Questions about Outsourcing Billing/Insurance to a Private Practice

[asukaran]

---

Members do not see this ad.

Hey guys, I have some questions regarding a private practice I’ve been in contact with. They explained that clinicians are not contracted under the practice, but instead directly contracted with the insurance companies. The practice provides support with credentialing, billing, consultation, and referrals. Their compensation model is a 70/30 split (70% for the clinician) so the clinicians pay them 30% from the insurance reimbursement, though it seems they may be open to negotiation. They also ask for a 2-year commitment, noting that it can take significant time and effort on their part to help clinicians build their practice. This is the first time I’ve come across this kind of arrangement with a private practice. Any thoughts or suggestions? Thanks!

 

[WisNeuro]

Are you in-office or telehealth? If all they are doing is offering credentialing and billing, for the most part, you can do that much cheaper, along with a minimal amount of outreach and advertising to fill your schedule.

 

[asukaran]

Are you in-office or telehealth? If all they are doing is offering credentialing and billing, for the most part, you can do that much cheaper, along with a minimal amount of outreach and advertising to fill your schedule.

Only telehealth. I am only working part-time that would meet the lowest caseload expectation of them, too. But as a beginner, I want to secure networking and peer supervision opportunities in the local community. I'm also considering to negotiate the split...

 

[asukaran]

Also what are the differences between 1099 contractor versus this clinic's model?

 

[MCParent]

Are you in-office or telehealth? If all they are doing is offering credentialing and billing, for the most part, you can do that much cheaper, along with a minimal amount of outreach and advertising to fill your schedule.

Agree.

I did not experience credentialing to be so arduous that it was worth 30% of my income in perpetuity.
Most telehealth platforms offer built in assistance w billing directly to insurance.
My experience was that between psych today and happy patient referrals I was full up and turning people away in my pt practice.
2 year commitment? For a 1099 position?
Does the practice have some astounding referral network to a huge body of patients willing to pay out of pocket at full fee?

 

[psych.meout]

Only telehealth. I am only working part-time that would meet the lowest caseload expectation of them, too. But as a beginner, I want to secure networking and peer supervision opportunities in the local community. I'm also considering to negotiate the split...

Yeah, but you're giving up 30% of your reimbursement for what?

Credentialing, billing, consultation, and referrals?

Credentialing isn't an ongoing thing, so it is not worth any ongoing portion of your reimbursement after it is done.

Billing can either be automated by the platform you're usinbg and would that take far less than what this practice is. At worst you, you could contract out any billing to someone else for less.

Consultation? For what, specifically? And how often are you expecting to need consultation, based on your previous experiences?

Referrals shouldn't be worth that much money, especially if you are doing longer term therapy (vs. something like PCMHI) where you won't have that much turnover, though that would also depend on you and your specialty. Between online resources like Psychology Today, referrals from providers you know/are friends with, and patients referring others in their social circle, you shouldn't really need that much effort on your own or help from others to have a full panel, especially if you aren't looking to be full-time yet. It's definitely not worth 30% for referrals that will be billing insurance. Now, if they were referring cash pay patients who can afford >$200/hour and they could basically guarantee a full panel, that might be something to think about.

Also what are the differences between 1099 contractor versus this clinic's model?

It's hard to tell from what you've posted. Contractors pay more in taxes as opposed because employers pick up part of FICA for their employees. What is the arrangement in this clinic?

Sounds like you're not getting much from this clinic (not even a physical space to see patient's in person, furniture to sit on, utilities, etc.) but they want 30% of what you bring in for as long as you work there.

 

[MCParent]

Are you doing not-bananacrackers therapy? I had no one to refer to who wasn’t also full and not doing IFS/brainspotting and such. Referrals aren’t worth that cut.

 

[asukaran]

Thanks guys. However, my understanding is that this split is lower than the typical 60/40 arrangement for 1099-contracted therapists? And they handle billing the insurance companies, scheduling, and admin staff that can free up my time. I am new to private practice and thus it could take me more time dealing with insurance and other admin staff at the beginning. I'm only doing part-time so revenue from this at the beginning is not a big concern for me.

 

[asukaran]

Oh may I also ask how long does it typically take to get credentialed with major insurance panels? Thanks!

