Podcast Episode 26: Insurance Negotiation Tips

Enlightened Practice Podcast

We received a question from one of our listeners requesting advice on how to negotiate with an insurance company. Our hosts, Dr. Ken Braslow and Dr. Kari Kagan share their experiences and provide some handy tips on credentialing, marketplace, and dealing with insurance companies and claims adjusters.

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Transcript of the podcast

Ken: Hi Kari. Welcome back to the podcast. 

Kari: Hi Ken. Thank you.

Ken: It’s great to have you here today. And we have a question from one of our listeners who is asking about if we have any tips for negotiating with insurance companies regarding rates. So, first I thought I’d just start off by asking you, what’s been your experience in-network with insurance companies? And we can go from there. 

Kari: Sure. Yeah, I was in-network with one insurance company when I first started in my private practice and I decided to contract with that company, one, because it was a way of building my caseload early on and two, because this specific insurance company represented a population that felt near and dear to my heart. So, it gave me access to working with that population. I stayed in-network with them for a few years and then decided to leave because I just didn’t have many clients through them at the end of the day and I had already built up my private practice outside of insurance. So, it just wasn’t as necessary to stay in their network. But I didn’t have to go through the negotiation process with them, so I’m curious to hear about your experience and tips there.

Ken: Sure. How was it that you didn’t have to go through the process with them? It was, take or leave our rates? 

Kari: That’s a good question. I probably didn’t know at the time that I could negotiate, to be honest. I was early on in practice. This one company did tend to offer higher rates in general because it was working with a really specific population. So, my understanding just from what I heard through the grapevine was that, this was high on the higher end for insurance companies. So, yeah, it honestly just never crossed my mind to do so at the time. I wish I had known though because I probably would have done it.

Ken: Got it. And do they make you do treatment plans or other types of paperwork that you felt were excessive while you were seeing their clientele or did your experience go okay but you just didn’t need them any longer in your practice? 

Kari: Yeah, no. There wasn’t any excessive kind of paperwork. It was just the electronic system that I needed to work through to submit invoices to get paid. And if something went wrong there for whatever reason, like maybe a code was input incorrectly or something, then it was a long time on the phone to figure out how to solve those kinds of problems. So, it’s more like problem solving that took a lot of time more so than any upfront paperwork or treatment planning, or anything like that. 

Ken: That was similar to my experience, in that I felt like 98 percent of the time once I was in-network everything went as it should. The system wasn’t actually so terrible, but it was the two percent of the time that a claim for whatever reason didn’t go through, that required a lot of time to understand what happened. And sometimes even when I talked to the insurance company on the phone they didn’t know and they would just have you resubmit, which is an expensive use of time just to be on the phone with them. 

Kari: Yeah.

Ken: And I don’t know if there’s a certain purposeful delayed response on their part or gumming up the works just to keep you honest or if they’re really just incredibly large institutions and organizations that are imperfect and sometimes one side doesn’t know what the other side is doing. I remember having to sometimes deal with clients and ended up getting referred over to provider services where totally different department and where I would have to talk to them about my rates or that sort of thing, as opposed to the claim itself. 

Kari: Right.

Ken: So, I wouldn’t even say there was a pattern other than it was painful that two percent of the time. When I had to take insurance, the other experience that I had was, as a psychiatrist trying to do psychotherapy, I think that just did not compute for them. I think maybe there’s not many of us who do that. So, they would never give me a hard time when I was starting out treatment, but occasionally if I had seen someone for let’s say more than twenty sessions they would ask, so, what’s going on here? What’s the treatment plan? I don’t know if that was their standard procedure and they do that with everyone or if they really didn’t like paying for a psychiatrist to do therapy much. 

Kari: Right. 

Ken: So, that kind of sent me the message, we’re not too interested in you doing therapy. And towards the end of my time with them they did say, oh, we’re going to need you to do a treatment plan for a couple of these patients and this was before treatment plans were a lot easier to do in a more automated way. I said, okay, I’ll use this as an opportunity to exit the network because I just didn’t want to have to go through this on a long term basis. And these are high acuity patients or pretty severely challenged patients and not an easy treatment plan to document in the way they wanted. Of course, every time I’m seeing that patient I’m thinking about, what’s the plan? But, to have to justify it to the insurance company and have them agree or disagree when they’ve never met the person that I’m seeing. I just didn’t feel like it was a reasonable use of my professional time. 

Kari: Absolutely. 

Ken: So, that’s part of why I switched out, but I can speak to the original question which is negotiation tips for insurance companies.

Kari: Yeah, I’m curious. 

Ken: So, you can negotiate. They don’t advertise that. They typically just send you, if you contact them and say I’d like to become in-network, they’ll send you like a 100 page contract with the rates buried on page 78 and two little stickys that say, sign here. As if that’s just what you do. They’ve got their system down pretty well. I tried to get in-network with several companies when I was starting out and they all had the same technique. And one of them said, first you need to get credentialed and then we’ll consider negotiation the rates. And I thought, that’s not interesting to me because I’m going to spend a ton of time giving you all the paperwork you need and then you’ve already got me a little bit because I’ve invested the time. So, I moved on from them. 

