November 17, 2023
Carlene MacMillan, MD
If you're like many psychiatric clinicians, you've likely found yourself mired in the complexities of insurance credentialing and contracting. It's a necessary process, allowing you to broaden your patient base and enhance your practice's finances. Yet, the red tape can be a headache, pulling you away from your primary focus—your patients.
This guide cuts through the complexity, offering a clear path forward.
Credentialing and contracting are interlinked processes in establishing a healthcare provider's relationship with an insurance company.
Credentialing and “paneling” are interchangeable. This is the first step in the process, where a psychiatrist or any healthcare professional is evaluated and verified by an insurance company or a healthcare organization to ensure their qualifications, training, and experience meet the required standards.
Contracting, on the other hand, is the act of formalizing an agreement between you, the healthcare provider, and an insurance company, establishing your status as an in-network provider.
You need to get credentialed before you can contract with any payer. Together, credentialing and contracting determine your status as an in-network provider, influencing your reimbursement rates and patient referrals.
Insurance credentialing serves as an assurance of the provider's credentials, capabilities, and competence. For mental health providers, it's a step towards building trust with both insurance companies and patients. It gives you the ability to bill insurance directly, helping you expand your patient base and increase practice revenue. Being more accessible to a wide range of patients motivates many clinicians to take insurance.
Choosing which insurance company you should consider accepting patients from is a balance between reimbursement expectations and your desired patient population.
The expected reimbursement rates for a mental health provider varies depending on the insurance carrier. Let’s cover these more in depth.
Medicare is a federal health insurance program primarily for individuals aged 65 and older or those with certain disabilities, such as psychiatric disability. Medicare reimbursement rates for psychiatrists are set by the Centers for Medicare and Medicaid Services (CMS) through the Medicare Physician Fee Schedule (MPFS). The MPFS uses a regionally adjusted formula to determine the reimbursement amount for a given procedure. Medicare reimbursement rates for psychiatry services are typically moderate and may vary based on geographic location. They change annually and are not negotiable. These plans are separate from Medicare Advantage plans which are a type of commercial plan.
Medicaid is a joint federal and state program that provides health coverage for low-income individuals and families. Each state's Medicaid program determines Medicaid reimbursement rates for psychiatrists. These rates are typically lower than Medicare and commercial insurance rates due to Medicaid's focus on serving vulnerable populations with limited financial resources. Medicaid reimbursement rates can vary significantly between states, and some states may offer supplemental payments or higher rates for specific services or underserved areas. On average, Medicaid pays about ~70% of Medicare rates for any given service (1).
Commercial insurance refers to privately-owned health insurance plans offered by various companies. Reimbursement rates for mental health providers under commercial insurance plans are negotiated through contracts between the insurance company and the provider. These negotiated rates can vary widely and are influenced by factors such as the insurer's fee schedule, market dynamics, and the psychiatrist's negotiating power. Reimbursement rates from commercial insurance plans are generally higher compared to Medicare and Medicaid - usually between ~120%-180% of Medicare rates for any given service (2). Commercial insurance also includes Medicare Advantage plans which are different than traditional Medicare so it is important to ask patients who have Medicare what type they have. To accept a Medicare Advantage plan, a provider must be credentialed with the commercial insurance company that manages it.
TRICARE is the healthcare program for uniformed service members, retirees, and their families. Reimbursement rates for psychiatrists under TRICARE are determined by the TRICARE Management Activity (TMA), which is part of the Department of Defense (DoD). TRICARE reimbursement rates are generally set to align with Medicare rates, although there may be some variation depending on specific TRICARE regions or plans.
It's important to note that reimbursement rates can also vary based on specific services provided, geographical region, billing codes used, and other factors.
We’ve created a table below with the major health insurers across Medicare, Medicaid, TRICARE, and Commercial insurance by State (4,5,6,7). Mental health providers often consider a combination of insurance types to ensure a diverse patient population while balancing their financial considerations.
