What are some of the biggest myths about taking insurance in private practice? How long does credentialing actually take? Is insurance better than private pay?
In this podcast episode, Joe Sanok speaks with Jeremy Zug about the biggest myths in taking insurance in private practice.
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In This Podcast
In this podcast episode, Joe Sanok speaks with Jeremy Zug about insurance myths from practicing in the state you live to private pay.
Myth 1: “I can only practice in the state that I live in”
Look into the licensure of your state and make sure you are licensed in the state you want to offer services in. Also, make sure you’re credentialed in that state according to their insurance company laws. Use Telehealth platform that is HIPAA compliant.
Myth 2: “Credentialing only takes 30-60 days”
Credentialing is a long process. Insurance companies process applications as they receive them. This hardly happens between 30-60 days, but rather between 90-180 days. This is due to the industry growing and also because insurance companies are not concerned with fast-tracking your application.
Myth 3: “I need to be on every insurance to have a successful practice”
When you’re on a number of insurance panels, you’re likely to end up with thousands of dollars in outstanding claims past 120 days. This will stop you from making progress on your revenue goals. Instead, take one insurance and build your practice around that insurance. Then, a year or two later, add another one. Once that’s established, add another one, and so on.
Myth 4: “You don’t get paid as much as an out-of-network provider”
An out-of-network provider is 100% private pay while also being somewhat involved in the insurance world. With out-of-network, you’re able to bill the patient for the entire cost of the session and have payment go to the patient for the insurance portion. Or, you can bill the insurance, charge the patient for their co-pay, and then collect from the insurance company. Whatever the insurance company doesn’t cover, you can get the patient to pay.
Myth 5: “Insurance is better than private pay”
There is a case for private pay. You don’t have accounts receivables to deal with. You get the cash in hand. Payroll becomes easier. Private pay allows you the freedom to do some volunteer work and also charge your full fee.
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This is the Practice of the Practice podcast with Joe Sanok, session number 402.
Well today on the Practice of the Practice podcast and live here on YouTube, we have Jeremy’s Zug. I almost said Dr. Jeremy Zug. You seem like you should be Dr. Jeremy Zug even though it’s totally not true.
So, let’s say you start out in private practice and you go to apply to a panel, but you don’t have a three to four-month reserve of cash in the bank. I would not depend on your insurance application or your credentialing application getting processed in 30 days. So, I would make sure you have enough in the wings to make it until your application is processed. But that timeline, that insurance, you know, is fast or effective or efficient, as far as administrative processing is not always true. So, do you want to go for the best and plan for the worst. [JOE]: Yes. So, could someone that’s just getting going submit their applications before they have an office so they don’t have that ongoing expense or do they need you to have your physical office and all that set up? [JEREMY]: So, if you in theory knew where you were going to practice, for sure you could enter that address on your application. So, you could do it ahead of time if you’re absolutely sure that that was your practice address. A lot of applications will ask for your practice and then home address, some will just ask for home address. It really depends on the application itself. But yes, you’re right. In theory you could get a jump on it if you knew where you were going to practice. [JOE]: Could you just do a change of address form later or is that harder within — [JEREMY]: That is a good question. Change of provider information forms are pretty simple. And now with electronic portals, each insurance company has their own online system that you can manage this information, it becomes a lot easier. So that’s certainly a consideration. [JOE]: Yes, I mean that intentional bottlenecking I think just saves them money and means that they’re not providing as much services and gives them more. [JEREMY]: That’s exactly right. Joe, are you seeing that a lot of providers are finding office spaces before actually getting a key to getting that office? [JOE]: Yes, I mean, I think right now, at least what I’m seeing is that the market is more in the landlord’s favor. And so, even mental wellness counseling, when I sold that in June of 2019, you know, Nicole, there were five clinicians kind of not fighting but all wanting the same space. And you know, a friend of mine who is a different clinician ended up getting the one that she wanted, and then even the space that they got, that’s this beautiful space, the landlord kind of was like, “I don’t really need to negotiate with you. I have like people lining up, they want this space. If you want it, here’s what the cost is.” And so, I don’t know if that’s just unique to Northern Michigan or, but as I’m talking to a special, our Next Level Practice membership community, people are finding landlords are less and less likely to negotiate.
