Start a Private Practice Billing: 7 Easy Decisions

If you want to start a private practice billing system that gets paid on time, seven decisions come first. Make them before your first client, not after your first denial. This guide is for psychotherapists and psychiatrists opening a solo or small group practice, and every step points to an official source.

Start a private practice billing with the right foundation

Insurers pay the billing provider named on the claim. So what you register, and in what order, shapes every payment that follows. The seven decisions below are in the order most new practices need them. Rules differ by payer and by state, so confirm each one with the payer or your state agency before you act.

1. Decide: in-network, out-of-network, or both

In-network means a plan has credentialed you, you signed its contract, and you have an effective date. Out-of-network means you have no contract, and the plan decides whether it pays at all. This one choice changes your rates, your claim volume and what you collect from clients. Read our guide to in-network vs out-of-network credentialing before you commit. When you start a private practice billing plan, write down which plans you will join and which you will not. MCM South bills out-of-network claims for clients as well as in-network claims. See out-of-network (OON) in the glossary.

2. Get your NPI and choose how you register

Every claim carries a National Provider Identifier. CMS says an individual provider, including a sole proprietor, gets a Type 1 NPI, and an individual is eligible for only one. Organizations get a Type 2 NPI, and an incorporated individual can hold both. A sole proprietor applies with a Social Security number, not an EIN. You must report changes to NPPES within 30 days. If you plan to form an LLC or add clinicians, read group NPI vs individual NPI first.

3. Set up CAQH before you apply anywhere

Aetna and Evernorth both pull your application from CAQH, and each asks you to authorize them to see it. Evernorth also asks you to re-attest every 120 days (180 for Illinois providers). A stale profile is a common reason an application stalls. Open your CAQH ProView profile early, and keep your license, liability coverage and work history current.

4. Decide who will bill: you, software, or a billing service

You can bill yourself, use practice software, or hire a billing service. Billing yourself costs time you could spend with clients. Software gives you tools, but the follow-up stays on your desk. A billing service takes over eligibility checks, claims and denial follow-up. For a step-by-step view, see how to start billing insurance as a therapist. MCM South works only with psychotherapists and psychiatrists in solo and medium-size practices.

5. Pick a clearinghouse and learn your payer IDs

Claims travel through a Clearinghouse to each insurer’s payer ID. Ask which clearinghouse your payers accept, enroll with it, and set up electronic remittance so payments post cleanly. Skipping this step is one of the quickest ways to delay your first payment.

6. Build a verification routine and a client cost-share policy

Check eligibility before the first visit: active coverage, behavioral health benefits, deductible, copay or coinsurance, and any prior authorization rule. Then write down how you collect the client’s share. If you are out-of-network, decide how you will issue a superbill. Do this once, and every new client follows the same path as you start a private practice billing routine.

7. Plan for denials and keep documentation tight

Every practice gets denials. Decide who works them each week and how you track appeals. Reasons usually come back on the remittance as codes, and a missing diagnosis, an unlisted license type or a wrong code is often the cause. See how a denied claim follow-up and appeals process works, and read the Claim Denial entry.

Private payers, Medicare and Medicaid, and state rules

• Private payers: each plan sets its own contract, rates, panel status and application route.
• Medicare and Medicaid: enrollment is separate from private credentialing, and each state runs its own Medicaid program. Check CMS.gov and your state Medicaid agency.
• State law: licensure, scope of practice and telehealth rules vary by state. Never assume one state’s rule applies in another.

Therapists and psychiatrists: what differs

The steps are the same for both. Prescribers add a DEA registration to the file, and Evernorth says a prescriber needs a DEA license for each location. Psychiatrists also bill evaluation and management (E/M) codes with add-on psychotherapy codes. See our psychiatry billing guide and the credentialing page.

The short version

• Choose in-network, out-of-network or both, and write it down.
• Get one NPI per person, and decide how the practice registers.
• Set up CAQH early, and keep it current.
• Pick a billing method, a clearinghouse and a verification routine.
• Plan weekly denial work. That is how you start a private practice billing process that holds up.

Sources checked (10/25/26)

• CMS, NPI fact sheet
• CMS, NPI fact sheet for sole proprietors
• Aetna, join the network
• Evernorth, join the behavioral network

Frequently asked questions