 

[MCParent]

Thanks guys. However, my understanding is that this split is lower than the typical 60/40 arrangement for 1099-contracted therapists? And they handle billing the insurance companies, scheduling, and admin staff that can free up my time. I am new to private practice and thus it could take me more time dealing with insurance and other admin staff at the beginning. I'm only doing part-time so revenue from this at the beginning is not a big concern for me. Additionally, regarding the 2-year commitment, I’m curious whether there is even any legal enforcement associated with that...

Do they eat any clawbacks or denials? I’m guessing no if they have that setup you described.
How busy can scheduling be? Usually tele platforms let you just open spots and people can schedule themselves. What other admin time is worth that to you?
Do you want an employer who starts off by asking you to do something illegal and then you plan to just ignore what they told you they want? Sounds like a bad business relationship.

Or, you know, ignore the advice from people here who ran successful pps and do whatever you’d like.

 

[R. Matey]

Thanks guys. However, my understanding is that this split is lower than the typical 60/40 arrangement for 1099-contracted therapists?

Lol, no. That's a big fat lie. You can find 70/30 1099 contracts.

 

[Sanman]

Are they fronting the session money so that you get a biweekly paycheck? Are they eating denials/clawbacks?

If the answer to both of those is 'No', then what are they offering that Alma or some other online platform is not? Part-time hours and taking insurance, you should be full with minimal marketing.

 

[WisNeuro]

Big hard no in giving up 30% essentially for billing help.

 

[asukaran]

Thank you for the advice, guys. If you run your own pp, where do you typically seek consultation, and how do you go about building a professional network in your local community (or online)? Are there consultation opportunities available through platforms like Alma or Headway? As a beginning therapist who has just moved to a new state, I don't know anyone here yet. How would you navigate that? My concern with working for these platforms right away is that it may limit my opportunities to connect with the local professional community which could help me earn experience and networking opportunities to open my own business in the future... Thank you.

 

[AcronymAllergy]

Oh may I also ask how long does it typically take to get credentialed with major insurance panels? Thanks!

Depends, but it can sometimes take a couple months.

 

[PsyDr]

1) This is some BS. They’re trying to skirt labor laws by saying you’re not contracting with them, except they need you to sign some contract committing to 2 years and a 70/30 split. Either there is a contract with them or there is not.

2) ask them if you can see a sample of this 2 year commitment. There’s a 95% chance that there is a contract, and a 5% chance this is just a gentleman’s agreement.

3) If you’re not contracted with the practice, then tell them “yes”, get signed up with the insurances, take some patients, throw the practice deuces and ask them to provide any contractual obligation to do otherwise. Usually ehr have an easy way to bill.

4) ask them what they supply for this 30%. They’ll probably say it’s marketing, billing, scheduling, offices, and admin. Maybe that’s worth it to you, maybe it’s not. Likely they’ll get pissed 30% initially seems fair to get you set up, sign patients, get insurances, etc. But 25% after you’re set up sounds more fair.

5) in my extremely limited clinical work, I take a 75/25 split. That assumes I walk in, do my job, and nothing else. But I have some standing in a very narrow part of a subspecialty.

 

[asukaran]

1) This is some BS. They’re trying to skirt labor laws by saying you’re not contracting with them, except they need you to sign some contract committing to 2 years and a 70/30 split. Either there is a contract with them or there is not.

2) ask them if you can see a sample of this 2 year commitment. There’s a 95% chance that there is a contract, and a 5% chance this is just a gentleman’s agreement.

3) If you’re not contracted with the practice, then tell them “yes”, get signed up with the insurances, take some patients, throw the practice deuces and ask them to provide any contractual obligation to do otherwise. Usually ehr have an easy way to bill.

4) ask them what they supply for this 30%. They’ll probably say it’s marketing, billing, scheduling, offices, and admin. Maybe that’s worth it to you, maybe it’s not. Likely they’ll get pissed 30% initially seems fair to get you set up, sign patients, get insurances, etc. But 25% after you’re set up sounds more fair.

5) in my extremely limited clinical work, I take a 75/25 split. That assumes I walk in, do my job, and nothing else. But I have some standing in a very narrow part of a subspecialty.

Thank you for sharing. What kind of labor laws / additional responsibilities they should follow / take if they contract with me as a 1099 versus this model?
I guess even for 1099, the clinic does not eat denials / clawbacks either?

