Use Case: Behavioral Health Contracting

1. The Provider

A licensed clinical psychologist in suburban Philadelphia had been running her solo practice for three years, specializing in anxiety disorders and trauma treatment. She maintained a full caseload of 25-30 patients per week, yet found herself constantly struggling to cover basic overhead expenses. Despite working 50-hour weeks and maintaining an excellent reputation in her community, she was seriously considering leaving private practice altogether.

2. The Challenge: Unsustainable Reimbursement Rates

When this psychologist first reached out to Medwave, the picture was grim. She was contracted with five major insurance carriers, but her reimbursement rates told a troubling story. For a standard 45-minute psychotherapy session (CPT code 90834), she was receiving between $65 and $85 from her contracted payers, rates that hadn’t budged since she’d signed her initial contracts three years prior.

Let’s put those numbers in perspective. After accounting for office rent, malpractice insurance, EHR software, billing costs, continuing education, and basic administrative expenses, her per-session overhead was approximately $45. That left her with $20-40 per session in actual take-home income. To make a modest living, she had to pack her schedule so tightly that she had no time for documentation, treatment planning, or professional development. She certainly had no time to advocate for herself with insurance companies.

The situation had several contributing factors:

• She’d accepted the initial contracted rates three years ago without negotiation, simply grateful to be in-network
• She had no benchmark data to know whether her rates were competitive or severely below market
• Two of her contracted payers had actually reduced their rates by 5% in year two, citing “network adjustments”
• Her telehealth sessions (which now comprised 40% of her caseload) were being reimbursed at 75% of in-person rates by three of her five payers
• One major carrier took an average of 45 days to process clean claims, creating serious cash flow problems

She’d tried reaching out to her payer representatives to discuss rate increases. One never responded. Two sent form letters stating they don’t negotiate rates. Another offered to “review her request” but never followed up. The fifth told her they’d be happy to discuss rates when her contract came up for renewal, in 18 months.

Meanwhile, her patient wait list kept growing. She was referring potential patients to other therapists because she simply couldn’t take on more volume at current reimbursement levels. The irony wasn’t lost on her. She was turning away patients who needed help while simultaneously not earning enough to sustain her practice.

3. The Solution: Strategic Contract Renegotiation by Medwave

This is when she contacted Medwave. We specialize in payer contracting for healthcare providers, and we’d worked with several behavioral health practices in her region.

Our first step was a thorough analysis of her existing contracts and reimbursement patterns. We pulled detailed payment data for the previous 12 months and compared her rates against regional benchmarks for behavioral health services. The findings were stark: she was being underpaid by 25-35% compared to market rates for doctoral-level psychologists in her area.

We also discovered several problematic contract clauses she’d overlooked when signing. One carrier had language allowing them to retroactively reduce rates with just 30 days notice. Another had restrictive termination provisions that made it nearly impossible for her to leave the network without a 180-day notice period. A third was billing her for their credentialing verification costs, a $375 annual fee she shouldn’t have been paying.

Armed with this information, we developed a multi-pronged contracting strategy. We identified which payers to prioritize based on her patient volume, which had genuine flexibility in their fee schedules, and which might require more aggressive tactics. We also determined that one of her five contracted payers was so problematic that we’d recommend non-renewal regardless of any rate adjustments they might offer.

We initiated formal rate renegotiation requests with all five carriers. Here’s what that process looked like.

For the two largest payers (representing 60% of her patient volume), we built detailed proposals demonstrating her value to their networks. We documented her credentials, including her doctorate, specialized training in evidence-based trauma treatments, and status as one of only 12 psychologists in their network accepting new patients within a 15-mile radius. We provided data on her average patient retention rates, clinical outcomes using standardized measurement tools, and exceptionally low claim denial rates. We made the case that losing her from their network would create access problems for their members.

For the mid-tier payer (about 25% of her volume), we took a different approach. This carrier had recently settled a class-action lawsuit related to mental health parity violations. We referenced this in our negotiations, pointing out that below-market reimbursement rates for behavioral health services while maintaining higher rates for other specialties could expose them to additional parity concerns. This got their attention quickly.

The two smaller payers required the most persistence. One initially refused to negotiate, so we escalated to their regional contracting director. When that didn’t work, we filed a formal dispute through their provider relations department, citing that their reimbursement rates made it financially impossible for her to remain in-network. This triggered a mandatory contract review. The other small payer we simply decided to non-renew, as their patient volume didn’t justify the administrative burden they created.

Throughout this process, we handled all communications with the insurance companies. We managed the back-and-forth, provided requested documentation, pushed back on unacceptable counteroffers, and kept the psychologist informed without requiring her time or energy. She continued seeing patients while we fought her contracting battles.

We also addressed the telehealth reimbursement disparity. We negotiated telehealth parity clauses into three of her four remaining contracts, ensuring she’d receive the same rate regardless of service modality. For the fourth carrier, we couldn’t secure full parity but did negotiate them up from 75% to 90% of in-person rates.

4. The Results: A Financially Viable Practice

Within 90 days, we’d secured new contracted rates with four of the five carriers. Here’s what changed.

Her two largest payers increased her 90834 rate from $75 to $105 (40% increase) and from $70 to $95 (36% increase). The mid-tier payer jumped her rate from $85 to $110 (29% increase). We non-renewed the problematic small payer and renegotiated the final small payer from $65 to $85 (31% increase).

We also eliminated that $375 annual credentialing fee, negotiated better claims processing timelines with specific performance guarantees, removed the retroactive rate reduction clause, and secured better termination provisions that gave her more flexibility.

The financial impact was immediate. Her average reimbursement per session increased from $76 to $102, a 34% improvement. On a weekly basis with 25-30 sessions, this translated to an additional $650-780 per week, or roughly $32,000-40,000 annually in increased revenue.

But the numbers only tell part of the story. With better cash flow, she was able to hire a part-time administrative assistant who handled scheduling, insurance verification, and billing follow-up. This freed up approximately 8 hours per week of her time. She reduced her weekly caseload from 28 sessions to 22, giving her adequate time for thorough documentation and treatment planning. She invested in additional trauma-focused training. She started taking Fridays off.

Six months later, she’s still maintaining those rates, her practice is financially stable, and she’s no longer lying awake at night worrying about money. She recently referred another psychologist in her consultation group to Medwave because, in her words, “Nobody should be doing this alone.”