BLOG: Private Pay v. Insurance Contracting
Private Pay v. Insurance Contracting
Let's dive into the factors to be considered when determining if you want to have a strictly private pay practice or contract with one or more insurance companies.
The choice between having a private pay clinic versus contracting with insurance companies is one that most of my clients consider. When I had my practice, I started as a private pay clinic and eventually became an in-network provider for BlueCross BlueShield (BCBS). However, there are many factors to consider when making this decision for your clinic.
The first thing to consider is the carrier's contracted rate. The contracted rate is what the carrier will pay for a given CPT code. For example, let's say you are contracting with BCBS and your rate for CPT 92507 is $200 per session, but BCBS' contracted rate is $45.67. As an in-network provider, you cannot bill your client for the difference.
Contracted rates vary not only by carrier, but also by region. You may have a colleague in Illinois collecting $98.12 per session from BCBS, but the rate in your state/region, for the same carrier, may be much lower.
If you opt to be private pay, there are two options you can offer clients. The first is that the client pays your full rate at the time of service, and you provide them with a "superbill" to submit to their carrier to be reimbursed. Many policies have both an in-network and out-of-network (OON) benefit. A private pay client with OON insurance benefits may get reimbursed by their carrier for a portion of what they have paid to you.
The other option is that you bill the client's insurance carrier, accept assignment (meaning the carrier pays you directly instead of the client) and the client pays the difference. I do not recommend this method because sometimes carriers reconsider the way they've processed a claim and will ask for the money back. In this example, the carrier would be asking YOU for the refund and then you have to chase the client to be reimbursed.
Knowing the reimbursement rate is an important step in determining if you want to be a contracted provider for any insurance carrier. Carefully weigh the pros and cons of becoming an in-network provider before signing any contract.
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Renee, the owner of The Private Practice Coach shares with clients her knowledge and expertise gained over 30 thirty years of building a profitable, multi-disciplinary private practice.
