Sometimes managed care companies change the terms of their contracts. Most contracts allow either party to terminate the contract without cause i.e. “a material breach of a contract term” at their discretion. Sometimes a therapist’s finances change such that s/he needs to resign from a provider panel. Sometime disputes arise between providers and managed care companies. And, sometimes, therapists realize after contracting with managed care that they cannot do their best work under the constraints of managed care.
Whatever your situation is, when you get ready to disengage from working directly with manged care, here are the steps you need to take . . . .
Step 1
Review your contracts with managed care. Not all panels are equal. If you want to gradually transition your practice from being managed-care dependent to being an independent practitioner, then you won’t want to terminate all contracts at once. I recommend that you begin by making a list of each company’s name and rate of reimbursement.
Step 2
Next, identify the company that has the lowest rate of reimbursement. This is the first provider panel that you should resign from. (Yes, even if this is your biggest referral source.)
Step 3
Decide how you will handle clients currently being seen under this managed care contract who cannot afford your full fee.
Step 4
Notify your clients of your intent to terminate your contract with this company.**
Step 5
Call the Provider Relations Department for this managed care company to get detailed information about how to legally end your contract with this company and follow their directions. Most companies require one to four months notice to end a contract without cause. Simply sending in your written notice with intent to terminate is not sufficient.
Note that after terminating your contract, it is not uncommon for providers to continue being reimbursed by this company for their clinical work at the previously contracted rate.
If this company has been a significant source of your referral base, you will want to wait until your income stabilizes before ending your contract with another managed care company. However, when you are ready to do, simply go back to Step 1 and identify the next company that has the lowest rate of reimbursement and repeat these steps.
Have you resigned from managed care panels already? How about dropping in to let us know what the process has been like for you? I’ve told you before . . . for me, it was the most freeing decision I’ve made to date. I only wish I had done so sooner!
**Pssst – Don’t know how to let you clients know that your fees or reimbursement policy is changing? I’ll let you know on Thursday!
thanks for this post. As therapists we can forget that our services are valuable – beyond the value the managed care companies put on us. Giving up managed care requires an active marketing plan but it can be done!
Sandra
Hi, Sandra! Thanks for dropping in this afternoon! In my experience, too many therapists forget that they need an active marketing plan even if they decide to work directly with managed care! I know very few therapists that actually receive a predictable stream of referrals from managed care companies; and, most of those that do receive those referrals have spent years fostering those relationships – aka marketing.
I hope you’ll drop in often, Sandra, to share your thoughts . . . . We are building a strong and vibrant online learning community here at Private Practice from the Inside Out and your voice is certainly welcome here!
It’s interesting, the question of whether to remain in managed care or not. My belief is that it can be a good thing initially when you want to kick-start a brand new practice, but then down the road, if you remain managed care-dependent, you begin to feel like a worker-drone in the former Soviet Union.
I started my practice two years ago in an area where there were very few therapists within a five-mile radius, and where even fewer participated in managed care. Within six months my caseload had grown from six to 30, and within 18 months it was hovering at 40. Most of these clients found me through their managed care directories, with the rest via my listings with Psychology Today Online and SuperPages or through Google searching.
Today, while these sources still provide me with a substantial number of clients, I have also seen significant growth in referrals from former clients and other healthcare providers who know my work. I also have a number of successfully discharged clients who return for second and third episodes of care.
As my reputation within my community continues to grow and yield a larger harvest of new clients through personal and professional referrals, I feel more emboldened to transition away from managed care and towards fee-for-service. I keep fairly detailed accounting records and with about 90% of my current caseload under managed care, I gross about $65 per client. My average net revenue per client ranges between $30-$35. Outside of managed care, my normal fees are $125 for individual and couples therapy and $250 for an extended substance abuse assessment.
Managed care’s compensation rates are grossly disproportionate to the value of services provided by mental health clinicians, and, I believe, they actually lessen our perceived value to the public. There is a marketing concept called Perception of Value, which, simply stated, asserts that how a product or service is priced determines the buyer’s perception of its value. Low-ball your price, and prospective buyers may reject your product or service as being inferior.
Several of my colleagues who only collect full fee-for-service (with no sliding scales) report that their retention rates are higher and the no-shows and cancellations lower, than when they were still under the constraints of insurance panels. For clients who would have trouble paying these fees every week, they offer bimonthly or monthly appointments.
