Your Private Practice Credentialing Process
Credentialing and contracting are by far some of the hardest and most misunderstood parts of private practice. This blog will help you on your way to credential with insurance in your private practice.
Fair Warning: This blog is long and is very detailed. Feel free to print out this blog and use it as a checklist for yourself along the journey of credentialing. This process takes a long time and requires a significant amount of care and concern to do well! Good luck and remember that we are here for you on this journey.
Step 1: Planning
The first step in any venture is planning! Dwight Eisenhower said, "Planning is everything, the plan is nothing". In the spirit of this quote, we will help you to evaluate the planning around credentialing with an insurance company. We recommend that you follow 3 basic planning steps to credentialing with an insurance company:
The First Way to Plan to Take Insurance
The first way that you can take insurance and be profitable is to take the smallest amount of in-network payers as possible with the highest level of reimbursement. What does this mean?
This means that you have evaluated the highest paying insurance companies in your area and you are only going to engage with that 1 or 2 insurance companies in your area. This could mean that you are only in-network with one commercial payer and one government payer or just one commercial payer.
What are the benefits to this way to take insurance?
The first benefit is that you are going to automatically exclude a certain number of people that don’t have that insurance. This is a tough truth to grasp, but the benefit is that the time you do spend with insurance-based clients will be of maximum benefit to your business. The contrast is that you have lower-paying insurance clients compared to a higher paying insurance client. In terms of time, you make less per hour with some clients than others, but this particular strategy means that you are maximizing your time per patient.
The second benefit of this way to take insurance means that you will have fewer credentialing hurdles as you scale up. Let’s say you are starting to want to scale in terms of clinical staff. It is much MUCH easier to credential 10 clinicians with 1 insurance than 10 clinicians with 10 insurances. This benefit can be better understood by looking at the math in terms of individual panels that you credential therapists with.
Let’s say you have 1 insurance company that you are in-network with. You have a 1 to 1 ratio in terms of credentialing. If you are in-network with 10 insurance companies, you now have a 10 to 1 ratio, which becomes a multiplication problem. In one circumstance you will engage in credentialing 10 providers 1 time with 1 insurance company. In the other circumstance, you will actually be conducting 100 credentialing activities to get 10 clinicians in-network with 10 panels.
Your expenses will obviously increase if you have to engage in 100 credentialing activities versus 10 credentialing activities. If you are a group practice this becomes even more important because the complexity of credentialing and paneling only increases as you grow.
The third benefit of this strategy for taking insurance is that by limiting the number of insurances that you take means that your overall billing processes are leaner and simpler than your counterparts. Remember above that the billing and insurance-related costs for a private practice owner revolve around claims submission, claims reconciliation, and payment processing.
By engaging one insurance company on an in-network basis you lean your processes to the simplest common denominator around these three areas. The delays and reduces your administrative burden and allows you to operate as simply as possible.
The downside here is that you limit the number of highly-clinical clients that you take and that can rub against your “why” in getting involved in private practice, which is why there is a second strategy to take insurance and remain profitable.
The Second Way to Plan to Take Insurance
This strategy involves focusing on your profit margin and focusing on particular clinical objectives in your private practice. Let’s say you have a heart of geriatric populations and it is important that you take Medicare in your private practice or perhaps you LOVE working with veterans and active-duty military personnel and you absolutely be in-network with Tricare.
This is totally doable and highly encouraged! We love the passion and we love the big “whys” to be involved in the private practice industry.
We want to put forward a strategy that allows you to accomplish those clinical objectives and still work with those patients that fit squarely into your purpose for private practice.
The second strategy to take insurance and be profitable involves tracking the risk around your caseload. In this strategy, you need to do some math and manage your caseload so you can maintain your profitability. This depends on your state because reimbursement rates vary across states and payers, but we recommend that you follow this breakdown for your caseload:
40% Commercial Insurance with an average reimbursement between $85.00 and $125.00 per session
10% Private Pay with an average reimbursement between $100.00 and $150.00 per session
50% Government Insurance with an average reimbursement between $55.00 and $85.00 per session.
Let’s break that down in terms of real numbers assuming that an average caseload for a full-time clinician is 25 clients or 5 clients per day.
