By Catherine Munson, MD
“I’m sure I’ll take you with pleasure!” the Queen said. “Twopence a week, and jam every other day.”
Alice couldn’t help laughing, as she said, “I don’t want you to hire me – and I don’t care for jam.”
“It’s very good jam,” said the Queen.
“Well, I don’t want any today, at any rate.”
“You couldn’t have it if you did want it,” the Queen said. “The rule is, jam tomorrow and jam yesterday – but never today.”
“It must come sometimes to ‘jam today’,” Alice objected.
“No it can’t,” said the Queen. “It’s jam every other day: today isn’t any other day, you know.”
― Lewis Carroll, Alice’s Adventures in Wonderland & Through the Looking-Glass
We can easily feel as mystified by payment systems as Alice. The intricacies of managed care contracts, filing codes, prior authorization, and claim denials (to mention a few) can make it seem as if payment will never happen. This article will review two methods of handling the madness: operating as a fee for service practice, or accepting insurance and dealing with all the complications therein.
Fee for Service
The simplest way to avoid at least some of the complications of getting paid is to have a fee for service practice. In this model patients (or clients if you prefer), pay out of pocket for each visit and can submit their receipts to their insurance. Depending on their plan, they may or may not be reimbursed for some or all of the fee. The advantages of this are obvious, no need to bother with filing insurance, little or sometimes no front office staff to pay, more flexibility in record keeping. Medicare patients can be seen if they sign a waiver and do not submit bills to Medicare. (More information and sample forms can be found here.)
The caveat here is the location of your practice. If you are practicing in an area where most people have a lower income and do not have high-quality employer-based insurance, it will be difficult to find enough patients to support your practice. Larger corporations generally have more generous insurance plans and provide coverage for out of network providers. This is less common for small businesses and for Affordable Care Act plans, which generally have a limited network of providers and do not cover providers who are out of network at all.
If you practice in an area with few psychiatrists you might be able to have a successful practice even if it is a fairly low-income area, since desperation demands a solution… however, in an economic downturn, this may dry up.
The ideal location for this type of practice is an area with a low per capita ratio of psychiatrists to population (This infographic shows where there is a shortage), higher than average income per capita and good larger employer base. Given the general shortage of psychiatrists, such a place is not difficult to find.
Filing insurance is an entirely different world. While there may still be some patients who prefer to self-pay and possibly be reimbursed; the majority will prefer to pay their copay and have the provider file insurance for them. In order to do this there are several initial steps: setting ideal and minimal payment schedules, credentialing, reviewing and negotiating contracts with multiple insurance plans, getting a Medicare provider number (or opting out as discussed above), deciding what types of payment you will accept (cash, check, debit and credit cards, online payments), and making arrangements to accept those payments (business bank account, credit card processing, money till, receipt system).
At this point, you may want to give up any idea of filing insurance, and no one could blame you. Yet in many communities, there are not enough patients who can afford to pay out of pocket to support a practice. There are many communities with larger employers who provide good health insurance coverage. Once you get through the initial hoops the upkeep is manageable and the income worthwhile.
Many electronic records systems provide a practice with the ability to file insurance claims electronically, either as an integral part of the system or as an add on. When this is used effectively, the need to have a full-time biller is reduced (although it may be necessary when dealing with claim denials). This can provide great savings for a smaller practice.
Pros and Cons
The advantages of accepting insurance are greater for a practice that may include multiple providers, is focused on shorter session psychopharmacology appointments, and/or where the number of patients able to pay out of pocket are too few to support the practice. In addition, accepting insurance often involves treating a different, sometimes more varied, population which may be appealing to some physicians and therapists.
The advantages of a fee for service practice are, for example, dealing with less paperwork, being able to write notes in the way one desires (for the most part), simpler billing, more opportunity to focus a practice on therapy, less need to hire administrative staff. One of the bigger downsides is more isolation, both in general (if there is no administrative staff), and in particular, contact with colleagues. In a fee for service practice it is even more important to seek out colleagues outside of office hours to avoid one’s own practice biases, to discuss ethical concerns, as well as for socializing in general.
Coming up… in the next post, I will be looking more closely at credentialing for insurance company panels, surviving with your sense of humor intact.