Private Practice: Benefits Of Dropping Insurance

Private practice therapists often face the dilemma of whether to accept insurance or switch to private pay. While the former is administratively tedious, the latter may reduce access to clients who cannot afford the fees. However, continuing to accept insurance may also lead to burnout and dissatisfaction. To stop taking insurance, therapists need to plan their communication with current insurance clients, establish their private pay fees, and market their private pay practice.

Explain the benefits of private pay vs insurance to your clients

Benefits of Private Pay vs Insurance for Clients

The benefits of private pay for clients include:

• Increased confidentiality: Private pay means clients don't have to share their information with insurance companies, allowing them to keep their therapy sessions private.
• Greater flexibility in treatment plans: Therapists can tailor sessions to the client's specific needs without adhering to insurance guidelines.
• Freedom to choose a therapist: Private pay enables clients to choose a therapist without the restrictions imposed by insurance networks.
• Direct control over fees and revenue: Clients can have more control over their healthcare decisions and finances by managing communication and payments directly with the therapist.
• Potential for reduced costs: Private practices often offer sliding scale fees or payment plans to help manage therapy costs, making private pay more accessible and appealing.

The benefits of insurance pay for clients include:

• Reduced out-of-pocket expenses: Insurance providers often cover a significant portion of therapy fees, making it more financially accessible.
• Wider range of mental health services: Insurance plans may cover a broad range of mental health services, making it easier for individuals to access the support they need.
• Convenience and peace of mind: Clients with insurance coverage can have peace of mind knowing upfront what their out-of-pocket costs will be, reducing financial uncertainty.
• Streamlined patient experience: Insurance coverage can simplify the process of finding a therapist and reduce financial barriers to care, potentially improving patient outcomes.
• Marketing and patient acquisition: Insurance companies often include in-network providers in their directories, making it easier for patients to find therapists who accept their insurance.

Prepare for credentialing

The first step in the revenue cycle is to obtain credentialing and a provider contract with insurance companies. Credentialing is a process that insurance companies use to verify your education, training, and professional experience and to ensure that you meet their internal requirements to serve as an in-network provider.

• Establish a business entity: Consider establishing a business entity such as an LLC, S-Corp, or PC to practice under and obtain a tax ID. If you are a sole proprietor, you may want to obtain a federal tax ID instead of using your Social Security Number.
• Obtain necessary licenses and insurance: Ensure that you have the required professional licenses and certifications for your state, including prescriptive authority if applicable. Obtain professional liability insurance.
• Apply for an NPI number: Get a National Provider Identifier (NPI) number for yourself individually (Type 1) and your business entity (Type 2).
• Create a CAQH profile: Set up a profile with the Council for Affordable Quality Healthcare (CAQH) and keep it up to date.
• Have a practice location: It is important to have a physical location for your practice before starting the credentialing process.
• Research insurance networks: Identify the insurance networks you want to participate with by considering which insurance companies are commonly used in your area and which companies provide the most patients in your region.

Once you have completed these steps, you will be ready to begin the credentialing process with the insurance companies you have selected. It is important to note that credentialing can be a lengthy and complex process, so it is beneficial to be well-prepared and organized before initiating the application process.

Credential with insurance companies

Credentialing with insurance companies is a complex, time-consuming process that verifies healthcare providers are qualified to receive reimbursement for services rendered. It is the process of being accepted as an in-network provider on insurance panels. The process typically involves two phases: credentialing and contracting.

Credentialing Phase

The credentialing phase is when the insurance company verifies your credentials and checks that you meet their requirements for participating in their network. They will review your education, training, and professional experience to ensure you are qualified to be an in-network provider. This phase can be tedious and time-consuming, often involving a significant amount of paperwork and follow-up. It is important to ensure that all your information is accurate and up-to-date to avoid delays in the process.

Contracting Phase

The contracting phase is where the insurance company issues a participating provider agreement that defines the terms of your participation in their network. This includes the reimbursement rates you will receive for your claims and the specific services you will provide as an in-network provider. It is important to carefully review the contract and negotiate if necessary to ensure a fair agreement.

Steps to Credentialing

• Prepare your information: Obtain your CAQH ID and update your profile to ensure it has all the correct information. This includes personal information, professional background, and practice information.
• Join the network: Complete a request to join the network on the insurance company's website. Contact the payer to follow up on your request.
• Panel determination: If the panel is open, the credentialing process can begin. Provide the requested information, such as your CAQH ID, NPI, and practice EIN.
• Reference number: Obtain a reference or ticket number from the payer to keep track of your application.
• Follow-up: Stay in frequent contact with the payer to ensure your application is processing correctly and address any issues promptly.
• Contracting phase: Once credentialing is complete, move to the contracting phase to determine your reimbursement rates and other terms.
• Fee schedule: Review the fee schedule included in the contract to ensure it is fair and reasonable.
• Contract execution: Sign the contract and send it back to the payer.
• Participation verification: Verify your participation with the payer and update your billing system with their information.
• Maintain credentials: Remember to renew your credentials as required and keep your information up-to-date to maintain your in-network status.