 

[Doctor Eliza]

I'd get some real details on how many clients they can get you and how quickly. That's the only real value I see with this practice. In general, running your own PP is better, but you have some major strikes against you being a newbie and telehealth only. Are you sure you want to be telehealth only? It seems much harder to fill a practice that way.

 

[AcronymAllergy]

I'd get some real details on how many clients they can get you and how quickly. That's the only real value I see with this practice. In general, running your own PP is better, but you have some major strikes against you being a newbie and telehealth only. Are you sure you want to be telehealth only? It seems much harder to fill a practice that way.

Just to latch on to this--I see a generally older population, but the vast majority strongly prefer in-person. I think a lot of folks are just burnt out with technology in general, and with virtual meetings and telehealth specifically.

 

[PsyDr]

Thank you for sharing. What kind of labor laws / additional responsibilities they should follow / take if they contract with me as a 1099 versus this model?
I guess even for 1099, the clinic does not eat denials / clawbacks either?

There's really only four choices here:
1) You're a contractor with them
2) You're their employee
3) Your LLC has a business agreement with their LLC, which gives them 30% of your revenue for SOMETHING. Contracts that do not offer something (i.e., "consideration") are not valid. For example, if you signed a contract with me for 30% of your hair and received nothing, a judge would throw the contract out.
4) You are purchasing a service from them.

There is something they want you to sign. Ask to take a look at it. That has to be a contract. If that is the case, then their statement "We don't contract with you, you contract with the insurance companies" makes zero sense. I'm guessing what they mean is "We will credential you with some insurance companies, set you up with an EMR, market you, maybe give you admin support such as answering the phone, maybe we have an actual office, and give you some initial patients. For that, we will get 30%.". That makes you a contractor. Honestly, that's not bad....especially if you are a broke early career person.

I'm just sketched out by people who are doing something, but calling it something else. They're trying to say you're not a contractor, but you're not an employee, and you're not purchasing something from them. If I went and cut open a goat, removed it's gallbladder, sewed it back up, and charged farmer Brown $100... that the practice of veterinary medicine, even if I call myself a "therapeutic butcher".

 

[WisNeuro]

There's really only four choices here:
1) You're a contractor with them
2) You're their employee
3) Your LLC has a business agreement with their LLC, which gives them 30% of your revenue for SOMETHING. Contracts that do not offer something (i.e., "consideration") are not valid. For example, if you signed a contract with me for 30% of your hair and received nothing, a judge would throw the contract out.
4) You are purchasing a service from them.

There is something they want you to sign. Ask to take a look at it. That has to be a contract. If that is the case, then their statement "We don't contract with you, you contract with the insurance companies" makes zero sense. I'm guessing what they mean is "We will credential you with some insurance companies, set you up with an EMR, market you, maybe give you admin support such as answering the phone, maybe we have an actual office, and give you some initial patients. For that, we will get 30%.". That makes you a contractor. Honestly, that's not bad....especially if you are a broke early career person.

I'm just sketched out by people who are doing something, but calling it something else. They're trying to say you're not a contractor, but you're not an employee, and you're not purchasing something from them. If I went and cut open a goat, removed it's gallbladder, sewed it back up, and charged farmer Brown $100... that the practice of veterinary medicine, even if I call myself a "therapeutic butcher".

I'd also want to see the contract, but from what OP says, it really sounds like they are charging 30% for simply credentialing them, getting them some patients, and taking care of billing. Especially as it's all telehealth. If OP doesn't want to handle those things, they can hire a one time credentialer, and get an EHR with built in billing, o pay someone to do that for them for a much lower rate. It just sounds like a terrible deal.

 

[R. Matey]

Just to latch on to this--I see a generally older population, but the vast majority strongly prefer in-person. I think a lot of folks are just burnt out with technology in general, and with virtual meetings and telehealth specifically.

It's not just older people. The vast majority of my patients (including Gen Z patients) strongly prefer in-person services.

 

[Sanman]

It's not just older people. The vast majority of my patients (including Gen Z patients) strongly prefer in-person services.

Are you self-pay or insurance based? Just curious as to the break down. Most insurance based clients by me will take whatever they can get.

 

[R. Matey]

Are you self-pay or insurance based? Just curious as to the break down. Most insurance based clients by me will take whatever they can get.

Mostly insurance-based in a large hospital system. We do take self-pay, but it's really expensive for folks.