Other companies, I told them I wanted to negotiate and they asked me to submit rates. Of course, nobody wants to go first in a contract negotiation. You want to see what the other side is willing to provide. So, what I did was look at the rates that they proposed and appendix F, page 78, and I typically started out by saying, well, why don’t we double these? And then they would come back and say, well, there’s no way we can do that. And I’d say, okay, well then what’s the best you can do? And they would sometimes negotiate it on a per CPT code basis and sometimes just on an across the board percentage basis for all CPT codes. 

Kari: Right.

Ken: And if you’re going to negotiate on a per CPT code basis, I would advise, know which CPT codes you’re going to use. It’s really important because once the negotiation is done they’ve got you. They’re highly unlikely going to want to go back and renegotiate at least for a couple of years. And you better know what you’re asking for. In my practice, there’s maybe four CPT codes that I use day in and day out. And those are the ones that I used in training and then when I left training and went into private practice. So, don’t waste your time with them haggling over every CPT code, it’s not worth it. And they’re probably going to be less likely to give you the real rate increases that you want and the core CPT codes that you are using. 

If it’s an across the board rate increase, then you may be able to say, okay, I can do X percentage above, but I’m picking this one CPT code and I really need this one CPT code to be even high percentage, and they may be willing to do that especially if it is a new intake. That’s really meaningful for them because insurance companies need to have good numbers that show that we get you in to see a specialist within X number of days. So, knowing that, that’s a little bit of their vulnerability. Of course, that means you’re taking on more patients and you may or may not want to go that path. 

Kari: Right.

Ken: You don’t have to see more patients, but that’s an area where they’re typically more likely to negotiate the fee. 

Kari: Yeah, good job.

Ken: So, within a contract I’d say, stepping back it’s really important to examine your timeframe. I started negotiating with them six months before I knew that I wanted their first patient to walk in my door. If you graduate and you go into full time private practice, and the first day you’re sitting there and nobody is calling you and you go, oh no, I better get in-network, they’ve got you. The credentialing process itself takes forever. It’s not as bad as it used to be. Sadly, when I was starting out everything was paper and it took a ridiculous amount of time, and now there are centralized databases for this process, but it still can take quite a long time. I had one insurance company, my contact there said the credentials committee meets once a month and hopefully your packet will come next month.

Kari: Oh, wow. 

Ken: So, who knows, maybe they had hundreds of applications to review that day. And if you’re on the bottom of the heap now you’re waiting two months instead of a month. So, they either consciously or unconsciously have the benefit of time. Of course, they would like to get people credentialed more quickly I would assume, but maybe if they know you’re negotiating they stall a little bit. 

Kari: Right. 

Ken: So, I would highly recommend thinking about when is the first day that I need to have my own clients or patients walking in the door and subtract six months. There’s one insurance company that I worked with, it actually took one year and I don’t know why that is.  

Kari: Wow.

Ken: I think it had something to do with their provider services person who was my contact, must have been the provider services person for like 3700 other clinicians because it would take forever for emails to get answered. Maybe there was some executive functioning challenges with that person or maybe just as an organization they were dysfunctional or functional and just everything takes forever there, like it can at many large institutions. 

Kari: Yeah.

Ken: So, I was fortunate that I was already in-network with other companies and I could just wait it out and it was worth it because they were willing to pay more, but I would have been not in a good space if I needed it and they were just going to move in the time that they were going to move and there was nothing I could do. So, thinking about context a little bit more, you definitely don’t want to put all your eggs in one basket. Just like, in general, you would never just have one client in your practice. And even in companies and organizations that don’t provide services they typically never want to have just want client it’s too risky. You have to spread your attention and your business over as wide a pool as you can. Although, too large a pool is not good either, so, each business has to figure out what their ideal number is, but for most businesses it’s highly unusual that their ideal client base is of one.  

I highly recommend that even if you’re not going to be in-network with ten insurance companies, you should apply to ten insurance companies. And one, some may just flake out or say your degree. Your profession type isn’t even needed in our network. So, you certainly can’t count on them taking you in-network. 

Kari: Right. 

Ken: And then, if they are all interested or at least some of them, you can compare the rates of all the companies and negotiate against other companies. Now, some will say, well, we’re not going to negotiate just because you got an offer from company A or B we’re not going to negotiate. Start a spreadsheet, put their best number up and put everyone else’s number up and then maybe just hone in on a few companies. 

You should know which companies have the biggest market share of clients. So, the way it works is, the companies that have the largest market share in your local area, meaning, they have the most number of patients and clients who are subscribed to them, are going to be the least willing to negotiate because they’ve got you. They know that they have more market share and they know that they’re going to send you a lot of clients or patients and they’re going to fill your business or at least partially contribute to it through volume, as opposed to through the rates. 

