5 Steps To Resigning From Insurance Panels

One of the most common questions that private practice therapists ask me is "How do I get off of insurance panels?" This question just came up today in my Private Practice Toolbox Facebook Group so I thought it would be a great topic for a blog post. In previous posts I've written about why I broke up with managed care (part 1) & (part 2), but this post will focus on how to do it.

The thought of letting go of the comfort of being on insurance panels can create a lot of anxiety for private practice therapists. After all, if we don't have clients, we don't get paid. Find comfort in knowing this equation. You only need about half the number of clients in a self-pay practice to make the same income (or more) than you made in an insurance based practice. Once I realized this fact, I felt a lot more comfortable resigning from insurance panels. Let's do the math...

Insurance:

Say you are seeing 20 managed care clients per week and you are reimbursed an average of $70 per client.

20 clients x $70 session = $1,400

20 clients x $70 session x 4 weeks = $5,600 per month

(then subtract your time or money spent in billing and paperwork)

Fee-for-service:

2o clients x $125 = $2500/wk

20 clients x $125 session x 4 weeks = $10,000 per month

10 clients x $125 session x 4 weeks = $5,000 per month

(with NO extra paperwork, NO delay in payment, NO denied claims, NO required diagnosis...)

So often we focus on number of clients instead of the quality of clients and the amount collected per client.

5 Steps To Resigning From Health Insurance Panels

1) Rank the insurance companies

Make a list of insurance panels and rank them from your most favorite to least favorite based on:

• reimbursement rates
• paper work requirements
• how quickly you're paid
• number of clients you see from each panel
• the type of clients generally referred
• your general feeling working with each panel

2) Resign in waves starting with your least favorite

Generally, I recommend to my consulting clients to resign in waves over the course of a year. Resign first from the panels with the lowest ranking - the ones that pay the least and are the most difficult to work with.

3) Check your contract for resignation requirements

Review your contract to check on the resignation process that you agreed to. Look at the time frame required. Do you need to give them 30, 60, or 90 days notice? Do you need to send in a written letter?

4) Beef up your web presence

As part of your plan to resign from insurance panels, it critical to invest in creating other referral sources. The most important being your web presence. Google is my #1 referral source. The majority of our clients who come to my clinic Wasatch Family Therapy find us online. The benefit of clients finding you online is that they've already read about you, your services, and your philosophy on your website and have chosen to contact you. This increases the likelihood that they will be willing to pay your full fee.

• Website - If you don't have a website, make that a top priority. If you have a website, make sure it's effective. Here are some common website mistakes and how to fix them.
• Blog - If you don't have a blog on your site, add one and start blogging weekly.
• Therapist finder sites - join PsychologyToday.com, GoodTherapy.org, and your professional organization's "find a therapist" site to help potential clients find you.

5) Know the benefits of self-pay and be prepared to educate clients

There are benefits to the client for paying out of pocket, instead of going through their insurance company, that they may not be aware of. As you make the transition away from managed care to a fee-for-service practice it's important to familiarize yourself with these benefits so you can educate your clients. A few of those benefits are: control over which provider you choose to work with, the course of treatment decided on by client and therapist instead of insurance company, and no diagnosis requirement.

Here's an example of how a provider educates her patients on the benefits of self-pay. Utah Psychiatrist Kelli Hyland, MD my colleague and consultation client, shares her philosophy in this blog post "Why Self-pay?"

(c) Can Stock Photo

2 Good Reasons To Hire Office Support

Hiring an office employee, especially if it's the first time you've done so, can feel scary, overwhelming and stressful. Where do you find trustworthy employees? How do I know they're doing the billing correctly? Isn't it less personal if clients have to talk to someone other than the therapist?

Many therapists in private practice are reluctant to hire office support for a variety of reasons. The two most common reasons that I hear in my consulting practice are: 1) cost - "I don't want to pay out more money" and 2) control - "I don't want to give up control."

I had to overcome these two common barriers before I hired my first office manager.

It's Cheaper Than Doing It Yourself

When it comes to hiring office support staff, I find that it helps to think more like a business person and less like a therapist. Before I hired my first office employee I was concerned about increasing my overhead. Why should I pay someone to do something that I can do for free? Then, I realized that my time is money.

When I first started considering hiring an office manager I was billing $100 per clinical hour and seeing approximately 15-20 clients per week. If I spent those 10 administrative hours a week doing therapy instead of office administration, I could bring in an additional $1000/week to my practice. The cost of paying an office employee 10 hours per week, even at the high-end of the pay scale for my location, would only be $200 per week.

Hello? If you think like a business person, that's a no-brainer. I hired an office manager.

They'll Do A Better Job Than You

I struggled with the issue of control before hiring an office manager. I knew everything about every client account: what their co-pay was, how they prefer to pay, what their diagnosis is, how often they come to therapy, their balance and more. I had developed my personal style of answering new client phone calls and had finessed my techniques over a few years.

I knew how to describe my therapy style better than anyone else could. How could I trust them to answer the phone, handle the billing, or other office tasks the way I would?

Once I really looked at that issue, I realized that I could be OK if someone didn't do things exactly like I did. There are people who were trained in office administration, billing and office management, and they might know how to do things better than I was doing them. After all, I had no office management experience other than running my practice.