Just some food for thought.
James! I’ve been thinking about you and am delighted to find you sharing your successes and thought here in this community! I encourage therapists to be informed about what it really means to work directly with managed care and to also be clear in their motivations for choosing to work with our without managed care. So many new therapists just assume that (1) they must work directly with managed care and (2) that doing so will allow them to make a liveable income solely off referrals from managed care. For most therapists in private practice, neither of these is true. Having said that, I’m really happy to hear that you have been able to quickly build a sustainable practice working with managed care! Kudos to you!
Your points about no-shows, cancellations, and retention rates are in line with my experiences as well. I would say, though, that even if you choose to work directly with managed care, you are still able to your own policy and consequences concerning these matters and I would recommend that you do so. I think particularly because managed care will not cover those costs, it serves as a motivator to clients to show up or be considerate in providing advanced notice.
I realize that this blog post was made 2 months ago, but I feel compelled to write today because, after over a year of serious contemplation & processing, I decided to remove myself from the many insurance companies with which I work. As of June 1st, my practice is free of managed care except for one Medicaid plan which has been easy to work with and more fair in terms of compensation.
In these 3 weeks since this change went into effect, I have vacillated between moments of confidence and relief re. my decision and self-doubt and worry. While this change gave some of my clients cause to discontinue therapy at this time, it seems only to have been the case for those who were holding onto therapy given the convenience of a small co-pay. In other words, there were no surprises re. who decided to terminate or “put on hold” therapy. Those who continue to need and want to work have continued working with me.
I provided 3 months notice to all of my clients and initiated deep conversations about fees, finances, and processing both my own and clients’ experiences with this change. I feel that many of my relationships have been deepened, and based on feedback from several clients, that has been a mutual experience.
Encouraged by my consultation group to “be for yourself while asking clients to be for themselves”, I maintained my need (financially, time/effort, & emotionally- I was becoming resentful of the changing contract terms, rate reductions, red tape, etc. with managed care) to discontinue. Y contracts with insurers while also working with my clients to be able to afford seeing me. For some, this has meant a reduced fee (but still the same or higher than the insurance rate), a payment plan, a reduction in the frequency of sessions, and most useful, the option to accept credit cards for pymt. I also created a list of questions to guide clients in determining and accessing their out of network insurance benefits, where applicable.
As expected, more new callers are opting for referrals to in-network providers than before when I was able to see just about everyone in network, but I’ve also taken on 3 new full pay clients in this time. Given that I had been receiving substantially more referrals than I could handle and had been turning away at least 15 people every month for over a year, I am actually welcoming being a but less busy. And since there was such a disparity between my rate and what I was accepting from insurers, I can actually see less people and generate the same income without the added work of billing, tracking incoming pymts, following up on claims, etc.
Time will tell how this works out for me. My plan is to try out this system for the remainder of the year and evaluate at that time. As this blog and you, Tamara, are such a great resource, I’m sure I’ll be checking back in before then!
Hi, Dawn! I’m so very glad that you took time to share you good news here (And, it is good new!) I was terrified when I first decided to remove myself from managed care panels about 15 years ago and, as I’ve told you before, it was the best and most freeing decision I’ve ever made for my business.
You’ve obviously made your decisions with both your own and your clients’ interests in mind. You’ve created a way to assess clients’ financial needs and payment plans, offered the option of paying with credit cards, given a generous 90 days notice to them of the changes, helped refer those that needed referrals, terminated with some whose treatment was done, and had the appropriate conversations with each of your clients.
I never close down discussions here because you guys are always telling new colleagues about Private Practice from the Inside Out. That’s one of the reasons you have the option when you comment to follow a specific discussion as new comments come in. (All you need to do is check the little box!) The conversations literally extend back to 2009 and continue to expand with each passing month so I hope you will continue to drop back in here and update us on your thinking as it develops. A variety of experiences from many different therapists – both new and seasoned – is much more helpful t(han just hearing from me!) to other therapists in building a private practice. There are LOTS of “right” ways to build a strong private practice and I really want those who drop in here to see that.
Hi Tamara, loving your content as a new provider. So helpful!! I am curious what your thoughts are regarding a practitioner who is paneled with a particular insurance provider having clients who are interested in “opting out” of insurance. I’m struggling to find clear information and also a legal “opt out” form. Thanks in advance!!