Now you have an idea of the big four types of insurance panels. Next, you'll want to narrow down the insurance companies you credential with based on your state, which we cover below.
We've listed only a selection of insurance carriers for each state, along with rough estimates of their member enrollment. This overview helps you identify the key insurers in your area. While the Federal government runs Traditional Medicare, individual states manage Traditional Medicaid. If you see a private company under Medicare or Medicaid, it indicates they're handling insurance coverage for certain groups in that state, under government contracts.
Now you have an idea of which payers you may want to credential with. Next, let’s cover how you go about the actual process.
Credentialing can often take between 90 to 150 days and frequently requires active follow-up with the insurance company to make sure the process is proceeding smoothly. A rough time estimate is ~10 hours of dedicated time for EACH application. Set your expectations and plan for you or someone on your team to budget time to actively manage this process. We recommend checking on the application at least once a week to identify and resolve any issues.
Understand (and document) the requirements for each insurer by searching on their websites.
Search “[Insurance company name] credentialing requirements” and in almost all cases, the insurance company website will have you answer some simple questions (e.g., specialty area) and will provide you with a list of requirements, usually including:
CAQH is a platform that allows providers to upload and maintain their practice and licensure documentation online. Many insurance companies use this platform as a shared site to prevent providers from having to upload their information to multiple sites. Their website can be found here → https://proview.caqh.org/pr/registration.
You may already have an account through a current or prior hospital employer. In that case, make sure your profile is up to date. CAQH sends periodic reminder emails to re-attest to the accuracy of your profile. It is essential that this profile be up to date for both initial credentialing and to remain on insurance panels when they periodically review their provider panels.
Think of this process as a job application - the insurance company will be deciding whether they want to include you in their network and so finding ways to be unique or differentiating in the services you offer will give you a greater chance of being approved.
Some typical ways to differentiate are:
Verification takes time and there’s a tremendous amount of follow-up required, so stay vigilant! If you need assistance, there are plenty of resources available that can help you get started.
Credentialing can take between 90 to 150 days, depending on the insurance company and the completeness of your application. During this period, it's essential to stay in touch with the payer, checking on the status of your application and addressing any issues promptly.
While it it’s possible in some cases to see patients before credentialing is completed, we don’t recommend it. Doing so could lead to challenges in obtaining reimbursement from insurance companies, as services provided before the effective date of the contract will not be covered.
Sometimes, payers will make the effective date the date you first applied or an arbitrary date between then and when they issue an approval. Before you’re officially credentialed with a patient's insurance, consider treating those patients as private-pay. If the contract date is later backdated, these patients may receive a refund, and the insurance company will pay at their contracted rates.
For private practices, credentialing extends beyond the individual provider to the practice itself. In addition to personal credentials, you'll also need to provide information about your practice, such as Tax ID, practice location(s), hours, and malpractice insurance coverage.
Note that for small practices, some insurance companies will use the practice’s Tax ID but not the group NPI and will not issue a group contract until a certain threshold of providers who are in-network is met. If you do get a group contract, keep in mind that each individual clinician within the practice you want to accept that insurance needs to go through the credentialing process. If they are already credentialed when they are hired, contact the insurance company to learn about how to get them to be able to bill under your practice’s tax ID.
While payers do not typically charge to go through the credentialing process, be prepared for indirect costs such as time spent in application preparation, follow-ups, and potential delays in starting your practice or accepting insurance. It’s important to factor in these considerations when planning your credentialing process. In addition, sometimes people choose to work with experts who assist with credentialing and the costs for these services can vary.
Mental health practices require a seamless, efficient approach to insurance claims — and Osmind delivers. Our platform is designed by psychiatrists, for psychiatrists. Turn tedious documentation into a streamlined, user-friendly process, all in one place.
Why Osmind makes it Easy for you to take Insurance:
Learn how to take the stress out of insurance claims.
Osmind does more than help with insurance; it’s your all-in-one platform for running your modern private mental health practice.
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