The fee schedule conversation nobody wants to have.

There is no part of a network build that gets more avoided and more mishandled than the fee schedule conversation. Plans either lead with a low offer and act surprised when providers push back, or they open high to avoid conflict and end up with a cost structure that doesn't work. Neither approach is a strategy — it's improvisation, and it tends to produce contracts that one side resents.

The fee schedule conversation matters beyond the numbers on the page. How you have it tells the provider everything about what the relationship is going to be like. Providers talk. They compare notes with colleagues, with their billing staff, with the hospital where they have privileges. The way you negotiate your first contract with a practice sets the tone for every conversation you'll have with that practice for the next ten years.

Start with the right anchor

Medicare rates are the standard reference point in most fee schedule negotiations. Not because Medicare rates are the right target — they often aren't, particularly for certain specialties and in certain markets — but because they are publicly available, objectively verifiable, and give both parties a shared baseline.

Coming to the table with a specific percentage of Medicare rates is not a weakness — it is professionalism. It signals that you have done the work and that the conversation is going to be grounded in data, not in whoever blinks first. Most practices have their own idea of what a reasonable Medicare percentage looks like for their specialty and market. If you open with a number that is in the realistic range, you will have a better conversation than if you open with a number that signals you haven't looked at the market.

Know your floor before you walk in. There is a rate below which the math doesn't work for your cost structure — below which this provider relationship either costs you money or creates utilization problems you can't absorb. Know that number. Do not offer it as an opening; do offer it as a real limit. Walking away from a contract because the rate didn't work is legitimate. Walking away from a contract because you couldn't explain why is not.

Understand what the provider is actually evaluating

Providers are not just evaluating the rate. They are evaluating the full picture of what being in your network looks like — the prior authorization burden, the claims payment history, the credentialing experience, the speed of issue resolution. A plan with a slightly lower rate but a clean reputation for paying claims on time and not burying providers in PA requests is a better deal for many practices than a higher-paying plan with a difficult administrative relationship.

If you are a new plan without a claims history, this is a legitimate vulnerability. The provider is being asked to accept a rate from an organization that hasn't yet demonstrated that it can pay cleanly. Acknowledge that. Talk about how you plan to build that track record, what your PA protocols look like, and what the provider's escalation path is if something goes wrong. That conversation builds more trust than a rate negotiation does.

Specialty rates require specialty homework

Primary care negotiations are relatively straightforward. Specialty negotiations are not. Behavioral health, oncology, orthopedics, and cardiology each have their own market dynamics — different levels of demand, different administrative burdens, different overhead structures. Offering a behavioral health provider the same Medicare percentage you used for your primary care contracts is a mistake.

Before you enter a specialty negotiation, do the homework: what are other plans paying in this market for this specialty? What is the procedure mix for this practice, and how does your proposed rate translate to their actual revenue per visit? A cardiology practice doing a lot of interventional work has a very different financial picture than one doing primarily office visits. The rate conversation should reflect that.

Don't give concessions you'll regret

Under time pressure — and network builds are almost always under time pressure — it is tempting to give a rate concession to close a contract that's been stuck for three weeks. Sometimes that's the right call. More often it creates two problems: it sets a precedent for what that practice expects from you at renewal, and it signals to other practices in the area (who will find out) that your rates are negotiable.

If you are going to move on rate, move deliberately and document why. Was it a specialty adequacy gap in a specific county where you had no other option? Say that. Was it a high-volume practice where a small rate concession was worth the volume? Say that too. Rate decisions that are made for clear business reasons are defensible at renewal. Rate decisions made because the build was stalling are not.

You will renegotiate this contract in three years. The way you handle the first negotiation determines whether that renegotiation is a conversation or a standoff.

Close it and document it

Once you have reached a rate agreement, close it quickly and cleanly. Get the contract executed — not “agreed in principle,” not “the provider is reviewing,” but signed and returned. Many builds have providers that were “verbally committed” for weeks before anyone noticed the contract was never executed. Verbal commitments don't count for adequacy.

Document the rate, the effective date, the term, and any performance or carve-out provisions in a way that your internal team can read and understand when you hand the network off. The person who renegotiates in year three may not have been in the original conversation. Leave them the context they need.