How to Establish a Private Practice, Part 3: Insurance Panels

Once you've made decisions about when and where to start your practice, it's time to think about how you're going to get paid.

Some therapists choose not to join insurance panels. Some only accept self-pay clients, with or without a sliding scale. This saves them the hassle of negotiating with insurance companies, but it does have a down-side. It tends to require more marketing, banks on a well-established reputation for excellence, and narrows one's clientele. It also seems likely that, with the Affordable Healthcare Act increasing the availability of health insurance, most people will be buying insurance, and therefore likely want to use that insurance to pay for treatment whenever possible.

There are some alternatives when therapists do not want to join panels. Some require clients to pay them directly for services, but give clients a receipt which they can submit to their insurer for reimbursement. Others will accept insurance that includes an "Out of Network" benefit, allowing members to see any provider they choose, with a higher copay for providers who are not on the insurance panel. Usually, the provider has to get authorization and submit claims in a similar way to how "In Network" providers do. However, they do not get the benefit of receiving referrals from the insurance company.

Given that there is a similar amount of paperwork, but less opportunity to receive new referrals when not on panels, therapists wanting to open a private practice should seriously consider seeking admission to insurance panels (in other words, apply to become a provider for health insurers in your area).

Where does one even begin? Well, a logical starting point is to make a list of all the insurance companies operating in your area. Your professional association may already have made a list, so check their website. Other professionals in the area can also be a resource in identifying available panels.

Next, look at the list and determine whether you already have a relationship with any of the insurers. Sometimes clinicians are providers on insurance panels through their agency work, and can transfer their provider relationship to an independent practice. Also consider which panels you are - and are not - interested in joining. Insurers vary in reimbursement rates, and quality of provider relations. For example, one of the major companies in my area tries to interfere so much in dictating interventions for clients they've never actually met that I just don't want to work with them.

Once you have your "short list" of panels you would like to join, you have a choice in how to proceed: you can hire a billing or credentialing company to do a lot of the legwork for you, or you can go through the process yourself. Money is obviously a factor here - one quote I heard for a company to help with credentialing was $200 per panel! In general, it doesn't seem necessary to me, since the application is not that onerous. That said, however, there are some panels that say they're closed, and you pretty much have to know somebody to get on them; in those cases, credentialing services may be worth it.

If you decide to see how far you can get on your own before investing extra money in your start-up, begin by going to the insurance companies' websites. Click on the "providers" section, and look for something about becoming a provider or joining the panel. Depending on where you will be practicing, some panels may be closed (typically because they feel they have enough providers, though sometimes an "insider" can still help you get in - see above), while others will outline a process for applying.

The process does differ from company to company, but typically involves the following steps:

1) Filling out an application

For the application, you will need to be licensed, have an NPI number, a tax payer identification number (for an individual provider, this can be your social security number), a practice address (where you will actually see clients), and a billing address if it is different (e.g., I use my home address; others may use a billing company). You may need a copy of your license or diploma, and a copy of your professional liability insurance face sheet. You may also be asked to furnish proof of your landlord's building liability insurance (usually that policy's face sheet - yes, really).

You will probably have to identify a clinician already on that insurer's panel who will cover for you if there is an emergency when you are on vacation or otherwise unavailable. You may need his/her NPI number. You may also have to identify a psychopharmacologist on that insurer's panel to whom you will refer if medication is necessary. You may also need to provide reference letters from clinicians who are on the panel. It pays to develop a professional network, and find out who is on various panels. When in doubt, most insurers have a provider search feature on their websites, and you can search or browse for providers you may know.

You will also be asked to indicate what populations you serve, what problems you treat, and what interventions you use. To substantiate your expertise, you may have to provide a 5 or 10 year work history, or some form of documentation showing expertise with a special population (eating disorders, or trauma, for example).

There will probably be some form of declaration or attestation to sign, along with a W-9 form (for reimbursement). Once you have all the information and documents complete, you will either fax or mail them to the address listed on the application.

2) The CAQH Universal Provider Datasource

Either before or after submitting the application, you will be asked to complete the credentialing process through the CAQH Universal Provider Datasource. This is an online clearinghouse that gathers information and documents from healthcare providers, to be accessed by insurance companies or healthcare organizations seeking to credential individual providers. You will have to get an ID number for CAQH from one of the insurance companies to which you are applying. Some allow you to call them to get this number; for others, you will get it after you have sent in your application.

Once you have an ID number, you can go to the website and create a username and password. Then, you begin the process of entering information. Bear in mind that this website is used for all kinds of healthcare providers, so you will not have responses to every question. You will need all of the same information you needed for the application: practice and billing addresses, NPI and license numbers, any professional memberships, work history, specialties, etc.

The application gives you the option of either selecting specific insurers to whom you want your information to be available, or making your information available to any insurer that attests you have applied for credentialing. I chose the latter, so as to avoid being turned down if I don't list the correct insurer; other people may be more concerned about privacy and choose the former option.

After completing the online application, you will be asked to review and attest to your responses (and you will have to reattest every 4 months). It will then prompt you to print a personalized fax cover sheet, with which to fax in copies of supporting documentation. There is a signature page that will also print, and is one of the required attachments, along with a copy of your license. Other documents you should submit include your liability insurance face sheet, a W-9, a copy of your CV, and reference letters if you have them. It will take 2-3 days for these documents to be added to your CAQH application, at which point it will be complete.

3) The contract

If the insurance company is interested, they will send you a packet with copies of a contract for you to read, sign and return to them. They then check any remaining documentation (e.g., CAQH if they have not yet reviewed it), and if all goes well, sign and return a copy to you with a welcome letter and effective date, outlining when you can start accepting their insurance, and which of their products you can accept (e.g., many have HMO, PPO, and Medicare plans, but you might not contract with all of them). Once you get this letter, you become an "In Network Provider" and can begin seeing clients using this insurance. You will also be listed on their provider list, which can be a source of additional referrals.