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What is an Insurance Contract?

Therapist signing an insurance contract

If you are a mental healthcare provider who is looking to work with insurance patients, then you need to know about your insurance contract! It is the legal agreement between you (the provider) and the insurance company outlining how you will be paid for services rendered to your patients by the insurance company, and what obligations you need to meet in order to receive payment. We like to think of it as an employment contract, with the insurance company being thought of as the employer and the healthcare provider being thought of as the employee. Below, we will explain how providers get an insurance contract, what information is useful to know from the insurance contract, and general tips about what to do with your insurance contract throughout the life of your private practice.

How do providers get an insurance contract?

Insurance contracts are obtained through the credentialing process. After a provider completes a credentialing application and it is reviewed by the insurance company, the insurance company will send the provider a contract to review and sign if they are accepting the provider into their network. We recommend that you retain either a physical or electronic copy of the contract that you can reference. We also recommend that if the insurance company does not send a final copy that they have signed that you request that as well. Since this document is your “employment agreement” you will want to be able to reference it if you ever run into any issues or questions about your contract with the insurance company. If you have a business attorney, we strongly recommend that you have them review the contract as well.

What to know from your insurance contract?

There are several key pieces of information contained in your insurance contract that you will want to know and reference.

Contract Effective Date

The contract will have an effective date, which is the date when the insurance company will be expected to reimburse you for any services rendered. This date is important because if you have seen patients with a date of service prior to the contract effective date, you may not be eligible for reimbursement from the insurance company. Some insurance companies do back-date their effective dates, so if you are in a position where you are seeing patients while in the credentialing process, your contract effective date will give you clarity on which sessions you can expect to receive insurance payments for. If you are working with a biller such as Practice Solutions, the effective dates are important for a biller to know so that they can submit claims and post payments appropriately, as well as manage denials and rejections that may be due to contract effective dates.

Contract Length

The insurance contract will typically have an expiration date, and a timeframe outlined for when you will need to start the renewal process if you wish to continue your working relationship with the insurance company. Be sure that you make note of the length of your contract, and stay on top of any renewal processes.

Claim Submission Processes

The insurance contract may also include specific instructions for claim submission, such as an address for paper claims to be sent to or instructions on how to set up Electronic Data Interchange (EDI) and Electronic Remittance Advice (ERA) so that you can submit claims electronically. This is important information for your biller to have so that they can follow the processes and make sure that you are paid in a timely manner.

Timely Filing Limits

Your contract may include timely filing limits that define how long you have to file an insurance claim after the date of service for a session. If this information is not included in your contract, you will want to find the timely filing limits from the insurance company website, a provider manual from the insurance company, or from a provider representative at the insurance company. Practice Solutions has compiled a list of timely filing limits for the most common insurance companies that you can also reference. Knowing your timely filing limits allows you to create structure around completing your notes for sessions and submitting claims for payment, and prevents you from running into non-payment for sessions.

Fee Schedule or Contracted Rates

The fee schedule may be included as part of your contract, or it may be a separate document that gets sent along with your contract. If it is not part of your contract, you should obtain a copy of the fee schedule from the insurance company directly. Fee schedules are proprietary information, and should not be shared among providers. The fee schedule will outline the contracted rates that the insurance company has agreed to pay you for your services, broken out by CPT code. This information is highly important for accurate insurance billing, because it helps you and your biller determine the appropriate coinsurance amounts for patient payments, and what payment amount to expect from the insurance company.

How to use your insurance contract through the life of your private practice

Over the course of your career in private practice, you may find that you want to request a rate increase from the insurance company, you may need to renew your insurance contracts, or you may decide that you no longer want to work with an insurance company and potentially explore relationships with other insurance providers in your area. In any of these scenarios, having your insurance contract to reference can give you direction, and your contract may even outline the process for you.

You may also need to reference your contract if you run into issues with denials and rejections. It may be that the contract was completed with a different address, NPI, or tax ID than you were contracted with, and the contract needs to be updated. It also may be that some instructions for claim submission were not followed. The contract can provide clues to resolve billing issues and help you or your biller in obtaining payment for your practice.

When a provider is utilizing Practice Solutions for billing services, we will request a copy of your insurance contracts so that we can efficiently help you in your insurance billing. While we are not capable of offering legal advice, our billers are experienced with understanding insurance contracts from a billing perspective, and helping providers understand them as well to ensure that billing runs smoothly. If you are looking for additional support in insurance billing, please contact us today for a consultation to see if Practice Solutions is the right choice for your private practice!


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