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3 Reasons Not To Credential with A LOT of Insurance Companies

Now that the mental health industry has been dealing with the COVID-19 pandemic, and its impact on clients, for about a year now, there has been a large trend in private pay practices switching to insurance to help maintain their growth through the pandemic. Within the trend toward insurance over the past year there has been an increasing number of providers that have expressed a desire that they want to be on as many panels as they can.

(Panels is both a colloquial term for "insurance company" and a technical term to refer to a particular insurance plan or product. For our purposes, we will refer to "panels" in the colloquial sense)

Attempting to be included on as many panels as you can is often a tactic that many providers use in the hopes of obtaining clients as quickly as possible because the insurance companies put in-network providers on their websites. Those websites have a high degree of visibility and clients can find preferred providers in their area. There is a certain degree of wisdom in this strategy because of the free marketing, but there are some key reasons why you should not credential with a lot of insurance companies. Often times, mental health clinicians don't know about the downsides of paneling with a lot of insurance because the literature is minimal and the education around insurance literacy is almost non-existent.

The first reason why you should not credential with a lot of insurance companies is that every insurance company has a different rate for each service that you offer. It is likely that if you are reading this blog, you conduct three main services represented by CPT codes as the following:

90791: Psychiatric Intake does not have a time requirement 90837: An individual session lasting 53 minutes and over 90834: An individual session lasting 38-52 minutes

Some of the people reading this blog also engage in psychological testing and that is a little more complicated, as you know, but for the sake of this conversation, we will stick with the three services listed above.

For each insurance company, they are going to pay different rates for the services. For example, insurance company A may pay the following:

90791: $100.00

90837: $90.00

90834: $80.00

BUT, insurance company C may pay the following for the same services:

90791: $150.00

90837: $100.00

90834: $90.00

While the $10.00 difference in the 90837 rates may not seem big, it makes a significant difference in the scope of a year. Let's look at the math below based on two clinicians in private practice conducting 20 sessions per week with 4 weeks of vacation a year. One clinician is in-network with only insurance company C and the other is in-network with insurance companies A and C. We will assume that the clinician that is in-network with insurance companies A and C see 60% of their clients with insurance company A and 40% with insurance company C. Here is how the math would break down:

Clinician 1 that is in-network with insurance company C would make $96,000 per year (20 sessions X48 weeks X $90.00).

Clinician 2 is in-network with insurance companies A and C with 60% A and 40% C would make $90,240 per year. That is $5,760 less per year for the same number of sessions per year. While that amount is spread out over the entire year, you as the clinician are doing the same amount of sessions but are making less. Of course, private practice is not all about the money that one generates, but if a clinician adds panels that pay significantly less per session (in some states $90.00 per session is generous), then the clinician will take home significantly less.

The reason why credentialing with a lot of insurance right away is not advisable is that the clinician may not know the rates and therefore may not be able to have a precise idea for what their practice should generate should they grow.

The better tactic is not to limit your panels indefinitely, but that is an option, but rather slowly grow your insurance base. Pick an insurance company that might be the easiest to work with or one that you are familiar with from a previous job to get started. Once you have a clear idea of how that insurance works then you can decide what is the best strategy moving forward. Moving slowly allows you to control your growth much better than taking a bunch of insurance companies at once.

The second reason why you should not credential with a lot of insurance companies is that the administrative burden is exponentially more than if you start with 1 or 2 panels. One of the perennial problems that clinicians have in private practice is that they get overwhelmed by the amount there is to do when conducting clinical work and running a business.

Often, therapists go from just a therapist to a business owner and therapist. With that shift, there is a lot more to think about, and one of the first tasks that get piled on is dealing with insurance. This becomes exponential when dealing with multiple insurance companies. The reason why the work piles on more than you would think is because the insurance industry is not interconnected. With each insurance company that you deal with, you have to learn the culture and language of that insurance company.

There are few standard operating procedures that are consistent between insurance companies.

Because of the fractured reality of the insurance industry, the therapist in private practice that takes on more insurance panels than 2 is asking for more work than what it might be worth. Especially in the beginning stages of private practice, time translates to money, and working with a bunch of insurance companies may not be the best return on your time investment.

If you are farther down the road in private practice adding more panels might be the best strategic move, but taking on more than what you have time for may not be the best move.

The other option available is to outsource the credentialing and paneling of your panels if you are thinking about taking on a lot of panels, but you as the clinician are still going to be involved and might encounter headaches that you don't want by taking on a lot of panels.

The third reason why you should not credential with a lot of insurance companies is that credentialing with a high volume of insurance companies can take a significant amount of time and reduce or eliminate the benefit of paneling with insurance companies.

One of the key reasons that therapists panel with insurance companies is so they can diversify their revenue streams and build a practice a little quicker than just going the private pay route. However, if a clinician decides they want to credential with a significant amount of insurance companies they may reduce or eliminate the benefit of taking insurance.

One of the variables that clinicians may not know when taking insurance is that for each insurance that they are paneled with there is a certain level of work that accompanies their in-network status. Some of the variables that a clinician has to consider when taking insurance are:

  1. Knowing and understanding the contract

  2. Knowing and understanding the contracted rates

  3. Audits

  4. Non-covered services as they relate to mental health services

  5. Out-of-Network changes for clients

  6. Knowing insurance representatives in case contractual issues arise

These are just some of the variables that a clinician should have at least a cursory knowledge of, but when you add 5, 10, or 15 panels to practice, the burden of knowing these variables becomes significant and can take quite a turn for the worse in terms of a clinician's schedule.

It could become less advantageous for your time to take on this many panels instead of sticking with your top two or three insurance panels.

Conclusion: Of course, one of the goals that many therapists have when they go into private practice is to serve as many people as possible. This is quite a noble objective and one that the Practice Solutions Team aggressively supports. Our recommendation based on working with hundreds of practices across the country is that the practices that are the most successful grow slowly by taking a few insurance panels and growing to take more as you grow your team.

We want to do everything that we can to support your practice and ensuring that you can meet your organizational objectives. If you have any questions or concerns about taking insurance panels don't hesitate to reach out and we would be more than happy to talk to you about any questions that you might have!

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