Many therapists and other wellness professionals in private practice find the reimbursements they receive from insurance companies less than ideal, but few ever try to negotiate higher rates.
The fact is, most insurance companies can afford to pay your practice higher reimbursements. Until you reach out using the proper channels, however, and make a case for why your practice should be paid more, none of them ever will.
Here is how to negotiate for higher reimbursement rates from insurance companies, including strategies for writing the most effective negotiation letter possible.
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Why negotiate higher rates with insurance companies?
There are a few good reasons to negotiate for higher reimbursement rates from insurance companies:
- You have nothing to lose. An insurance panel won’t drop you because you request higher reimbursement rates. The worst they can do is deny your request, which only costs you the time it takes to make the request in the first place.
- You deserve to be paid well. Many wellness professionals, and especially mental health therapists, have qualms about asking for more money. But while it may be true that your clients should come first, it’s also true that you need to earn a living wage to stay in practice.
- Higher reimbursements make private practice more sustainable. Higher revenue means more potential for building up emergency savings and reinvesting in your practice. That makes your practice more likely to succeed in the long term, and more likely to keep giving clients the treatment they need.
- Insurance panels make you accessible to more clients. If you are forced to leave an insurance panel because of low reimbursement rates, the clients who rely on that insurance company’s coverage may not be able to afford your services. Negotiating higher rates ensures you remain accessible to as many potential clients as possible.
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How to negotiate higher reimbursement rates
To negotiate higher rates, you need to follow three simple steps:
Find out where to send your negotiation letter
Call the provider contact number the insurance company has provided you. In most cases, this should be included in the package of documents you received after credentialing with the insurer, but you may also be able to find it in your online dashboard if you have one.
An insurance company may provide an email contact. While it doesn’t hurt to send an email first, the quickest path to success is usually to talk to another human being on the phone.
Once you’re in touch with a representative, tell them that you intend to send a reimbursement rate negotiation letter and ask where you should send it. They should be able to provide you with a mailing address or, in some cases, an email address.
Rarely, an insurance company will put you in touch over the phone with a representative who is authorized to negotiate new rates.
If that’s the case, send your negotiation letter to the relevant contact all the same. It helps to have everything laid out in writing in case you forget to cover any important points in your conversation. And sending a letter creates a paper trail recording the history of the negotiation.
Draft your negotiation letter
Your negotiation letter is key to your efforts at securing higher reimbursement rates.
If you are negotiating with multiple insurance companies, you may be able to create a template letter to speed up the process. But take care when filling out each letter to make sure it’s properly customized for each company.
Because your negotiation letter is so important, take your time preparing it. You may need to compile information about your practice, and your history with the insurance company in question.
For a detailed breakdown of what to include, see the next section.
Send the letter and receive a reply
The representative you talk to on the phone may be able to give you a timeframe for when you can expect a reply to your negotiation letter. Or they may not. In any case, be prepared to wait anywhere from several weeks to several months to hear back from the insurance company.
If you receive a reply and the insurer offers you a reimbursement rate on par with what you requested, then congratulations—you have successfully negotiated a higher rate!
If, on the other hand, they deny your request, or offer less than you requested, suppress any urge to send a follow-up letter. If your first letter was thorough, you have already provided all the information the insurer needs to make their decision, and sending a second letter won’t benefit you.
Now is the time to consider whether you would like to keep working with the insurance company. If the reimbursement rate you receive from them is too low to be sustainable, you may consider dropping them in favor of cash pay. For more, check out How to Transition Your Therapy Practice from Insurance to Cash Pay.
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How to write a reimbursement raise request letter
Your raise request letter, or negotiation letter, is at the heart of your efforts to receive higher reimbursements from an insurance company.
By taking care to include all the necessary information and make a good case for your practice earning a higher rate, you maximize your likelihood of getting a raise. So it’s worth your while to carefully prepare each of the elements of a successful letter.
Here’s what you should include.
Heads up: Here’s what not to do
Before you get started, make sure to avoid these serious missteps:
- Focusing heavily on your own financial situation. Insurance companies don’t particularly care if your practice is struggling. They want to know how much value you provide to them as a practitioner. If your letter focuses on how badly your practice needs to increase its revenue rather than the ways it provides the insurance company value, they are likely to deny your request. Think of your letter as a sales pitch, not a plea.
- Presenting an ultimatum. You may indicate that current reimbursement rates put financial pressure on your practice, and that you might need to reconsider your business’s strategy in terms of insurance if you don’t see an increase in reimbursements. But do not claim that you will leave an insurance panel if they fail to raise your reimbursement rate. Not only is this strategy unlikely to move them, but if the company declines your request, you may be forced to stick to your word.
