Insurance and EAPs – The Basics (Part 1)

Are you in private practice and considering accepting insurance? If so, this series of posts is for you.

The decision as to whether to accept insurance and EAPs (Employee Assistance Program) is a somewhat complicated one. In this post, I will outline the pros and cons, but let’s start with some basic definitions. Insurance refers to the mental health portion of the client’s health insurance. An EAP is a benefit offered by the client’s company. The rationale is that mentally healthier employees are more productive.

Pros and Cons of Accepting Insurance and EAPs

Pros

1. You will get more referrals without extra advertising costs. It doesn’t cost you any money to be listed as a provider by either the insurance company or the EAP. However, keep in mind that EAP benefits generally only pay for 3-6 sessions.
2. You will serve a more diverse clientele. Instead of just seeing people in higher-paying professions such as lawyers and physicians (who can afford your private practice rates), you are more likely to see people with lower incomes. Because personality plays a role in career selection, you will see a broader range of personality types, which will make your job more interesting.
3. You likely will receive more referrals from colleagues. For example, if a colleague needs to refer a client, and that client needs to use insurance, the colleague can only refer the client to other practitioners who accept that type of insurance.

Cons

1. You will have more administrative duties. There are extra tasks associated with both insurance and EAPs: authorization, billing, and following up on unpaid claims. In general, paperwork for EAPs is simpler, however each EAP has its own method for submitting claims, which can be confusing if you accept EAPs from more than one employer.
2. For insurance, you must diagnose the client with a mental disorder. If the client doesn’t understand or agree with your diagnosis,this could become a clinical issue. EAPs generally do not require this.
3. You’ll be paid less. Depending on the insurance plan or EAP and your private pay rate, the reimbursement from the insurance company or EAP could be anywhere from 40 – 70% of your rate.

Next steps

Still interested? Here’s what to do next:

1. Set up an account in CAQH, a credentialing database. Many insurance companies and some EAPs require this to help streamline the application process.
2. Research the different insurance panels and EAPs to decide which ones you’d like to be on. Talk to colleagues about their experiences, check professional practice forums such as Psychology Today, and make an initial contact with the insurance company or EAP to check their reimbursement rates.
3. Once you’ve narrowed your choices, contact the Provider Relations department of the insurance companies or EAPs you are interested in and ask to see a contract. Read the contract to make sure there is nothing objectionable.
4. Next, contact the Provider Relations department again and ask for an application. Fill it out and submit it.
5. Be patient. There is usually a delay of at least a couple of weeks, and it could stretch into months. Be sure to follow up on your application. Depending on your location, many of the insurance panels may be closed to new providers, so you may want to submit several applications at once. EAPs, on the other hand, are generally easier to get on.

Yours in the Joy of Knowledge,

Dr. Barb LoFrisco