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How to Determine Mental Health Insurance Reimbursement Rates

In order to build a sustainable practice, therapists must be a jack-of-all-trades. While you may get help from an administrative assistant, a billing specialist, and others who can handle various tasks, it’s important to have a basic understanding of each area of your business and how it operates. Therapists who understand the business portion of their practice are able to better serve their clients since they can stay organized and ensure they’re reimbursed for the services they’re providing. After all, one of the most essential aspects of managing a therapy practice is cash flow — how quickly and how much you’ll be reimbursed by your clients’ insurance companies. 

While the question of how much you can expect to be reimbursed is an important one, it’s also tricky to answer. Unlike those in most other professions, medical professionals don’t get paid in a straightforward manner. It can be confusing to try to determine how much you’ll be reimbursed. Many different factors affect reimbursement rates, and different providers offer different rates. To make matters more complicated, the rates vary as they’re updated regularly. In this post, we’re exploring the factors affecting insurance reimbursement rates for mental health and how to determine what you’ll be paid for the services you provide. 

Factors Affecting Reimbursement Rates

Four primary factors go into an insurer’s calculations for what they will reimburse for mental health services.

1. License and Education

The type of license and how much education you have attained play a big role in reimbursement rates. The rates will vary between a Psychiatrist, Psychologist, (CNS-PMH), Licensed Professional Counselor (LPC), Licensed Mariage and Family Therapist (LMFT), and so on. Your level of education, typically tied to the type of license you have, will also impact rates. Someone with a Ph.D. will usually be reimbursed at a higher rate than someone with a Master’s degree. 

2. Specialization

Your specialization area, as identified in the National Provider Identifier Registry, also factors into your reimbursement rate. For example, Addiction Psychiatry will typically be reimbursed at a higher rate than Cognitive & Behavioral Therapy. Because insurers are always trying to include a full spectrum of providers in their network, they incentivize providers with rarer specializations. 

3. Location

Also because insurers are looking to build out a full collection of providers for their customers, your location plays a role in your reimbursement rate. If your city has a shortage of providers of your type, you’ll probably have a higher reimbursement rate than a city that’s saturated. 

4. Demand

The final factor is demand for your area of specialization in your location. If the demand is high, insurers will be willing to reimburse more in order to attract a sufficient number of providers to cover the demand. 

Rates Are Always Changing

As you might predict, the number of providers with your specialization in your location and the demand for that specialization are constantly fluctuating. For this reason, reimbursement rates are always changing. Insurers are continually updating their rates in response to market influences. This is why insurers don’t publish their rates publicly — if they did, they’d be out of date by the time you found them. 

Your Reimbursement Rate is Custom to You

Your reimbursement rate is unique to you. When you’re accepted into a payer’s network, you’ll negotiate your reimbursement rates at that time. Each year, you’ll have the opportunity to renegotiate your rate, so be sure to take advantage of this time and see if you can increase your rate. Renegotiation is especially important if you’ve added new education to your resume.

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