- Threatening to leave with other therapists. If you have an individual contract with an insurance company, you qualify as an individual contractor. Collaborating with other practitioners to boycott or leave an insurance panel en masse qualifies as price fixing and restraint of trade under the Sherman Antitrust Act, and could result in six-figure fines or even jail time. (This is according to Barbara Griswold, LMFT, a therapist who specializes in helping other practitioners navigate insurance.)
Your history working with the insurance company
Briefly mention the number of years you have been working with the insurance company. The longer you have been working with them, the longer you have been making them money. Plus, your history together indicates your level of commitment and how likely you are to remain credentialed.
It’s worth considering this figure even before you request a rate increase. If you have only been credentialed with an insurance company for one year, they are unlikely to grant you your request. If you have been working with them for ten years, on the other hand, they will be much more likely to raise your reimbursement rates.
Education, specialties, skills, and experience
Review your areas of specialization, valuable skills, experience level, and educational background. For the most part, the insurance company already knows about the qualities that make you a great wellness practitioner. But it’s worth bringing them up again to put them in the context of your request for higher rates.
The number of members you serve through your practice
Inform the insurance company how many of their members you currently treat on a regular basis. You may even choose to indicate what percentage this makes of your overall caseload.
For every insurance enrollee you treat, the company earns revenue. Naming this number helps to prove your value to them.
Multiple languages
If you speak multiple languages—including American Sign Language—then make a point of indicating the fact in your letter.
Multilingual practitioners provide greater value to an insurance company because they are able to treat a wider range of clients.
Professional and educational developments
If you have obtained new certifications or degrees since you became credentialed with the insurance company, be sure to highlight the fact.
The original reimbursement rates the company set for you may have been based partly on your level of training and specializations. Those have changed, you can make a good case for being reimbursed at higher rates.
Increased accessibility
If you have increased your office hours or become licensed in multiple states, or if you now treat clients in new settings—for instance, their homes or care facilities—these are all worth mentioning in detail.
The more accessible you are to potential clients, the more value you offer to those enrolled in the insurance company’s plans. They can offer members better access to services, and you have more capacity to take on clients.
Expanded offerings
If your practice has expanded to offer additional services to clients, then you may now offer an insurance company more value as a contractor.
For instance, if you are a chiropractor, but you now also offer massage therapy as part of your practice, you can treat a wider range of new clients and also potentially earn more from existing ones. That translates to increased earnings for the insurance company.
Practice growth
A growing practice may make you more attractive to an insurance company and worth reimbursing at higher rates.
It’s worth mentioning the fact if you have steadily been increasing your caseload or have realized a recent, significant jump in the number of clients you are treating, or if you have hired new staff to your practice. These both spell out the potential for higher earnings, and increased value as a contractor.
A reasonable rate request
Identify every CPT code you bill for, and name the dollar amount you would like to receive as reimbursement for each.
In most cases, you should request no more than a $20 increase for each code. This is a general rule of thumb, but it’s a good one to follow.
Your insurance company already has an idea of how much they can afford to increase your reimbursement rates. They are not going to double your rates, or offer you a $50 increase on a service that is usually reimbursed $80.
Asking for no more than a $20 jump shows them that you have a realistic perspective and that you’re willing to work with them, not against them. And your $20 request is much more likely than an astronomical increase to be granted.
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Reimbursement raise request templates
The most effective way to write a negotiation letter that gets you a raise in reimbursement rates is to customize it to the company you’re addressing. Also, there are details about your practice that can’t be captured in the boilerplate of a letter template.
That being said, looking at reimbursement raise templates can give you an idea of how to structure your letter, and help you get started if you’re struggling with writer’s block.
A few resources to consider:
- Barbara Griswold’s template letters for therapists. These include both a version for solo practices and one for group practices. They are available as downloadable Word files.
- TheraNest Rate Negotiation Tool & Template. This online tool is designed for mental health therapists and will generate a letter based on your inputs.
Key takeaways
- Many professionals in private practice feel they are reimbursed too little by insurance companies, but few try to negotiate higher rates
- So long as you follow best practices, you’re unlikely to see any negative fallout for requesting higher rates
- Contact the insurance company by phone and speak to a representative; they can tell you where to send a reimbursement negotiation letter
- In your negotiation letter, focus on the value you provide the insurance company, not on your own financial struggles (think of it as a sales pitch, not a plea)
- Do not threaten to leave an insurance company if they fail to raise your reimbursement rates; it’s ineffective, and you may find yourself in an awkward position if you’re denied
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Want to learn more about insurance billing? Check out our complete guide to insurance billing for therapists.
This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post.
Bryce Warnes is a West Coast writer specializing in small business finances.
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