Hi, Lottie!
Welcome to the big adventure of private practice and thank you for your kind words!
So my first thought is “practitioner beware!”
That’s because many therapists have entered into contracts with insurance companies that prohibit them from doing just what you are describing . . . so read the fine print and make sure you understand exactly what you have agreed to.
You don’t want to be caught in unknowingly engaging in insurance fraud or otherwise violating any contract that you have entered into because . . . well, you were supposed to know what you were agreeing to up front.
Not all contracts with managed care are the same.
So, if you are sure that you are legally and ethically allowed to work with a client who chooses to “opt out” of using their insurance card, you will need to first assist your client in understanding all of the ramifications of that choice and what that means for them going forward.
Thank you so much for this article! It was just what I needed. When I started my practice, I worked on getting on insurance panels to build my client base. It did its job and substantially opened up the pool of clients I could see – especially in this economy.
However, a few years later, as others have mentioned, my fee has gone up as I’ve gained more experience yet the reimbursement rate has remained the same – to the point where for some of them it’s not worth being contracted anymore. I’ve decided to remain out-of-network (not contracted) with some panels that reimburse decently and are easy to work with, but am working on terminating contracts with panels (as in-network) that do/are not. I pay a billing specialist to take care of the remainder of my insurance work, which is much cheaper than doing it myself and less headache for me because it’s not what I’m good at or what I like doing!
As a side note, it’s really a shame that private practice therapists have to do this because it really limits the quality of service for members with insurance to providers who are willing to accept such low reimbursement rates.
Hi, Aaron! Welcome to Private Practice from the Inside Out and thank you for taking time to share your thoughts here! I’m so glad you find this helpful. It is the kind of information that I wish I had had when I started off in private practice in 1991. Like you, I started off working with managed care and applying to get on provider panels. However, after spending way too much time jumping through the hoops of managed care and way too little time face-to-face with my clients, I opted to terminate those contracts, too.
I have found that if potential clients really understand what it means to access those insurance benefits and what they are giving up in exchange for those benefits, I rarely have a caller decline to work with me (paying full fee cash only). I suppose some may see that as a shame but I’m not sure I do. There are trade offs and consequences to every choice in life. If clients are fully informed about the pros and cons, I think it really is not so terrible for them to be able to choose for themselves who they want to see and what they want to give up.
In fact, what I see as more troubling is that therapist new to the field (and sometimes those who have been around a lot longer) have been taught (or assumed) the myths that clients should / must pay via insurance and that managed care will keep their appointment books full and the bank accounts plush. Of course, you already know that none of those things are true. But, those are things that I believed to be true when I got out of graduate school and managed care companies often lend support to those ideas . . . in the beginning.
A more accurate view of the future for a new therapist would be . . . learning to think about a private practice as a business, learning to market that business, and learning how to build an online presence. There are many places to learn those things . . . . It doesn’t have to be from me. But, putting heads in the sand and having temper tantrums because it isn’t the way we thought it was going to be . . . . Well, that’s just not working for us, is it?
Oh, Aaron – I know that I’ve gotten on my soapbox. Sorry! Not really directed at you. Just rambling about one of my pet peeves . . . and happy to know that you are smarter than me and are making changes earlier in your career! Let me know if I can help as you continue to grow your practice!
Thanks for your fast reply! I wholeheartedly agree with you on all counts. When I discuss with clients the pros/cons of their managed care, if they don’t decide to continue working with me (their choice) they often return to me frustrated after trying to navigate through that system because they came to appreciate the time and sensitivity to talk with them about their benefits (whereas most other people in that system are too overloaded to devote the time and energy needed to clients). It’s a shame that people pay so much money for their managed care benefits but don’t get genuine CARE and have to pay extra to actually get someone who DOES care about them and is willing to listen to their needs.
As for the new therapist comments… sigh… yes, another nail on the head there. My graduate program was superb but was nearly silent in this area. Thankfully God had directed me to several colleagues and other networked contacts who had been in the field and who were able to give me some wisdom before I jumped into anything headfirst. But I am definitely a very small minority there, as so many colleagues and graduate students have come to me for that same wisdom I received which they tell me they need.
Anyway, thank you for this helpful website and for your advice! I have a feeling I will be returning here often. 🙂
Aaron, I, too, have had many wonderful teachers and mentors over the year that helped me avoid or pulled me out of those tricky little places. And, with your help, we’ll help a few more avoid them a little earlier!