But I think the subleasing space, because people then get in these leases, and they aren’t full, oftentimes there’s a lot of clinicians out there looking for someone to sublease. And so, I’d say for people just getting going, especially knowing now I mean 180 days, half a year, like that’s nuts. So if you can sublease and have it be based on what you bring in or even just a lower amount where you say, “Okay, I’ll rent one day a week, maybe do private pay for half a year, and really build those skills,” which are good to build anyway, that then would keep someone’s risk way down if they’re just getting going. [JEREMY]: Right. And then you can always say like, like you said, you can submit that change of address form. I mean, providers change addresses all the time, right? Therapists change locations all the time. So, insurance companies are pretty used to those and they, those tend to process much quicker because you’re already in the system and you’re a known quantity. So that’s certainly a better strategy for sure than taking it like really segmented. You want to overlap your processes a little bit. [JOE]: So, practicing in other States, you know what, we actually have a mutual client. Someone that was in my mastermind group came to Slow Down School that she practices from, is it from Mexico? And she does online counseling with her whole practice where she wants to live. And so, going by your first myth, I mean that’s just an example of living where you want to live, but then you’re getting kind of the big city prices. [JEREMY]: Yes. And I think it’s important because telehealth is starting to really develop, right? You’re really starting to see the technology for telehealth and the capabilities start to match insurance company policies. So, you’re starting to see that really blossom out. And so, I think it’s becoming much more actionable and doable to start to imagine, “Where do I want to live and then how do I practice in that state, but live over here?” So, you know, it’s a lot of what you talk about Joe, as far as we reverse engineering what you want your life to look like and be about. And billing and credentialing can fit into that narrative. You just have to be really sure about rules and regulations. But once you’re sure about those, then you can execute on that strategy. [JOE]: Yes, 100%. I was on hold for priority health recently, for my own insurance, which, [inaudible 00:10:47] but on hold they were like, “Instead of going to urgent care, do you know that you could do an online session with your doctor or with a doctor, if you have a medical, like non-emergency, but emergency, like urgent care level?” I thought, if they’re getting to that level that they’re promoting it when you’re on hold, the urgency is going to trickle down into therapists a lot more. [JEREMY]: Oh, for sure. Yes. Whatever happens on the primary care side eventually hits the mental health side. [JOE]: Yes. All right. So, what’s number three? The third myth. [JEREMY]: Number three is an issue that is near and dear to my heart, but it’s the idea that you need to be on every insurance to stay full or to get full or to have a successful practice. That is categorically untrue. And the reason why I have a lot of fire behind this one is because I’ve seen hundreds of practices, if not thousands of practices that get on every single insurance panel. So they’ll come right out of the gate with 10 insurances and then they end up with, you know, 10 20, 30. I even saw yesterday, $300,000 in outstanding claims pass 120 days and now you’re stuck in this administrative mouse wheel, when you’re not really making any progress towards your revenue goals, you’re not making a lot of progress in the business and you’re really overwhelmed.