Tips for Credentialing

• Consider using credentialing software or hiring a billing professional to help manage the process, especially if you plan to accept multiple insurance plans.
• Be prepared for a lengthy process and set aside dedicated time to work on your applications and follow-up.
• Keep accurate and organized records of all your credentials, contracts, and relevant information.
• Regularly review and update your information with insurance companies to maintain your in-network status and eligibility for reimbursement.
• Remember that credentialing is an ongoing process and may require periodic renewal and updates.

By following these steps and tips, you can successfully navigate the credentialing process and become an in-network provider with insurance companies.

Choose to be an out-of-network provider

Being an out-of-network provider means you can still treat clients who are covered by a particular insurance company but are not on their panel of approved therapists. In this case, the client pays you directly and then seeks reimbursement from their insurer. This option gives you more freedom to set your own fees and avoid the hassle of insurance company bureaucracy.

However, it can be more challenging to attract clients as a private pay practitioner. You will need to invest time and money in marketing your practice, including creating a website and getting your practice listed on therapist directories. You will also need to explain to clients the benefits of paying out-of-pocket for therapy, such as increased privacy and more flexible treatment options.

If you decide to go down this route, it's important to establish your fees and stick to them. Research the fees of other private pay providers in your area with a similar niche and reputation to determine a competitive rate. Also, consider your workload and how many clients you can realistically see per week to inform your pricing.

Another option for out-of-network providers is to offer a "superbill". This is a detailed receipt of the session that the client can submit to their insurance company for reimbursement. This option allows you to charge your full fee while giving the client the opportunity to get reimbursed later.

Whether you decide to be an in-network or out-of-network provider, it's essential to carefully consider the pros and cons of each option and choose what works best for your private practice.

Decide your private pay fees

When deciding on your private pay fees, there are several factors to consider. Here are some key points to help you determine the appropriate fees for your private practice:

• Market Analysis: Research the rates of other private pay providers who offer similar services to your target niche. This will give you a sense of the standard pricing in your industry and help you remain competitive.
• Brand Recognition: If you have strong brand recognition and a solid referral network, you may be able to charge higher fees. Your reputation and people's awareness of your services can allow you to set higher rates compared to less established practitioners.
• Lifestyle Expectations: Consider your lifestyle expectations and financial obligations. Calculate the income you need to sustain your business, cover personal expenses, and meet any other financial commitments, such as student loans or family responsibilities. Ensure that your fees align with your desired standard of living.
• Workload and Capacity: Determine your capacity to see clients. Some therapists can manage a higher caseload than others. Decide on the number of clients you can realistically handle each week and set your fees accordingly. Remember that a lower number of clients may be preferable to maintain a healthy work-life balance.
• Location and Demographics: Consider the demographics of your practice location. If you are in an affluent area, you may be able to charge higher fees as you cater to a privileged clientele. On the other hand, if you are in an area with lower average incomes, you may need to set more affordable rates to ensure your services are accessible to your target population.
• Specialty and Expertise: Evaluate your specialty and expertise in the field. If you have a niche specialization or are highly experienced, you may be able to command higher fees. Your unique skills and knowledge can be a factor in setting your rates.
• Ethical Considerations: Reflect on the ethical implications of your fees. Consider whether your rates align with your values and the accessibility you want to provide. Remember that higher fees may limit access to clients who cannot afford them, so finding a balance between your financial needs and the needs of your clients is essential.
• Sliding Scale: Think about offering a sliding scale or payment plans. This approach can make your services more accessible to clients with financial constraints while still allowing you to maintain a sustainable income. Be sure to set clear boundaries and communicate your payment policies effectively.
• Comparison with Insurance Rates: Compare your private pay fees with the rates set by insurance companies. While you have the freedom to set your own rates, be mindful that insurance companies often dictate lower reimbursement rates. You can use this information as a reference point but remember that you are now eliminating the administrative burden and delays associated with insurance companies.

Remember, there is no one-size-fits-all approach to setting private pay fees. It is a complex decision that requires careful consideration of multiple factors. The key is to find a balance between your financial needs, the needs of your clients, and the unique characteristics of your private practice.

Frequently asked questions