Article
What the analysts are saying
At a Fitch Ratings webinar this week, the firm’s nonprofit hospital and health insurance leads described a payer market under strain on both sides. Kevin Holloran, who covers nonprofit health care, said he has asked roughly 200 hospital leaders whether insurer relationships are improving, and nearly all said no. Brad Ellis, who leads Fitch’s North American insurance coverage, said he expects more threats of network terminations this year and tougher negotiations overall.
The two sides start 2026 in different places. Fitch moved its nonprofit hospital outlook to neutral for 2026, while its insurer outlook has been deteriorating since June. Insurers raised marketplace premiums by an average of 15% for 2026, the largest increase since 2018, and face uncertain medical cost trends and federal Medicaid and marketplace changes. Medicare Advantage payments rise 5.06% this year, but a three-year phase-in of a risk-adjustment coding update continues to squeeze plans and risk-bearing providers.
Why the bargaining is changing
Medicare Advantage now covers more than half of Medicare beneficiaries, and hospitals report more delays and denials of service approvals in those plans. Some health systems have left Medicare Advantage networks altogether. Holloran said negotiations are increasingly focused on contract structure, faster payment and ending automatic denials rather than only on price.
For hospitals, that is a useful shift. A modest rate increase can be erased by a rise in denials or slower payment. Terms that limit administrative friction can be worth as much as a rate point and are often easier for an insurer to grant.
A negotiating checklist for 2026
- Price the friction. Quantify denial write-offs, appeal costs and days in accounts receivable by payer before talks start.
- Write enforceable terms. Seek clear timelines for prior authorization decisions, limits on retroactive denials, prompt-pay penalties and a defined dispute process.
- Know your walk-away point. Model the financial and patient-access effect of going out of network, including continuity-of-care obligations and emergency care rules.
- Prepare communications early. If talks may fail, patients, employers and physicians need plain information well before a contract end date.
- Review Medicare Advantage participation plan by plan. Compare each plan’s denial rates and payment speed with traditional Medicare.
Archive entry for Jan 10, 2026, added Nov. 11, 2026.