13 clients per week that net $937.50 (i.e. $75.00 per session)
2 clients per week that net $312.50 (i.e. $125.00 per session)
10 clients per week that net $100.00 (i.e. $100.00 per session)
Using this per week model, your full-time caseload should bring in $9,675.00 per month and still favor those populations that you want to work with clinically. Obviously, you can play with the percentages of this kind of breakdown internally and have fun with the numbers, but it is possible according to the math to spend half of your clinical time focused on those populations that you are passionate about and still maintain healthy profitability.
You will need to spend quality time with the math and you will also have to be disciplined about the patients that you take on, monitor your percentages, and be sure you are actually collecting from your private pay clients and commercial insurance clients. But it is definitely doable.
Could you make more money just with private pay clients? Sure.
Can you help move the needle on the decreasing life expectancy with this model? Absolutely!
One challenge to overcome with this model is that as you scale you would also have to monitor your clinicians to make sure you are balancing their caseloads as well, but that is a different blog topic altogether. If you feel like you need help tracking this information or creating a system around this model, feel free to reach out and we would be happy to consult with you on this specific issue.
The Third Way to Plan to Take Insurance
The last strategy that we would recommend to take insurance and maintain your profitability assumes that you take 1 or 2 insurances that yield the greatest reimbursement like strategy one, but this strategy includes holding multiple out-of-network contracts with a multitude of insurance companies.
Being out-of-network means that you are a qualified and licensed mental health provider, so the insurance companies will issue a reimbursement, but you are not held to their specific contract or contracted insurance rates that you are with your in-network contract.
The main benefit and this is critical, is that you have the opportunity to balance bill the patient to meet your full-rate.
That sounds like Greek, so we will break it down with a fake example.
Let’s say you are in-network with the ACME insurance company. Because you are in-network with ACME you will only get paid a contracted rate. Let’s say you bill 100.00 for an hour session, but ACME says they are only going to pay $87.50 for your hour. You can’t bill the patient for the $12.50 that would make up your full rate. The $12.50 is called a contractual adjustment because your contract dictates that you write-off this amount. Therefore, for each session you bill for clients that have ACME, you will lose $12.50 per session because you are in-network.
Hopefully, you are following!
Let’s say you are out-of-network with the ACME insurance company. Because you are out-of-network with ACME you can now charge the patient for that $12.50 OR you can choose to write-off the difference as an act of kindness toward your client, but you are not required to.
In the first situation, you are required to write-off the $12.50 and you will make a maximum of $87.50 from ACME clients.
In the second scenario, you can choose to charge the patient for the $12.50 to make $100.00 a session no matter what, or you can tell your patient that they only owe $87.50. It is your choice.
What is the impact of a contractual adjustment over a year?
Let’s say you have 25 clients a week for ACME clients and you are in-network so you have to write-off the $12.50 from our example. 25 clients a week multiplied by 48 weeks a year (4 weeks of vacation :)) multiplied by $12.50 means that you will write-off $15,000.00 per year because you have an insurance contract with the insurance company. If you are out-of-network you can choose to make that $15,000 no problem.
If you are using this strategy, there is still an administrative burden to get clinicians listed as out of network but it is far less than the credentialing process for in-network credentialing. Another important concern is that your practice has to be uniquely skilled at collecting from patients at the time of service, each and every session. Again, another topic for another day.
Step 2: Information Gathering
Let's say you have planned which insurances you are doing to take in your private practice. Now you are going to need to gather a significant amount of documentation and information on your journey in credentialing in private practice.
Here is a checklist of everything you need (with links) to start the credentialing process:
Liability Insurance Certificate
NPI Documentation from NPPES
NPI Provider Application/Update Form (i.e. if you are joining a group)
Copy of Social Security Card
Copy of your Drivers License
Copy of your Professional License
Set up your CAQH Account
Decide your Provider Type (i.e. Clinical Social Worker)
Copy of your Diploma (i.e both undergraduate and graduate)
Addresses of your Undergraduate and Graduate Schools
Copies of your CEU Certificates
Names of Training Courses
Name of the Practice
Address of the Practice
Start Date at the Practice
Phone Coverage Hours
Tax ID of the Practice
Office Hours of the Practice
Names of the Partners at the Practice
Names of Colleagues that Cover Sessions in Your Absence
Name of the Office Manager at your Practice
Name of the Billing Contact at your Practice
Demographic Information of the Billing Contact at your Practice
Payment and Remittance Information (i.e. Bank account information)
Patient Limitations or Patients you Don't Take
Disabled Accessibility Information
List of Services
List of Treatment Modalities
4 Professional References
Criminal and Civil History
Login Password for PECOS
Login Password for I/A
Login to any Insurance Portal
Copy of your EIN Documentation
Copy of your LLC
Copy of your Articles of Organization
Copy of each completed application
Steps to Apply for Each Panel
Step 3: Application Submission and Tracking
Next in the process for your credentialing strategy, you are going to do 2 things:
First, you are going to research each insurance panel that you want to credential with and you are going to find out what are the steps to credential and who to contact if you want a status update.
