What Is Payer Contracting? A Guide for Behavioral Health Providers

What Is Payer Contracting?

Payer contracting is the process of establishing and negotiating agreements between healthcare providers and insurance companies (payers). These contracts define the terms under which providers deliver services to the payer's members, including reimbursement rates, billing requirements, authorization processes, and contractual obligations.

For behavioral health providers, payer contracting directly determines how much you get paid for every therapy session, psychiatric evaluation, or group service you provide. The difference between a well-negotiated contract and a default contract can amount to tens of thousands of dollars in annual revenue.

How Payer Contracts Work

A payer contract is a legal agreement that covers several key areas:

Fee Schedule

The fee schedule is the heart of the contract. It lists every CPT code you might bill and the contracted rate the payer will reimburse for each one. These rates are typically expressed as a specific dollar amount or as a percentage of Medicare rates.

For example, a contract might pay 110% of Medicare for evaluation and management codes, or it might list a flat rate of $120 for a 90837 (60-minute psychotherapy session).

Terms and Conditions

The contract terms outline your obligations and the payer's obligations. Key provisions include:

• Timely filing requirements: How long you have to submit claims (typically 90-365 days).
• Authorization requirements: Which services require prior authorization.