Canceling Payer Contracts: When & How to Drop an Insurance Provider
Canceling payer contracts is a big move, but sometimes, it’s the best decision for your practice. If reimbursements are too low or negotiations aren’t working, staying in-network could hurt your bottom line. Here’s what to expect when dropping a payer and how to handle the transition smoothly.
Maybe a payer won’t renegotiate fee schedules, or their reimbursements are so low that you’re actually losing money by seeing their patients. Whatever the reason, sometimes it’s better to cut ties with an insurance provider entirely.
So, what happens when you cancel a payer contract? You’ll no longer be considered in-network with that insurance company. Patients covered by that payer will have to either pay cash or use their out-of-network benefits—if they even have them.
Key Takeaways:
- Canceling a payer contract means you’ll no longer be in-network, impacting patient costs.
- Patients may face higher out-of-network costs—educate them early to avoid frustration.
- Read your contract carefully for termination procedures, required notice periods, and submission guidelines.
- Notify patients in advance via letters, emails, and front desk staff.
- Offer self-pay pricing, educate on out-of-network benefits, or consider a membership model.
- Double-check pending claims and remove the payer from billing systems before the termination date.
- If a payer tries to renegotiate, weigh the offer carefully before deciding.
How Out-of-Network Benefits Work (And Why Patients Might Be Upset)
Here’s the tricky part: Out-of-network benefits are completely separate from in-network benefits. Think of them like two different buckets.
Let’s say a patient has been working towards their deductible using in-network providers. If they see you after you cancel your contract, their payments now apply to their out-of-network deductible instead. That means they’re starting over, and their insurance company won’t combine the two.
Most patients don’t realize this until they get hit with a much higher bill. Suddenly, instead of paying 30% of the cost, they might have to pay 50% or more out-of-pocket. And that’s if their insurance even offers out-of-network coverage. Many plans don’t.
The only way to know for sure? Check the payer’s portal, call the insurance company, or ask the patient to confirm their benefits. And honestly, asking patients to check their own coverage is a great way to educate them about how their insurance actually works.
Steps to Cancel a Payer Contract the Right Way
If you’ve weighed the pros and cons and decided to cancel a payer contract, the first thing you need to do is read your original contract.
That contract will tell you:
- How to submit your cancellation (written notice, email, certified mail, etc.)
- How much notice you need to give (usually 60-90 days)
- Who to send the request to
If your contract says you need to submit a 90-day notice, for example, you’d send it on the first of the month, and your participation would officially end three months later.
When writing your cancellation letter, be specific about why you’re leaving. If you’ve tried negotiating rates or if you’re actually losing money by seeing patients under that plan, say so. If enough providers drop out, insurance companies might be forced to improve their rates in the future.
What If You Don’t Have a Copy of Your Contract?
Let’s be real—most people don’t keep their contracts organized. If you don’t have a copy on hand, contact provider relations at the insurance company and request the executed contract.
Why the executed contract? Because that’s the version that was signed by both you and the insurance company. That’s the one that actually matters.
If you suspect the payer isn’t holding up their end of the contract, your agreement should also outline the steps you need to take to address it. Whether you’re negotiating fees, trying to leave, or filing a complaint, the contract is always your first reference point.
Notifying Patients: Transparency is Key
Once you’ve set a termination date with the payer, let your patients know ASAP. You don’t want them finding out when they show up for an appointment and get slapped with a surprise bill.
Here’s what to include in your patient notification:
- The exact date you’ll no longer be in-network
- Whether or not their insurance offers out-of-network benefits (if unsure, tell them to check their plan)
- Your self-pay rates for those who want to continue seeing you
- Any options they have for transitioning to a new provider (if applicable)
Some practices send out formal letters, while others prefer emails, texts, or in-office signage. The best approach? Do all of the above.
Your front desk staff should also be trained to mention the change during scheduling calls. The goal is to make sure no patient is caught off guard.
Preparing for the “Why Are You Leaving?” Question
Patients will ask why you’re leaving their insurance plan. And while you don’t need to go into full financial detail, having a simple, clear answer helps.
Here’s an example:
“Unfortunately, we’ve had to make the difficult decision to leave [Payer Name] due to ongoing reimbursement issues. Our goal is to provide the best possible care to our patients, and at this time, staying in-network with [Payer Name] is no longer sustainable for our practice.”
Keep it professional but firm. You don’t need to justify your decision—just explain it clearly.
Dealing with Patient Retention After Canceling a Payer Contract
Some patients will decide to leave, but many will stay—if you give them a reason to.
Offer Competitive Self-Pay Pricing
If you want to keep patients who no longer have coverage with you, consider offering a transparent and reasonable self-pay option.
For example:
| Service | Self-Pay Rate |
|---|---|
| Office Visit | $100 |
| Follow-Up Visit | $75 |
| Annual Physical | $150 |
Patients appreciate knowing exactly what they’ll pay without hidden costs.