So, the way out of that myth from my perspective and from seeing hundreds of practices that take one insurance, so typically it’s a payer like Blue Cross Blue Shield or Cigna or Aetna and they build a practice on that insurance. Then like a year or two later, they add another one and then maybe once that is established, they add another one. I work with a client, one group practice. They take 25 insurances and their aging is under 30 days. But the only reason that is the case is because they slowly, and then, I mean slowly painstaking grew the insurance side of things. They didn’t come right out of the gate and do 15, 20 insurances. [JOE]: They had to [inaudible 00:12:59] them down for one and then added another and another. [JEREMY]: And then one of the [inaudible 00:13:03] groups I work with that have never had, they’ve only had the revenue go up and they’ve never gone backward ever. [JOE]: So, what’s aging mean? I know we’re going to go into terms in the next episode, but just because you used it. [JEREMY]: Oh yes. So, aging or accounts receivables is the idea that you submit a claim to the insurance company that should warrant reimbursement, but you don’t have that money yet. So, depending on a variety of administrative glitches, your claims can live right in accounts receivable where you don’t have that money for a certain period of time. So, it’s sort of like a KPI, actually, a key performance indicator that I look at to say how much money is past 60 days or how many claims do you have outstanding past 60 days or 90 days or 120 days? That’s a key billing marker for success because it means that your cash flow is good. But if you have claims that are past four months, and the likelihood of you collecting on that decreases tremendously. [JOE]: So, if they have that many insurances and the aging is less than 30 days, that means they’re mostly getting paid within 30 days for services they render. [JEREMY]: That’s right. Four 25 insurance panels. But that’s uncharacteristic because they went slow, they were patient, they had the long game in mind, so they had a certain mindset about them that made that doable, but the mindset that I have to get there today or tomorrow becomes untenable or unscalable or unsustainable even for the long run. [JOE]: I would guess some people apply to be on a bunch of insurances because I mean if it’s taking a 180 days with some to get on, it’s like, “Well, half a year from now I’m going to want to be on this one, so maybe I should get on all of them right now and then later on I can always sort out which one I want to get off of.” [JEREMY]: Well, that’s exactly right. And then they get their reimbursement, their fee schedule, which is the spreadsheet of what you’re going to get paid for your services and it, your profit margin is low and then you want to get off that panel. I see that all the time too. I want to get on this panel, they get their fee schedule, what they’re supposed to get paid per hour, and then they say, “I can’t keep the lights on at that rate.” Whereas they could have spent that time building perhaps some private pay patients or some out of network patients while they’re getting a network and sort of buffering their risk a little bit, they go all in on the insurance table, whereas that may be a very risky move in the long run. [JOE]: Yes, I know we’re going to cover a lot of this. I’m going to save some of my questions for some of the other episodes. I wouldn’t want this first one to be too full of golden nuggets. [JEREMY]: That’s right. [JOE]: Is it golden nuggets? [JEREMY]: That’s got to be the phrase. [JOE]: That’s a simply weird term. Golden nuggets [inaudible 00:15:48]. All right. So, what other myths do we have? [JEREMY]: All right, so the next myth is that you don’t get paid as much as an out-of-network provider. This one kills me, because an out-of-network provider is sort of like being a hundred percent private pay, but also a little bit in the insurance world. So, you’re kind of, there’s one foot in and there’s one-foot out kind of thing. And so with out-of-network at the moment what you’re able to do is you’re able to bill the patient for the entire cost of the session and have payment go to the patient for the insurance portion; or you can bill the insurance, charge the patient for their cost share, right for their co-pay, and then collect from the insurance company. And then whatever the insurance company doesn’t cover, you can, what’s called balance bell or bill the patient for the remainder of the session. So, I don’t know if we want to take like an equation and some math. [JOE]: Yes, so, I mean it’s to say like your, say Blue Cross is going to pay 100 bucks a session and you’re not on Blue Cross and you pay, you know your private pay is 150, you can bill the client $150 but they might get $100 reimbursed to them? Or maybe if they have like an 80:20 split, they might get $80 or … they’re not paying as much for private pay but then you’re getting the full amount. [JEREMY]: That’s right. That’s exactly right. And you have the option to bill them for that difference or you can just take whatever their co-pay or 80:20 split was and the insurance money and call it a day. You have a lot of flexibility there because you’re out of network. You’re not under a contract where you have to abide by the reimbursement rules, and we’ll get to fraud and insurance audits later, but you’re not under that requirement. So, it really does give you a lot of flexibility, it gives you the profit margin potentially of private pay, right, of getting paid for your full fee, and then you also have the ability to tell the patient, “I will courtesy bill,” which is the colloquial term for billing the insurance company for your patient.