Whereas, insurance companies that may be big but may not have a big market penetration in your local area, are going to be much more likely to negotiate because they’re going to have fewer clinicians in-network because the clinicians know, well, I don’t want to waste my time with this insurance company because they’re not going to send me many people. So, having a blend of perhaps one or two insurance companies that have high market share and then one or two companies that have not so high market share, then you can go test, see how it goes for six months or a year. See who is sending you the most referrals and are they quality referrals and then you can then redo the numbers in a year. 

Sometimes, insurance companies will say, well, you need to be in-network for two or three years before we’ll negotiate, mark your calendar and start that process again six months before that date and see if you can negotiate specific CPT codes at that time. They typically won’t be willing to negotiate as much on a renegotiation, but they want to keep you in-network typically if you’ve done an okay job. You do have a little bit of leverage if you threaten to leave the network.

Kari: Right.

Ken: And if you’re already in other networks then you have that much more resiliency and buffer in your practice. 

Kari: Yeah. 

Ken: So, why would anybody take insurance rates? Well, one, that may be what the market says you have to do depending on your local arrangement in the marketplace. It is probably more the exception than the rule that patients can pay private paying rates and it makes sense. There’s lots of good in working with insurance companies in populations who are subscribing to insurance. And virtually, every patient or client you see will have insurance anyway. It’s just a matter of will you take it. 

Kari: Right. 

Ken: But, you should be thinking about insurance less from a money point of view and more from a marketing point of view. They are essentially doing your marketing for you. I know the day that I hit one of the big insurance company’s websites my phone, I don’t know if people got an alert or something but the phone had never rung that much.

Kari: Wow.

Ken: I went on the website, I had been checking in that day, it was on the website and I got really busy all of a sudden. So, they are in a sense a vehicle for your practice, for your brand, to get your name out. And you’re paying lower rates in return for their efforts at marketing and for the volume they’re going to send you and that’s the deal. You don’t have to take insurance forever if you don’t want to or you don’t think it’s a good idea, but it’s a fine way to start out. The other thing I would say is, think about, do you need to be in private practice full time to start out? If you have a situation where you have a community mental health job half time, then you have a lot few slots you have to fill to start your private practice. And so, that may also affect how much you want to take insurance or how hard you’re going to negotiate.

Kari: Right.

Ken: We’ve talked in other episodes about how much to charge and those things, so we won’t go into that here, but that’s just some general thoughts in approaching a negotiation. The other thing I’ll say is, in those 100 page contracts, there’s a lot of other clauses in there and you could hire an attorney to read them to you or for you, or you could do it on your own, but it’s important to not just look at the rate sheet and sign the contract, whether the rate sheet is what you want it to be or what they want it to be or somewhere in between. There are a lot of clauses in there that are very meaningful and it’s well worth reading them, especially being able to guarantee access within a certain amount of time, each insurance company approaches that differently. 

What to do when you’re full, and you’ve got to be careful with that because you have to be full across the board in your practice. You can’t just say, I’m full to this particular insurance company’s clients or patients. It will get you in some hot water.

Kari: Right. 

Ken: And, be prepared for insurance companies to call you directly and say, we have a patient for your practice. Can you take them? And if you on your voice mail say, I’m not accepting any new clients or patients at this time. I think you’re less likely to hear from them. But if they call you, you can’t tell them, well, I’m full. It’s too late. It sounds like you’re just being difficult. So, you have to be really careful. And then, looking at evergreen clauses and what’s the termination. Whenever you begin an agreement you have to know how to, how do I get out of this? 

Kari: Right. 

Ken: What are the timelines? And what are the criteria? 

Kari: Absolutely, yeah. 

Ken: So, I think I will pause there. Any other thoughts or advice or things you can think about?

Kari: The only thing that I might add that could potentially help in the negotiation process, I guess it would depend on the insurance company and how important this is to them, but I think if you can offer some kind of specialty, like getting certified in a certain type of treatment or something like that. That targets a smaller population of people, like you’re one of few providers that can offer something that might give you some leverage for negotiating as well. So, it’s something worth thinking about if you have a highly specialized practice, that you might be able to negotiate good rates within insurance companies. You know you offer some unique services. 

Ken: You know, that’s a really good point. I would imagine speaking additional languages helps if languages are in the catchment area that insurance companies needing to cover. And also, your zip code, that may play a role. If you’re in a densely populated zip code they may look at that differently than if you’re in a less densely populated zip code. That’s also something to be thinking about.

Kari: Yeah.

Ken: All right, that’s good. I hope this was useful. 

Kari: Yeah, it was helpful for me. 

Ken: Great. And if our listeners have any other questions we’d love to hear them. And we’ll have some instructions on our webpage on how to send us more questions. Thanks Kari. This was fun. 

Kari: Yeah. Thanks Ken. You too! 

Ken: All right. Bye. 

Kari: Bye.

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