 

[AcronymAllergy]

Are you self-pay or insurance based? Just curious as to the break down. Most insurance based clients by me will take whatever they can get.

And now to add to this--where I am as well, many people can't find anyone local with any availability. I usually recommend they at least consider telehealth, which I discuss with them, but there's frequently a fair amount of pushback.

 

[R. Matey]

And now to add to this--where I am as well, many people can't find anyone local with any availability. I usually recommend they at least consider telehealth, which I discuss with them, but there's frequently a fair amount of pushback.

Yeah, I wonder if the proliferation of VC-backed telehealth companies that largely hire midlevels and FPPS graduates have soured many people's perception on virtual services.

 

[Sanman]

Yeah, I wonder if the proliferation of VC-backed telehealth companies that largely hire midlevels and FPPS graduates have soured many people's perception on virtual services.

There certainly is a backlash against Betterhelp, etc. That said, I am seeing insurance companies and other big backers push for telehealth services to contain costs. I am also getting weekly recruitment emails since being Psypact approved. There is certainly demand.

 

[R. Matey]

There certainly is a backlash against Betterhelp, etc. That said, I am seeing insurance companies and other big backers push for telehealth services to contain costs. I am also getting weekly recruitment emails since being Psypact approved. There is certainly demand.

I believe it. I'm licensed in a psychpact state but not psypact approved and I still get recruitment ads via Linkedin for telehealth including a hilarious one where I was offered $80k/year for only 35 patient contacts a week: "Umm...no thanks. I have self-esteem."

 

[Therapist4Chnge]

I very much dislike videoconferencing, but I had to adjust to meet patient preferences. It’ll be interesting to see how telehealth evolves bc Medicare currently covers it, but last I heard they haven’t extended it past 09/30/25. While I don’t take Medicare, they impact commercial policy coverages, which then can trickle down to impact OON coverage and cash pay ppl like me.

 

[chicandtoughness]

I was the office manager for one of these practices. Very common for group private practice, actually. 70/30 is the most common split but 60/40 is also common for newer or masters level therapists. Everyone was individually contracted with insurance panels but we would assist with the process and negotiations. At the time I did billing/credentialing/intake/marketing and basically everything else that wasn’t patient facing for the therapists/psychologists. It is surprisingly more work than you’d think. When I was there we had about 20 providers…. I think that practice is now multi-city and has like 100 providers so it’s clearly an okay enough place to work. I suspect they probably credential under a group NPI now as I can’t imagine trying to coordinate individual credentialing for 100 staff members. Back then, we gave therapists the option to be salaried (base rate 75k or so + incentives) or to be 1099. Most people picked 1099.

That said, most people use these types of group practice arrangements to start their career and build a caseload + get postdoc hours. If you’re already a well established clinician there is no reason to join a practice like this.

 

[asukaran]

I was the office manager for one of these practices. Very common for group private practice, actually. 70/30 is the most common split but 60/40 is also common for newer or masters level therapists. Everyone was individually contracted with insurance panels but we would assist with the process and negotiations. At the time I did billing/credentialing/intake/marketing and basically everything else that wasn’t patient facing for the therapists/psychologists. It is surprisingly more work than you’d think. When I was there we had about 20 providers…. I think that practice is now multi-city and has like 100 providers so it’s clearly an okay enough place to work. I suspect they probably credential under a group NPI now as I can’t imagine trying to coordinate individual credentialing for 100 staff members. Back then, we gave therapists the option to be salaried (base rate 75k or so + incentives) or to be 1099. Most people picked 1099.

That said, most people use these types of group practice arrangements to start their career and build a caseload + get postdoc hours. If you’re already a well established clinician there is no reason to join a practice like this.

Thanks for sharing this. But they tell me I'll contract with insurance directly with their help rather than contracting with them, making me wonder if in that way they take less/no responsibility if anything goes wrong (like crawbacks?). Also they ask for a 2-year commitment which I think is quite uncommon too.

 

[psych.meout]

Thanks for sharing this. But they tell me I'll contract with insurance directly with their help rather than contracting with them, making me wonder if in that way they take less/no responsibility if anything goes wrong (like crawbacks?). Also they ask for a 2-year commitment which I think is quite uncommon too.

Are you still seriously considering their offer?