I’m happy to have you join us hear and so appreciate you taking the time to join the conversations here at Private Practice from the Inside Out!!
Hi Tamara/Aaron,
Just a quick reaction…
Aaron, I’m not sure if you intended it this way, but…your posts kind of insinuate that the only therapists who take managed care are less competent and/or don’t care.
In any case, my experience has been that it’s not that simple.
If you read my earlier comment on Tamara’s article, being paneled is–IMHO–a great way for a therapist just opening a practice to generate a relatively quick volume of clients. Then, as your reputation begins to grow–as evidenced by referrals from other providers, clients, etc.–managed care becomes less important to the success of your practice.
Even great therapists have to start somewhere.
James, I’ve missed your voice here! Welcome back! I definitely don’t think that those who work with managed care are less competent or don’t care about their clients. And, the choice to work or not work directly with managed care is definitely not a simple one. Still . . . I’m not sure that I am as optimistic as you, James, about getting on panels being a great choice for new therapists. Most of the therapists that I’ve talked with indicate that they got on those panels thinking that the referrals would roll in but that in reality did not happen for them. I do understand that becoming a preferred provider has been a good choice for you. I’m just not sure that that has been true for a majority of the mental health professionals.
Every great therapist has to start somewhere and there are lots of right ways and places to get started. Making informed choices – rather than choices based on fear and assumptions – is always the right place to start. For some it is working without managed care. (Yes, it really is possible.) And, for some it is working within the system of managed care. If it’s working for you and your clients, then I say “Go for it!”
(And, of course, if you need a little help figuring out which is the right way for you . . . call me at 303-660-4989 or email me. Happy to set up a brief consultation to see if I might be the right “fit” for you in making those practice-building decisions.)
Hi James/Tamara,
I apologize for giving off that message. It was meant to reflect more of my frustrations with managed care, the low reimbursement rates, and the amount of additional work that’s required of providers which takes away from our ability to be serving clients more effectively. I agree with Tamara that I’m not as optimistic, especially after having worked within that system for some time now. I do believe it helped me get my practice off the ground more than if I had been without it, but I don’t see it as a long-term, sustainable part of my practice – financially, logistically, and mentally (for my sanity!). So I will, like many other great therapists I know and work with, be removing myself from panels. And this is a detriment to potential clients because they will not have the same access to these therapists due to the issues we’ve already mentioned.
And like Tamara said, many of the other therapists I’ve talked with are NOT informed properly about managed care. Many stay away from it simply because it’s difficult to GET informed properly!
🙂 Hey, Aaron, there’s no need to apologize at all. Many of us have been there. It’s where I started off, too. And, like you, it sucked me dry. When I found that I was becoming more resentful and less joyful, I knew I had overstayed my time with managed care. For me I think of that period as a developmental step in my professional growth. I’m glad I had that experience. It wasn’t necessarily what I had hoped for or expected but . . . I learned a lot! And, that reminds me that I really ought to get to posting more about how to work with managed care for those that . . . would like to experience that learning curve. As we learn better, we do better!
Have a great day, Aaron. And, thanks for staying engaged here and willing to share your journey with us!
Hello!
I know this post was made a while ago, yet I’m hoping it is still active. I’ve built up my case load after 1.5 years with managed care. I’m preparing to take steps to remove some PPOs (that would allow clients to continue to see me as a out of network provider). I’m even entertaining setting up a contract to continue filing claims (I’m 100% electronic).
With the 2013 CPT changes, some managed care plans are reducing reimbursements and are paying for only 45-minutes (what will soon be the “old” 90806). This could mean I loose up to 30% of income or it would be necessary to add a few extra 45-minute sessions and do charting “on my own time.” This is a recipe for financial disaster and burn out.
Concern: you write “Note that after terminating your contract, it is not uncommon for providers to continue being reimbursed by this company for their clinical work at the previously contracted rate.”
Question: how would a clinician get the rate revised so the insurance company stops reimbursing at the previously contracted rate and start paying at the actual out of network rate?
John
Hi, John! Congrats to you for building up your practice!
I’m not sure that I’m understanding your question correctly. If you decide to terminate your contract with a managed care company and you provide sufficient notice to the company and to your clients your clients of your intent to terminate, there is no need to get reimbursement rates “revised.”