Second, you are going to set up a spreadsheet and a schedule for following up on each of your credentialing applications. This will be very important in managing the credentialing process as you go down the road of credentialing your private practice.
Let's take this step-by-step!
First, you are going to research each insurance panel and find out what the steps are to credential your private practice with. Let's take Aetna as a case example:
Fill out the following application
Then you are going to submit your application!
Save a copy of your application with the insurance company along with any reference number that you had.
Congratulations! You are not done yet, though.
Second, you are going to set up a spreadsheet and a schedule for following up on each of your credentialing applications. This will be very important in managing the credentialing process as you go down the road of credentialing your private practice.
While there will be one spreadsheet to manage the credentialing, there will be 3 separate sheets that you will need to manage:
The first sheet that you will want to create is to curate the provider information and the practice information. This could look like this:
This sheet is going to include the practice's information as well as each provider's information as well. This will greatly help in managing provider information as you scale and as you credential yourself with insurance.
The second sheet that you will want to create is to track the follow-up attempts made to the insurance companies that you have applied to. That could look something like this:
This sheet will track the follow-up attempts that you or your staff make in relation to your credentialing applications.
Remember: You shouldn't just trust the insurance companies to process your application. You need to know where your application is in the process!
Your updates need to include 5 things:
The date that you called
The number you called
The person you spoke to
The update they provided
The reference number for the call
Here is an example of a good update: 06/23/2020 I called the insurance company at 855-867-9532 and spoke to Sharon (Ref: 1-122222222). She said that the application is in process and we should be hearing from the insurance company soon with a signed contract.
The reason this kind of update is important is that it gives the provider who is being credentialed a clear view into the current status of the credentialing process. You need to know how many times you have followed up and what the status updates have been. You have put a lot of work into the process so far and you know you have submitted a correct insurance credentialing application. Make sure they are focused on getting it processed!
Finally, you will want to create a spreadsheet that tracks the network status of each clinician in your private practice. It could look something like this:
As you scale you will need to track how each clinician is contracted with each insurance that you take. Your Electronic Health Record System may do this for you but be sure that you are tracking this outside of your EHR system. This will be an important factor in your growth.
Step 4: Contract Finalization and Initial Billing
At this stage in the process, you have gathered all the information you need to credential with an insurance company, you have applied to the panel, and you have been dogged in your follow-up activities. At this point, you have received an email or a call about your acceptance into the panel.
Question: Does this mean you can see patients and get paid?
Answer: Absolutely not!! Do not see patients at this point in the process.
All too often, therapists in private practice see clients preemptively because they received notification that they have been accepted into the panel. The insurance company is providing notification that you have been accepted into the panel, but you still have to sign a contract, agree to a fee schedule, receive your welcome materials, and then start testing the waters.
We can't advise caution enough here. It is much better to wait longer and then submit claims knowing they will be paid as opposed to pushing the boundary on claim submission and not get your claims paid, and have to write off those claims.
Here are the various stages of receiving a contract from the insurance
company:
You will be notified by phone or by email that you have been accepted to the panel
You will receive an electronic contract for signature (check your spam folder to see if it went there if you didn't receive it)
You will then sign and return the contract
The final stage is to receive a welcome letter and to begin billing claims for that insurance.
Congratulations! You have made it all the way through.
Credentialing is not a simple process but the more organized you are through the process the smoother the process will go for you. Of course we are also here to help advise and guide you along the way. If you ever need anything don't hesitate to reach out and contact us!
