CAHPS scores

If you can demonstrate that your organization closes gaps in care that the payer is being measured on — and you can show that data — it changes the conversation from, “What rate will you accept?” to, “What does this partnership accomplish for both of us?”

Know your value proposition before you negotiate.

Dimension Three: Operational Alignment

Operational alignment is chronically underweighted, and it’s where margin disappears quietly over time.

Contracting with a payer isn’t just an agreement about reimbursement. It’s an agreement to operate inside their administrative infrastructure.

That means their prior authorization processes. You need to know the volume of services that will require prior authorization and whether that process is electronic, manual, or something else entirely. The staffing implications are very different.

It also means paying attention to their credentialing and recredentialing cycles. It means understanding specific requirements around clearinghouses, benefit managers, and third-party arrangements.

Operational alignment goes further and further.

Before you sign, map the operational requirements against your existing workflows.

What do you already have? What would you need to buy or build? What is the cultural cost of adapting to their process? Are there real costs that don’t show up in the fee schedule?

These are the questions I want you to think about.

Dimension Four: The Payer’s Past Performance

Talk to your peers. Seriously.

A contract is only as good as the payer’s claims adjudication practices, and that information is not in the contract itself.

You want to understand:

• How accurately do they pay on first submission?
• What are the dispute resolution timelines?
• How do they handle audits?
• What does the appeal process look like in practice — not on paper?

A payer with a favorable rate sheet who systematically underpays or delays payment is worse than a payer with a lower rate who processes claims cleanly and quickly.

Actual collected revenue — not billed revenue or contracted revenue — is what pays your overhead.

So you want to be careful with that.

Dimension Five: Physician Profiling and Measurement Programs

This one surprises people when they first encounter it.

A lot of payers operate cost and quality profiling programs that rank or tier physicians based on their performance data. Those tiers aren’t just internal. They often affect patient cost-sharing.

A physician in a preferred tier might be subject to lower patient copays, which is a real steerage mechanism. It really does drive volume. Patients choose lower out-of-pocket costs.

Before you sign, understand:

• What metrics does this payer use to profile physicians?
• How are the results reported?
• Is there a dispute resolution mechanism?
• Does the dispute process have any teeth?
• How might your historical data position you for a conversation like this?

This is especially important for behavioral health, where utilization patterns and measurement methodologies are still evolving and are not always well suited to the nature of the care being delivered.

As a provider, you have an additional burden to make sure you’re aligning operationally and identifying physician profiling and measurement programs from the beginning.

Dimension Six: Data-Sharing Requirements

Read page 31 of the contract. Actually read it.

As value-based arrangements have expanded, payer contracts increasingly include provisions requiring data access. This can include clinical data, encounter data, and outcomes measures.

The FHIR-based interoperability push has added another layer of complexity.

In behavioral health, you also have the specific overlay of 42 CFR Part 2, which governs substance use disorder records and creates real constraints on what can be shared, with whom, and under what conditions.

The intersection of payer data-sharing requirements, HIPAA, and 42 CFR Part 2 is not a hypothetical risk. This is real compliance exposure that behavioral health operators need to assess carefully before agreeing to data-sharing terms.

Separately, evaluate the privacy and security posture of any data-sharing agreement.

Where does the data go? Who has access? What are your obligations if there’s a breach?

Identify the answers to these questions before you sign.

The Out-of-Network Alternative

Now let me spend a few minutes on the out-of-network alternative, because I want to be honest about what it does and doesn’t offer.

Some practices stay out of network intentionally, particularly in certain specialty markets where the practice can command premium rates on a self-pay or direct-pay basis.

This can be a viable model. I’m not dismissing it. But you need an honest accounting of the trade-offs.

Out of network means payment at what’s called UCR — usual, customary, and reasonable rates — not your billed charges and not in-network contracted rates.

It means limits on what your patients can actually recover from their own plans.

It means a collection burden that falls on your practice, along with the staff time and friction that come with it.

It also means operating in an increasingly complex regulatory environment. The No Surprises Act materially changed the out-of-network landscape, particularly for behavioral health providers in certain care settings.

Understanding where your exposure sits under that framework before you assume out of network is a clean alternative is essential.

For most behavioral health operators that are scaling and trying to serve large populations across multiple markets, staying out of network with major payers is not a growth strategy. It’s a constraint.

The question isn’t whether to join payer networks. The question is how to do it well.

Practical Takeaway

Let me bring this back to the practical takeaway.

The practices that negotiate the best payer contracts — and more importantly, the ones that are still satisfied with those contracts two years later — are the ones that come in with clarity on all six of these dimensions before they sit down at the table.

They know their market access reality. They know their value proposition and can articulate it with data. They’ve mapped out the operational requirements and costs of alignment. They’ve done diligence on the payer’s track record. They understand the profiling program and where they’re likely to land within that structure. And they’ve read the data-sharing terms carefully.

That preparation changes what you ask for, what you’re willing to accept, and when walking away is the right call.

One more thing: if a contract involves significant value-based payment terms, risk-sharing arrangements, or complex data provisions, get experienced healthcare counsel involved in the review.

Not because the contract is inherently dangerous, but because the nuances in those provisions compound over time. The cost of getting it right upfront is much lower than the cost of unwinding a bad arrangement later.

Payer contracting is the beginning of an operational relationship, not the end of a negotiation.

Treat it that way.

That’s a wrap on today’s episode.

If this was useful, share it with an operator or administrator who’s navigating a contracting decision right now. This is exactly the kind of thing that’s hard to find clearly laid out in one place.

You can find us at vbcapodcast.com. And if you want to go deeper on any of the topics we cover — Medicaid managed care, value-based payment models, telebehavioral market strategy — subscribe to the Substack and let me know on our website.

Until next time.