After the agreed upon process of terminating the contract, you will then free to bill at whatever rate you desire. If that same managed care company has a provision that allows its members to obtain services out of network, they will also have a contract (between the company and your client) that addresses the professional services (and circumstances under which) they will cover and the rate of reimbursement. You will simply need to either (1) submit your claims directly to the managed care company or (2) provide a receipt to your client so that s/he may file for reimbursement.
Hi Tamara,
Thanks for your encouragement and quick response!
I understand the process. Originally, I was 100% fee for service and then decided to build up the practice with third-party contracts, EHR, billing, patient portal, etc. As part of my “lets get serious” three year plan for getting a viable practice, I’m now moving toward trimming the contracts that are a lousy return-on-investment.
My question relates to Step Five in your original post. Specifically, I curious about I one responds to the last sentence of this step. If this scenario unfolds, how could a provider get reimbursement for the fee listed in the public full-fee rate card *if* the insurance company keeps paying at the “old” contracted rate.
This sounds like some insurance companies could act as if the provider is still contracted and pay a lower rate. That’s “totally not cool.” (I’m generally not a pessimist or cynic, yet experience confirms that insurance companies frequently goof up with payments, contracts, etc. My list of claims messed up by third-party payors and screw-up’s made by a billing vendor quadroupled in 2012 …
Does this clarify? Do you or anyone on the forum have experience or thoughts to handle this situation.
Best,
John
Thanks, John, for clarifying. Now I get it!
Once you’ve terminated your contract with the managed care company, you will then resume charging your Usual and Customary Fee. You will need to watch closely to make sure that the managed care company changes their records to accurately reflect their new relationship with your practice. Should you find that they are continuing to reimburse you at the previously contracted rate, you simply need to notify them (in writing to create a paper trail) of your change in relationship and your new fee structure.
If you continue to have difficulty getting reimbursed at the proper rate, I recommend that you have your client actually contact the insurance company to address this issue. In my experience, your clients (and their employers) have much more clout than providers do.
In my experience, once you are out-of-network with the insurance company, you can charge your usual and customary rate but they will still only pay what they deem usual and customary (I’ve found this rate to be the same as the in-network provider rate) so the difference between your rate and the insurances company’s payment will need to be balance billed to the client. I discontinued my participation with insurers 6 months ago and it was the best thing I could have done. I also opted not to do “courtesy billing”. Rather, upon request, I provide a statement and my clients get reimbursed from their insurer directly.
I would like to know if anyone has a “letter to clients” regarding termination from insurance panels that they would be willing to share. I have just terminated my contracts with the 2 panels I was on, and was hoping to get some advice as to how to tell my clients.
In response to Lori’s request, I have the letter I provided to my clients when de-activating with insurance panels last year. I also have a document that I provide to new clients as a courtesy in helping them to accurately determine their out-of-network benefits and costs. I’m not sure how to share that information here though, so I’ll defer to Tamara for instruction.
Dawn
Dawn, that’s great! If you send it to me, I’ll try to upload it here for everyone. That’s so kind of you to share!
Hi Dawn, would you still be willing to share a copy of your letter to clients that was used when terminating with with insurance panels? John
And, Dawn, you are welcome to turn that in to a guest post or send it to me and I’ll do that so that everyone can benefit from it!
I am so sorry! Obviously, I have not been very active in this discussion as of late but I will email to Tamara the information I gave to clients when I terminated participation with most panels. Tamara, feel free to share this. As an update, I recently decided to reactivate my status with one large insurance plan, primarily because I now have 2 additional therapists working in my practive AND more importantly, I am in the process of purchasing a building for my practice, which significantly increases my costs. For the time being at least, participating will provide a consistent boost for all of our caseloads and thereore, a reliable stream of income. Please look for my email.
Hey, Dawn! That’s so cool! Congrats to you on the expansion! I’ll get those docs shared in the next 10 days if at all possible. Thank you so much for sharing!
Congrats Dawn! This is exciting news. Best wishes in this new stage of your professional work 🙂
Hi Dawn,
I am a Psychotherapist in the New York area and am interested in seeing your letter to disengage
from managed care panels. Could you provide a copy of that to me? I would appreciate it .I’ve had it!!
Thank you,
Mitchell Berk