Educate Patients on Out-of-Network Benefits
Some patients can still get partial coverage through their out-of-network benefits. Guide them on how to check their policy.
They’ll need to ask their insurance:
- Do I have out-of-network benefits?
- What percentage of the visit will be reimbursed?
- What is my out-of-network deductible?
You can even provide a superbill—a detailed receipt they can submit to their insurance for reimbursement.
Consider a Membership or Concierge Model
For patients who want to keep seeing you but can’t afford out-of-pocket costs, a monthly membership model might work. Instead of paying per visit, they pay a flat fee for access to services.
Example:
| Plan Type | Monthly Fee | Includes |
|---|---|---|
| Basic | $50 | Unlimited email support, discounted visits |
| Premium | $100 | 1 visit/month, direct phone access |
This won’t work for every practice, but some patients prefer a predictable monthly fee over surprise medical bills.
What Happens if a Payer Tries to Negotiate?
Once you send your cancellation letter, don’t be surprised if the payer suddenly becomes interested in negotiating. They might offer higher reimbursement rates or better contract terms to keep you in-network.
If that happens, take a hard look at what they’re offering:
- Does it actually improve your financial situation?
- Are the terms better than before, or is it just a temporary fix?
- Would you even consider staying if they had offered this earlier?
Sometimes, a payer won’t budge until you’re ready to walk away. If they come back with a legitimate improvement, it might be worth reconsidering.
But if they’re just offering minor changes that don’t address your core concerns? Stick to your decision.
Notifying Patients: Transparency is Key
Once you’ve set a termination date with the payer, let your patients know ASAP. You don’t want them finding out when they show up for an appointment and get slapped with a surprise bill.
Here’s what to include in your patient notification:
- The exact date you’ll no longer be in-network
- Whether or not their insurance offers out-of-network benefits (if unsure, tell them to check their plan)
- Your self-pay rates for those who want to continue seeing you
- Any options they have for transitioning to a new provider (if applicable)
Some practices send out formal letters, while others prefer emails, texts, or in-office signage. The best approach? Do all of the above.
Your front desk staff should also be trained to mention the change during scheduling calls. The goal is to make sure no patient is caught off guard.
Preparing for the “Why Are You Leaving?” Question
Patients will ask why you’re leaving their insurance plan. And while you don’t need to go into full financial detail, having a simple, clear answer helps.
Here’s an example:
“Unfortunately, we’ve had to make the difficult decision to leave [Payer Name] due to ongoing reimbursement issues. Our goal is to provide the best possible care to our patients, and at this time, staying in-network with [Payer Name] is no longer sustainable for our practice.”
Keep it professional but firm. You don’t need to justify your decision—just explain it clearly.
Dealing with Patient Retention After Canceling a Payer Contract
Some patients will decide to leave, but many will stay—if you give them a reason to.
Offer Competitive Self-Pay Pricing
If you want to keep patients who no longer have coverage with you, consider offering a transparent and reasonable self-pay option.
For example:
| Service | Self-Pay Rate |
|---|---|
| Office Visit | $100 |
| Follow-Up Visit | $75 |
| Annual Physical | $150 |
Patients appreciate knowing exactly what they’ll pay without hidden costs.
Educate Patients on Out-of-Network Benefits
Some patients can still get partial coverage through their out-of-network benefits. Guide them on how to check their policy.
They’ll need to ask their insurance:
- Do I have out-of-network benefits?
- What percentage of the visit will be reimbursed?
- What is my out-of-network deductible?
You can even provide a superbill—a detailed receipt they can submit to their insurance for reimbursement.
Consider a Membership or Concierge Model
For patients who want to keep seeing you but can’t afford out-of-pocket costs, a monthly membership model might work. Instead of paying per visit, they pay a flat fee for access to services.
Example:
| Plan Type | Monthly Fee | Includes |
|---|---|---|
| Basic | $50 | Unlimited email support, discounted visits |
| Premium | $100 | 1 visit/month, direct phone access |
This won’t work for every practice, but some patients prefer a predictable monthly fee over surprise medical bills.
What Happens if a Payer Tries to Negotiate?
Once you send your cancellation letter, don’t be surprised if the payer suddenly becomes interested in negotiating. They might offer higher reimbursement rates or better contract terms to keep you in-network.
If that happens, take a hard look at what they’re offering:
- Does it actually improve your financial situation?
- Are the terms better than before, or is it just a temporary fix?
- Would you even consider staying if they had offered this earlier?
Sometimes, a payer won’t budge until you’re ready to walk away. If they come back with a legitimate improvement, it might be worth reconsidering.
But if they’re just offering minor changes that don’t address your core concerns? Stick to your decision.
Double-Check Your Billing & Claims Before the Cutoff
Just because you’ve canceled a payer contract doesn’t mean your work with them is over. Outstanding claims and denials can still pop up even after your official termination date.
Here’s what to do:
- Make sure all pending claims are processed before the contract ends. If the payer still owes you money, follow up aggressively.
