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  1. #1
    Join Date
    Jul 2008
    Location
    NY
    Posts
    48

    Default Billing and Compensation for Independent Contractors in a Psychology Practice

    My question involves business law in the state of: New York

    I presently operate a private psychology practice. Presently, I am credentialed with numerous insurance companies, as well as Medicare/Medicaid.
    I have decided to rent a larger space and bring in two 1099 (independent contractor) psychologists. My plan is to split the fee reimbursement 60/40 (40 for the 1099 psychologist). My questions are:

    How does the billing to insurance companies work in this case?
    1. Do the 1099 psychologists submit insurance claims through my credentials in my name?
    2. Do the 1099 psychologists bill through those insurance carriers with whom they are credentialed and then split their reimbursement with me?
    3. Does each 1099 psychologist need to become credentialed with the same insurance carriers as myself?
    3. Will I need to be a PLLC to set this up?

    Thank you very much for any clarity you can offer on this issue.

  2. #2
    Join Date
    Dec 2009
    Location
    Lake Chapala
    Posts
    2,761

    Default Re: Billing and Compensation for Independent Contractors in a Psychology Practice

    I believe the IC psychologists have to submit their own bills to the insurance carriers, and then fork over 60% of what they receive to you. If you want to do the billing yourself, then you'll have to make the ICs employees and put them on a payroll.

    (And how you're gonna get anyone to agree to your proposed fee split I don't know, given that all they're getting for 60% of their income is free rent on a workspace. Your proposed business plan would make a heckuva lot more sense if the 60/40 income split was in the ICs' favour.)

  3. #3
    Join Date
    Feb 2008
    Posts
    893

    Default Re: Billing and Compensation for Independent Contractors in a Psychology Practice

    It might be easier and less bookkeeping to sublease/rent them part of your space/admin staff at whatever is a fair rate to get a good psych to want to join you. Because otherwise you (or someone you hire) are going to have to track their billings to know how much they owe you back - and track when they owe you even if they get paid months later (assuming Medicare/Medicaid isn't fast in paying). And this allows them to pay all their other bills (malpractice insurance, etc) directly. And you have no worries about their reimbursements.

    We have a different situation but the same conundrum and I will say the best solution we found was just a specific "rent" each month -- that means we are not dependent on the # of cases seen/reimbursed and that falls onto their own personal business. Because what happens if you get someone in who only does 2-3 sessions a week? That 60% is going to be way low back to you..... (but I do think a 60/40 split in your favor sounds high to you and low to them, but that is not my field). We've tried to set "rent" at what a good professional would bring in during a month working a regular # of sessions and then taken a % of that (and we think it is closer to 25-33% -- higher for those that do less though.)

  4. #4
    Join Date
    Mar 2013
    Posts
    15,318

    Default Re: Billing and Compensation for Independent Contractors in a Psychology Practice

    Quote Quoting blazer217
    View Post


    Thank you very much for any clarity you can offer on this issue.
    I agree with the rent space idea. That way they run their own business, pay you rent, and you never get into the issue of whether they are independent contractors or employees. Getting the independent contractor vs employee question wrong could end up costing you a great deal of money with the IRS.

    As for 60/40 in your favor, fageddaboudit. Isn't gonna happen. At least not unless you get a couple of desperate snake oil salesmen for whose actions you could be liable.

    Rent them the space and keep a wall between your business and theirs. Best way to do it.

  5. #5
    Join Date
    Feb 2008
    Posts
    893

    Default Re: Billing and Compensation for Independent Contractors in a Psychology Practice

    Oh yeah, I did forget to mention the positive of no ee/IC issues to worry about. We had a standard agreement with some specific behavior/late payment/professionalism clauses but I think it wasn't more than about 3 pages. We continued this setup for 7 years until we sold both businesses in 2017 and both new owners have stuck with our setup. In the end we have found a pretty good return vs the whole billing/reimbursement issues that come along with the ee/IC idea...

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