While there was a learning curve for me and for my first office employee, it turned out to be the beginning of significant growth in my practice. Having office support has allowed me to let go of the day-to-day tasks and focus on the bigger picture: my practice mission statement, community outreach, web marketing, training other therapists, business planning, and of course, providing therapy.

photo credit: Jerry Bunkers

Why I 'Broke Up' With Managed Care

At times, working with managed care insurance panels in private practice felt like dating a bad boyfriend. I was constantly investing more time and attention than "he" was in the "relationship" and it started to wear me down. I got up the nerve to break it off for good. I've never looked back. I understand that building a practice free of managed care isn't for every therapist. I am grateful for excellent colleagues who participate on insurance panel because and there is a great need for their services and I frequently refer clients to them. However, if you're a private practitioner considering building a practice outside of managed care, I share my experience of resigning from managed care to give you the courage to take the leap, and the faith to know that it can work. So here's my story...

After I received my clinical license I started applying to any health insurance panel. I just assumed that's how you're "supposed" to get clients in a private practice because every therapist I'd known had followed this path to get referrals. I was accepted to many panels and my practice started to grow. I was ecstatic.

However, as time went on I started to resent many aspects of working with managed care panels and it began to effect how I felt about my work in general. I felt overworked and drained and knew that something needed to shift if I was to be in private practice for the long haul. Here's what I started noticing about my relationship with managed care.

• Excessive paperwork: I was spending almost as much time performing unpaid work (paperwork, phone calls, tracking authorizations, and billing) as I was spending seeing clients. I went into this field to do therapy, not paperwork.
• Reduced income: I resented writing off 40-60% of my fee upfront just to be placed on a list with dozens and dozens of other therapists. The managed care companies weren't doing anything to market my practice and yet I was being asked to take a huge pay cut to work with their clients.
• Mandatory diagnosing: I grew tired of having to diagnose every client who walked into my office in order to get paid. When I met with a client who didn't have clearly diagnosable symptoms I was faced with a dilemma. Do I stretch a diagnosis just so I can get paid, or do I do free therapy because insurance won't reimburse without a diagnosis?
• Denied or delayed payments: Being denied reimbursement for a variety of reasons and receiving payment weeks or months after I had performed the service grew frustrating.

My uneasiness led me to critically look at the financial numbers and I was astounded by the amount of money I was writing off just to participate on managed care panels. I decided that there had to be a better way to for me to run my practice. I realized that if I resigned from managed care panels and transitioned to a fee for service practice, I could see half the number of clients weekly and make the same income. Or, I could see the same number of clients and double my income. To top it off, I could eliminate most of my unpaid paperwork hours. Work less and make more? It was a dream come true for a private practitioner and mother of young children.

I resigned from all managed care panels in 2007 and raised my fee by 10%. Since then, my private practice, Wasatch Family Therapy, has grown from a solo practice of one to a thriving clinic employing several therapists. We are adding a second office location later this month. It has taken some relentless marketing, consistent networking, and social media skills to keep a practice growing without managed care or any outside contracts, but it has worked. If I can do it, you can too.

6 Ways To Give Yourself A Raise

You're in the mental health field because you want to make a difference AND an income. Too many therapists are making a big difference but only making a small income. Here are 6 ways you can make your private practice more profitable within the next month. 1) Cut expenses

Look more closely at your recurring monthly expenses. Can you find a way to reduce any of them? You might want to sub-lease your office on the days you're not there so you're paying less rent. Do you pay monthly for a therapist referral listing that rarely sends referrals your way that you could cancel? How about buying bulk printer paper of files online? We recently cut expenses by replacing water bottles that we offered to for all clients with a water cooler in the waiting area. This save $100 a month. The little things add up.

2) Raise your fees

When is the last time you raised your fees? Do some research on therapist's fees in your area with similar level of experience are charging and see where you fall in comparison. Ask yourself what is keeping you from raising your fees?

3) Hire an office manager

Most therapists who don't hire a billing person or office manager because of the added expense. I want you to count up the minutes and hours you spend doing clerical work each week. Let's say it's 10 hours per week. If you saw additional 10 clients at $100 per session that's $1000 of additional income per week, or $4000 more every month. With that additional income you can hire an office assistant for $13 per hour for 10 hours per week. You'd be paying out only $130 a week or $520 per month for the additional support. After paying your assistant you'd be bringing in $3480 every month just by replacing your time spent doing clerical hours with clinical hours.

4) Charge more if sessions go over

Do you allow clients to go over the scheduled session time without paying for it? Consider this...If you're seeing 6 clients in a day and 5 of them go over 10 minutes, you're giving away the equivalent of one session that day. If you charge $100 for a 45-50 minute session that means that you're losing $100 a day of income if you don't charge additional fee for additional time. If you charge for additional time you'll make $100 (or your session fee) each day you work. You will have given yourself a raise of several dollars in a month.

5) Charge full fee for no-shows or late cancellations

What's your no show or late cancellation policy? Do you stick to it? I don't like being at work and not getting paid, do you? For years I've charged full fee for no shows and late cancellations, even for first sessions. And a few years ago, I started requiring a credit card in order to schedule an appointment with me or one of my therapists. New clients were notified that if they failed to cancel with more than 24 hours notice they will be billed for the entire session. Guess what? We rarely have no shows and if we do, clients pay the full fee for the therapist's time. I've found that when I require the client to invest something from the get-go they invest more in the therapy process.

6) Tighten up your collection policies

If you're in solo practice, I know how easy it is to let client accounts get out of control. You didn't get into ther therapy business to do accounting. Try scheduling some time to review your client accounts, send out bills and follow up with clients who owe you money. In my clinic, our policy is if I client is more than one session behind in payments their therapy is "on hold" until their account is current.

More on therapist and money in upcoming posts, but until then, I challenge you to try one of these suggestions this month and give yourself a raise.

photo credit: ZeRo`SKiLL