- Check for any unpaid or denied claims—appeal anything necessary while you’re still in-network.
- Verify the exact termination date with the payer (get it in writing!) so you don’t accidentally submit claims past the deadline.
After your termination date, remove that payer from your billing system to avoid any accidental submissions.
Updating Your Practice’s Online & Offline Information
Now that you’re no longer in-network, update every place your practice is listed. You don’t want patients (or your staff) mistakenly thinking you still accept that insurance.
What to Update
- ✅ Your website – Remove the payer from your “Accepted Insurance” page.
- ✅ Google My Business – Update your profile to reflect insurance changes.
- ✅ Third-party directories – If your practice is listed on sites like Zocdoc or Healthgrades, make sure they no longer show that you accept this payer.
- ✅ In-office signage & paperwork – Update patient intake forms and front desk scripts to reflect the change.
- ✅ Staff training – Ensure your team knows how to handle questions about the payer and can confidently explain out-of-network or self-pay options.
What If a Patient Complains About the Change?
No matter how well you communicate the transition, some patients will be upset. They may not understand why you’re leaving their insurance or how out-of-network benefits work.
If a patient pushes back, stick to the facts and be empathetic:
“I completely understand this is frustrating. Unfortunately, our practice was unable to continue working with [Payer Name] due to financial constraints. We still want to make care accessible, so we’ve set up self-pay options and can help you check if you have out-of-network benefits.”
Most patients just need clear information and reassurance. Some will leave, but many will stay if they feel valued.
FAQ: Canceling Payer Contracts
How do I officially cancel a payer contract?
To cancel a payer contract, review your agreement for termination procedures. Most contracts require written notice (via mail or email) and a 60-90 day notice period. Be sure to send your request to the correct department and confirm receipt to avoid any misunderstandings.
What happens to my patients once I leave a payer’s network?
Patients with that insurance will either need to pay cash for visits or use their out-of-network benefits (if available). Out-of-network benefits often mean higher out-of-pocket costs for the patient, so it’s crucial to notify them early and offer alternative payment options.
How should I notify patients about my contract cancellation?
Send letters, emails, and text notifications to affected patients well in advance. Update your website, intake forms, and office signage to reflect the change. Train your staff to explain the transition clearly and guide patients on self-pay rates or out-of-network benefits.
Can an insurance company negotiate after I submit my termination request?
Yes! Sometimes, payers only consider renegotiation after you threaten to leave. If they offer improved reimbursement rates, evaluate whether the new terms make financial sense. However, if they only provide minor changes, stick to your decision and move forward with contract cancellation.
What should I do if I don’t have a copy of my payer contract?
Contact the insurance company’s provider relations department and request the executed contract (the version signed by both parties). This document will outline termination procedures, notice periods, and any penalties for early withdrawal. Always keep a copy of your contracts for future reference.
Will canceling a payer contract hurt my practice financially?
It depends on the payer’s reimbursement rates and the percentage of your patient base covered by them. If a payer consistently underpays or denies claims, canceling may actually increase profitability by allowing you to focus on higher-paying contracts or self-pay patients.
What should I do if patients complain about my contract cancellation?
Be empathetic and clear in your explanation. Let them know the decision was necessary due to low reimbursements or financial sustainability. Offer solutions like self-pay options and guide them in checking out-of-network benefits. Most patients just need reassurance and a plan moving forward.
How do I handle unpaid claims after canceling a payer contract?
Before your termination date, follow up on all outstanding claims and appeals. Confirm with the payer that no pending payments remain. After termination, remove the payer from your billing system to avoid accidental claim submissions. If issues arise, work with provider relations to resolve them.
Can I rejoin a payer’s network after canceling my contract?
Yes, but recredentialing can be a lengthy process. Some payers may impose a waiting period before allowing providers to reapply. If you anticipate wanting to rejoin in the future, negotiate terms before leaving or ensure you maintain good relations with the payer.
Should I consider a membership or concierge model after canceling a payer contract?
If many of your patients prefer to stay but can’t afford out-of-pocket costs, a membership model may be a good option. Offering monthly subscription plans for routine visits can provide predictable income and keep patients engaged with your practice despite leaving their insurance network.
Final Steps Before Your Payer Contract Ends
Before your termination date, double-check everything:
✅ Confirm the payer has processed your termination (get it in writing!)
✅ Remove them from your website, intake forms, and billing system
✅ Notify your billing staff to stop submitting claims to that payer
✅ Make sure all outstanding claims are settled before your contract officially ends
The last thing you want is a patient thinking you’re still in-network when you’re not.
Final Thoughts: Is Canceling a Payer Contract Worth It?
Canceling a payer contract is a tough decision, but for many practices, it’s the right one. If an insurance company isn’t paying fair rates, refusing to negotiate, or making billing a nightmare, staying in-network might not be worth the hassle.
By handling the transition strategically and transparently, you can minimize patient loss and build a stronger, more profitable practice that doesn’t rely on low-paying insurance contracts.