 

[medium rare]

Thanks for sharing this. But they tell me I'll contract with insurance directly with their help rather than contracting with them, making me wonder if in that way they take less/no responsibility if anything goes wrong (like crawbacks?). Also they ask for a 2-year commitment which I think is quite uncommon too.

Do not take this offer. As has been said here already, you can get credentialed with insurance yourself or hire someone to do so for you. Just being on insurance panels will get you busy and you will get 100% of what insurance reimburses. All while being your own boss, setting your own policies, and working when/as much as you want. Don’t sell yourself short…

 

[WisNeuro]

Thanks for sharing this. But they tell me I'll contract with insurance directly with their help rather than contracting with them, making me wonder if in that way they take less/no responsibility if anything goes wrong (like crawbacks?). Also they ask for a 2-year commitment which I think is quite uncommon too.

If you are credentialed directly with the insurance company, you are solely on the hook for audits and clawbacks. As others have said, I see nearly zero reason to accept this offer. The only way I'd even start thinking about it as a starting point of negotiations is if they were giving you a physical office space with the split.

 

[chicandtoughness]

Thanks for sharing this. But they tell me I'll contract with insurance directly with their help rather than contracting with them, making me wonder if in that way they take less/no responsibility if anything goes wrong (like crawbacks?). Also they ask for a 2-year commitment which I think is quite uncommon too.

These types of practices do exist out there, yes. It's not uncommon. That said, I only think it's worth it if you are a baby therapist just starting out with 1) no knowledge of how to negotiate rates, 2) don't know a thing about billing and claims filing, 3) want to focus solely on the patient-facing front and leave all back office work to someone else. It sounds like you're a licensed psychologist and this isn't your first rodeo, so there's no reason to hand over 40% of your income to someone who will maintain limited responsibility and give you minimal benefit.

If you REALLY don't want to do your own billing/insurance/etc there are freelance billers that will cost a lot less than 40% of your income. I used to do billing/claims for a private practice psychologist (he was in his 70s and not interested in the technology of it all) and I charged $25/hr for 5-10 hrs a week of work, if that... so $1000/month at the worst, and rarely was it that bad because if everything goes well - and it usually does - billing in a lot of these private practice EHRs nowadays is as simple as pressing a button and waiting for the check to come back. I would say his costs were probably more like $500-600/mo. That's 5-6 sessions for you if you're going with the lowest of the low payor who only reimburses you like $100 per 90837, or less than a day's worth of work.

 

[asukaran]

I have a follow up question... Does the group practice usually eat the costs of insurance denials/clawbacks?

 

[Doctor Eliza]

I haven’t heard of that happening. It certainly didn’t happen in the group where I used to work.

 

[asukaran]

I haven’t heard of that happening. It certainly didn’t happen in the group where I used to work.

So basically the group practice will not be responsible for insurance denials and clawbacks? What was the support that they provided for you? Thanks.

 

[Doctor Eliza]

So basically the group practice will not be responsible for insurance denials and clawbacks? What was the support that they provided for you? Thanks

This was pre Covid, so it was 100% in person. So they furnished all the office and testing supplies, a very steady stream of clients, a billing staff, and receptionists. I worked there for ten years (too long) while they took 40-50% of what I brought in. I left 5.5 years ago for solo PP and it was a fabulous decision. I doubled my income and I have great autonomy now.

 

[PsyDr]

This was pre Covid, so it was 100% in person. So they furnished all the office and testing supplies, a very steady stream of clients, a billing staff, and receptionists. I worked there for ten years (too long) while they took 40-50% of what I brought in. I left 5.5 years ago for solo PP and it was a fabulous decision. I doubled my income and I have great autonomy now.

Didn’t you say that you were making like half the national average at that time?

 

[Doctor Eliza]

Didn’t you say that you were making like half the national average at that time?

Yep. And I worked a ton of hours. It was a poor decision to stay as long as I did. They capitalized on my fears that it would be hard to run a business and get clients. It has been so much easier than anticipated.

 

[PsyDr]

Yep. And I worked a ton of hours. It was a poor decision to stay as long as I did. They capitalized on my fears that it would be hard to run a business and get clients. It has been so much easier than anticipated.

Thanks, and sorry for bringing that up. I really wasn't trying to criticize. I just want to make sure that you were not in the same position, and offering advice to the kiddos. Same reason I avoid participating in discussions about psychotherapy.