Tips on How to Contract With Private Insurers

The terms of your contracts with insurers or managed care organizations (MCOs) can affect many aspects of your practice, including how much you are paid, which services you are permitted to provide, and how you are expected to provide them. So before you sign any contract, it's vital that you take the time to read it thoroughly. You cannot rely on the word of colleagues who say they signed a contract with the same company, the terms were good, and their lawyer approved it.

Each contract is different, even from the same company. A contract with one physician may be written at a time and under circumstances that are different from another physician's. Also, don't assume that a renewal contract is the same as the one received “last year.” Often it is not.

As insurers and psychiatrists have become more sophisticated about the managed care environment, contracts have become more sophisticated and complex as well. Companies may include important contract features in appendixes, addendums, or “attachments” such as provider manuals, which, if you're not careful, you may be unaware of until it's too late. You must be certain to obtain all documents referenced in a contract and to review them all before entering into a contract. If there is any provision in the contract that you do not understand, do not sign it until you get an explanation and are certain that you can comply with that provision.

In the 1990s, insurers and MCOs sometimes used risk-based contracts, which transferred the risk of expensive patient care to the physician through capitation or case rates, but over the years this practice has largely been abandoned.

Now most contracts stipulate the fees that will be paid to in-network physicians for specific procedure (CPT) codes and which physicians will be paid for which CPT codes. For instance, some insurers pay psychiatrists only for the psychiatry CPT codes (the 908xx series) even though it is just as appropriate for psychiatrists to use the evaluation and management (E/M) codes (the 992xx series) when they do patient evaluations and medical management. This kind of information is rarely found in the body of the contract, but should be available in either the appendixes or attachments. Be sure you find out how much you'll be paid and what CPT codes you're permitted to use before you sign the contract.

Contracts should also define the physician's status with the insurer in various settings. While some contracts may apply to only specific settings, others stipulate that an in-network psychiatrist is in-network at every place he or she provides services. This requirement has been problematic for some psychiatrists who practice in clinics that accept many forms of insurance but who have private practices where no insurance is accepted. If the clinic's contract with an insurer says it covers all its psychiatrists in all practice settings, then psychiatrists who see a patient in that plan in their private practice are considered in-network providers there as well and will be paid only the in-network fees negotiated under the clinic contract.

Even if the clinic's contract with the insurer does not stipulate that all places of service are covered, psychiatrists who want to be considered out of network in other settings must notify the insurer of this fact.

Because many insurance companies are having trouble maintaining an adequate number of psychiatrists in their networks to meet enrollees' needs, they may make it difficult for psychiatrists to sever their relationship. APA's Managed Care Help Line has received calls from members who were unable to get out of their contracts for many months because an insurer maintained it hadn't received faxes or e-mails that the doctors had sent to convey their change in status. We recommend that any notifications about a change in status with an insurer be done in writing and be sent by registered mail, return receipt requested. This way you will have a record of the company's having received your request.