Should Your Community Behavioral Health Organization Contract with Commercial Insurance Payers?

Traditionally, most Community Behavioral Health Organizations (CBHOs) have remained focused on Medicaid and Non-Medicaid (ADAMHS Board-funded) services — rarely venturing into the world of commercial insurance.

But things are changing. With the growth of the Federal Marketplace Exchange and increasing uncertainty in Medicaid funding, more agencies are beginning to consider expanding their payer mix.

So now, I’m getting the question more often:

“Should our CBHO contract with commercial insurance payers?”

I wish there were a simple yes or no answer. But like many things in behavioral health management — it depends.

What Does It Depend On?

It depends on what types of services your organization plans to contract for.

There’s a big difference between:

  • Contracting for routine outpatient services (billed with standard CPT codes), and

  • Contracting for facility-based services like Residential Treatment or IOP.

While the process of contracting with commercial payers is generally straightforward, it can also be time-consuming and detail-heavy.

That said, if your agency:

  • Employs independently licensed staff

  • Maintains state licensure

  • Has accreditation

Then yes — you’re likely eligible to participate in the commercial insurance space.

But the more important question is:

Is this the right strategic move for your agency?

5 Things to Consider Before You Contract with Commercial Insurance

Here’s a checklist of questions to help guide your decision-making:

🔹 1. What Are Your True Costs of Care?

Before you sign any contract, you need to know exactly what it costs your agency to provide a service.

Most commercial insurers pay based on a fixed fee schedule — often lower than Medicaid for certain services.

Can you cover your costs under those rates?

🔹 2. How Do Covered Services Compare?

Commercial plans and Medicaid don’t cover the same services.

For example, services such as:

  • Case management

  • LPN nursing visits

  • Urine drug screens

…are commonly covered by Medicaid, but often excluded from commercial coverage.

Will you need to adjust your service offerings?

🔹 3. Can You Manage High Deductibles?

Most commercial plans come with high deductibles and coinsurance that the client must pay before insurance kicks in.

This is a major shift from Medicaid, where services are often fully reimbursed.

Does your agency have the billing infrastructure and front-desk procedures in place to collect payments from commercial clients?

🔹 4. Is Your Billing Software Ready?

Each commercial payer may have:

  • Unique billing codes

  • Specific authorization requirements

  • Different documentation protocols

Is your EHR or billing system flexible enough to handle this variability?

🔹 5. Are You Ready for the Administrative Load?

Credentialing, contracting, and ongoing maintenance with commercial payers requires significant administrative bandwidth. It’s doable — but only if your internal systems are strong.

Final Thoughts

This isn’t meant to discourage you — only to equip you with the right questions before diving in.

At G&M Consulting, we work exclusively with Community Behavioral Health Agencies and understand the complexities of payer relationships. Our team brings over 43 years of experience in:

  • Credentialing

  • Contracting

  • Revenue Cycle Management

  • Provider Marketing

Let’s Talk.

If you’re considering entering the commercial insurance space — or want help evaluating if it’s the right move — we’d love to support you.

👉 Visit our Contact Us page and let us know how we can help.