You have two options there. You can, out of your electronic health record or on paper, submit the claim for your patient. That’s called courtesy billing. Or you can issue your client a superbill, and your patient has to deal with that on their own. The idea that you would courtesy bill starts to sound like a luxury service that you offer when in reality it doesn’t take that much time on your part as the therapist. [JOE]: Yes. Whereas if you are in-network, you have to bill to get paid. So, it’s called [crosscheck]. [JEREMY]: That’s right. Not only do you have to bill insurance, but you also have to collect the co-pay and deductible no matter what. And there are very, very rare circumstances where insurance will let you write off or forgive the co-pay or deductible. It’s exceedingly rare. So, if you’re going to take insurance, as an in-network provider, you have to live by those rules. [JOE]: Awesome. All right. So, what is our last myth to cover? [JEREMY]: So, I think our last myth, and we’ve talked about this, as far as shooting myself in the foot, but honestly, I think that this is the best-case scenario. But I think there is a case for private pay. I think that on a lot of levels you don’t have accounts receivable to deal with, which means you’re not financing the insurance company until you actually get that cash. You get it in hand, and I think Joe, you could probably speak to how good that feels, right? As far as like, “I don’t have to worry about what’s past 30, 60, 90 days. I have it in my bank account.” I think that payroll becomes a lot easier, honestly from the side of the therapist and maybe Joe, you could speak a little bit more to that, or I could as well. But I think that that’s a reality. I think that private pay enables you some freedom to do some “volunteer work”, or to get paid your full fee, your full freight, and have a successful practice that way. So, I — [JOE]: I think for me it’s like to be able, because my practice was entirely private pay, it was awesome to just get paid, be able to pay the clinicians. They didn’t have to wait on it, way less to keep track of in regards to just what I as an owner. Now, if I really wanted to scale, that would have been harder because you have kind of a boutique practice and you know, we had 11 clinicians, but you know, if you want to go way bigger than that, you probably have to add a couple insurances. But it’s that point when I would have not been the one just looking at the money, adding in bookkeepers and billers or things like that. So, — [JEREMY]: Right. Well, that’s exactly right. And I think that if you’re passionate about staying with your insurances that you’re in network with, but you also want to talk about strategies to develop the downturn and insurance or what have you, there are examples that I’m seeing and this is happening more and more where practices are able to secure grant funding; well, private funding even for write-off amounts for denied claims, for rejected claims and sort of fills the gap of what they should have gotten paid but didn’t. And those are becoming much more common. But I really do think that private pay as far as you know, headache with insurance, time spent for the clinician on billing, time spent for administrators on billing and payroll. That is the simplest way to go for sure. [JOE]: Awesome. Well, if you have more questions for Jeremy, there’s two things that you can do. If you head over to practiceofthepractice.com/Jeremy, you can schedule a free consulting session with him to pick his brain a little bit, hear a little bit about how there might be some ways to do things easier for yourself. Jeremy, who are the ideal people that might get something out of that kind of free call with you? [JEREMY]: Yes, it’s a really good question. So, I work with three kinds of individuals or organizations. The first type is the individual who is trying to DIY billing or credentialing, and doesn’t necessarily want to pay a company to do that. So, I consult with those individuals on the process, what they need to have in place and how to navigate that process as well as troubleshoot along the way and provide adhoc support for any glitches that might occur. I work with practices that want outsource their billing or in-source their billing. So, they’ve gone to a place whereby it makes a lot of sense to bring the billing back in-house and need to know how to do that. How do we set up a billing department? How do we hire, what do we need to track, or measure, or project or what have you? Those are the profiles and individuals and organizations that I work well with. [JOE]: Awesome. And then also on November 6, 2019 at 3 o’clock Eastern, 2 Central, 1 Mountain, and noon Pacific, we’re going to be doing a webinar, all about billing. Jeremy and I are going to go deep into this, beyond kind of what we are covering here on the podcast, and also, talking a lot of Q&A. So, you can register for that over at practiceofthepractice.com/billingwebinar. And, Jeremy, tomorrow we will be talking all about insurance terms that you have to know or you already know. [crosstalk] [JEREMY]: That’s right. [JOE]: This podcast is designed to provide accurate and authoritative information in regards to the subject matter covered. It is given with the understanding that neither the host, the publisher, or the guests are rendering legal, accounting, clinical, or other professional information. If you want a professional, you should find one. And thanks to the band Silence is Sexy for your intro music. We really like it