In-network vs. out-of-network behavioral health billing: risk tolerance
Today’s behavioral health facilities get to choose between contracting with private insurance companies as an in-network provider, or remaining out-of-network instead. Each option comes with its own benefits and drawbacks. It is truly up to the facility to decide which option is best for them. One of the largest components to consider is risk tolerance. Contracting as an in-network provider allows the facility to project revenue quite accurately since rendered services will typically be reimbursed at the same amount, specific to each payer. These payments tend to be lower, but more consistent in amount. Out-of-network providers, on the other hand, cannot gauge with full certainty how much each rendered service will reimburse, or sometimes, whether they’ll be reimbursed at all. This is because the payer has no obligation to the provider to pay the billed charges since there is no contract in place. Although more inconsistent, these reimbursements tend to be higher than their in-network counterparts. The risk tolerance a facility has for the possible inconsistency may be a significant drawback for some, but may be viewed as a possible source of increased revenue for others. It comes down to a personal preference that aligns with the goals for the facility.
Benefits of contracting with insurance companies
When considering some of the other benefits of contracting with insurance companies as an in-network provider, one can count the ability to accept a wider range of insurance policies as a significant perk. Once a facility contracts with an insurance company, they can accept any HMO or PPO policy from that payer network. It can be a significant marketing point to be able to tell a prospective new patient that you can take their insurance without having to worry about an extensive verification of benefits on the front end. Additionally, deductibles and out of pocket maximums are typically lower when utilizing in-network benefits. For this reason, patients tend to be drawn to in-network options for care. It’s an easier to understand model and offers reassurance to the patient that their insurance will pay for their care the way they expect it to. As a facility, however, there are some additional drawbacks to consider. In-network services are typically billed as a per diem rate, and don’t allow the stacking of additional services to increase daily revenue. With the consistency of knowing how much a policy will reimburse also comes the acceptance of a lower daily reimbursement.
Drawbacks of contracting with insurance companies
Though the higher reimbursement rates of being an out-of-network provider do help to attract providers to this option, they should also consider some of the less appealing components of choosing not to contract with insurance companies. Facilities can only accept PPO policies that specifically offer out-of-network benefits. Reimbursement rates can be volatile and can change without warning, even over the course of one treatment episode. Deductibles and out of pocket maximums are typically higher. As an out-of-network provider, a facility has limited recourse should an insurance company choose to deny a rendered service. It can also be difficult to project what patient responsibility will look like prior to a patient’s admission, since co-insurance amounts aren’t known until after claims have been processed and priced. Even with all of those drawbacks to consider, though, the reimbursements from billing as an out-of-network provider do tend to be greater than in-network rates.
It all comes down to goals and preference
The choice of how to bill insurance, in or out-of-network, truly comes down to personal preference, risk tolerance threshold, and revenue goals for the individual facility. With the consistency that in-network billing offers comes the fact that payments to the facility will usually be lower. With the volatility of out-of-network billing comes the possibility of significantly higher payments to the facility. It is our hope that this brief summary of the pros and cons of each option helps you to decide what path is right for your facility.