Insurance Contracts 101

We have a reputation. It is true. We have a reputation as the gals who help people get off of insurance panels. In fact, some people talk to us and say "we know you hate insurance." While the former is partially accurate, the latter is not even remotely accurate.

Our goal is to help educate therapists in private practice to be informed and successful business owners. Sometimes, insurance is a great fit for a private practice, sometimes it is not. Taking insurance in your practice is entering into an ongoing relationship with the insurance company. And like any good therapist- we believe you should enter relationships after clear communication! 

Today we want to help clarify one aspect of entering into an insurance relationship: reading your contract. One of the most common issues we've seen, is therapists being surprised by the terms of their contract, many times long after signing the contract. Your contract, and any documents it references are the basis for your relationship and clarify SO much about the process. Let's review a few of the important things to read and understand (preferably BEFORE entering into an agreement). Understanding the requirements can allow you to enter into a beautiful, mutually beneficial relationship with a great insurance company... or maybe help you avoid an unhealthy relationship with an insurance company that doesn't meet your needs. 

(Side note: I am SO tempted to go make some fun references to dating, marriage, etc. in more detail- but it would make this SO much longer... just know I am making fun jokes in my mind!) 

How MUCH Are You Getting Paid? 

Ok- this is a relatively obvious one. However, sometimes in the hub-bub of the process after spending a dozen hours (or more) on the process of getting added to a panel you can be in a rush to sign and not check that important detail. 

In some cases, thankfully fewer, the rate might also not be completely clear. Do not make any assumptions based on what colleagues have been paid, or your old agency was paid for sessions. Be VERY sure of what the rate is so you can work that rate into your business plan, or determine if the rate is workable.. 

HOW are you getting paid? 

"Your contracted rate is $99 for up to 3 sessions for the covered employee." What does that mean? What are you getting paid for? In this particular example (a real world example)- you are getting paid a FLAT RATE of $99 to work with their covered employee. So, whether you do one 50-minute session, or three 50-minute sessions- you still get paid a flat $99. Many therapists mis-read statements like this because let's be honest- it is unclear and a bit misleading! If there is ANY ambiguity in the wording be sure to talk to your account representative and clarify how exactly they are defining the terms. 

What services are reimbursed? 

This is where things can get VERY tricky for both the therapist, and the client. Here is a non-exhaustive list of some of the questions you might want or need to ask the specific insurance company regarding what and how services are covered: 

  • Are only medically necessary services covered? Meaning- does the client needs to have a relevant and active DSM diagnosis to be receive services? 
  • Are V-codes covered? Related to the above- some might consider a V-code a diagnosis- but many insurance companies do not. 
  • Is traditional couple's therapy covered? Meaning, can you use a CPT code for couples and family therapy? 
  • Does the insurance company allow couple's therapy- but require it to be billed as individual therapy under one person's name and diagnosis? 

You might also want to ask yourself some questions about the work you do, and whether it meshes with the requirements of a particular insurance company. 

  • Do I focus on preventative work where people would be coming in pre-diagnosis? 
  • Do my clients normally come for help with a diagnosis that is currently causing clinically significant distress or impairment in social or occupational function? 
  • Do I have the skills, or am I willing to learn the skills to ensure the clinical case file clearly documents the symptoms, diagnosis, treatment plan, etc. that is required to prove that the person qualifies for the covered service? (And remember this isn't a one-time requirement.) 

Who is Actually Covered Under This Contract? 

It used to be that somebody said I have a Blue Cross and we knew what that meant! Now, there are many carve-outs and moving parts that could mean that your contract with Blue Cross doesn't allow you to see everyone who has Blue Cross. Be sure you understand what plans are, and are not covered. Also, understand that they may give you options to see groups of clients under their plan that may be reimbursed at a different rate- sometimes as low as 50% of the standard rate you'd get paid through that contract. 

What Is the Process for Seeing Insurance Clients? 

The process for seeing clients and getting reimbursed is usually covered within the contract or the manuals it references. It is extremely important to understand that there may be a lot of moving parts. 

  • How Do I Ensure a Client is Covered for Services? 
  • Does this insurance plan actually pay the claims- or does another somebody "administer" the program? 
  • Will I Be Notified if the Insurance Plan Lapses? 
  • What if a Client's Plan Gets Cancelled Retroactively? 
  • How long does the insurance company have to change their mind? 
  • What is the appeal process? 
  • Are you allowed to bill for no-shows and late cancellations? 
  • Can you charge your full fee if a client is covered by the plan? 

I know it might feel like a lot if you haven't taken insurance before. It doesn't mean that insurance isn't doable or couldn't work for your practice- but there are a lot of moving parts! Give yourself time to learn this process and get good at it. Or, consider outsourcing your insurance billing- but still realize you need to ultimately understand much of this to ensure things flow smoothly and your biller has the information they need in a timely manner. 

Alright community- I know this isn't an exhaustive list by ANY means! Share your biggest lessons in taking insurance below! Let's help one another out! What was the most surprising thing you learned after reading your contract? 

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Miranda Palmer

I have successfully built a cash pay psychotherapy practice from scratch on a shoestring budget. I have also failed a licensed exam by 1 point (only to have the licensing board send me a later months later saying I passed), started an online study group to ease my own isolation and have now reached thousands of therapists across the country, helped other therapists market their psychotherapy practices, and helped awesome business owners move from close to closing their doors, to being profitable in less than 6 weeks. I've failed at launching online programs. I've had wild success at launching online programs. I've made mistakes in private practice I've taught others how to avoid my mistakes. You can do this. You were called to this work. Now- go do it! Find some help or inspiration as you need it- but do the work!