What Do I Do Now? Steps to Begin Private Practice

By Ashley Carter Youngblood, LMSW, LMFT, CIMHP, CNRC, ADS, NNP

Ashley Carter Youngblood is the owner of her private practice in Kalamazoo, Inner Peace Counseling, PLC, where she specializes in the connection between nutrition and mental health and counseling worrying women and highly sensitive people. Because of her love of private practice, she also offers consulting services for those who are interested in starting or growing their own private practice.

We have reached the fourth and final article of this series on private practice. First, I shared my own personal story and the characteristics of private practice in the Summer 2024 Bridges magazine in “Private Practice as a Social Worker: My Story, Getting Started, and What You Should Know”. In the next quarter of Bridges, my article, “Private Practice: The Pros and Cons”, reviewed the pros and cons of private practice as a social worker. Most recently, my third article, “So you Want to Go into Private Practice? Questions to Ask of your Potential Practice”, suggested questions to ask of a private practice in order to ensure that your transition to private practice is as smooth and as empowered as possible.  

If you have arrived at this article, you are ready to begin the foray into private practice! You may choose to begin your private practice journey as an independently contracted social worker working for an already-existing private practice office. Or, you may choose to start your own business. Regardless of your first step, it is time to get specific about the logistics of what you need to actually practice as a social worker in private practice.

The Legal Stuff

Let us start with what is necessary to make you a legally practicing private practice clinician. You, of course, need to have a license with a state within the United States that has awarded you with a formal license number. Since limited licensed providers can bill and get reimbursed under a “supervising” fully-licensed clinician, this could be as either a fully licensed social worker or a limited licensed social worker. [Note: There are lots of specifics related to billing under another provider that we will not go into here. So, make sure to do your research if you are a limited licensed provider.]

Considering this license number, you will register with the National Plan & Provider Enumeration System (NPPES) to acquire an individual “National Provider Identification” (NPI) number. This does exactly what its name suggests – it allows each professional to have their own distinct identifying provider number. If you have done agency social work already via direct service care for clients, you likely already have an NPI. So, you can also Google your name to see what your NPI may be.

Obtaining a NPI is a necessary first step to take because it is required for credentialing with insurance companies, to request a Tax Identification Number (TIN) or Employer Identification Number (EIN) from the IRS (“TIN and “EIN” are just two different names for the same thing), or to file to start your own business.

If starting a formal business registered with the state is intimidating to you, you can simply start with a request to be credentialed as an independent individual professional with insurance companies. If you choose to do this, you need to know that on an insurance claim form, which is information also available to clients, there is a box that requires you to enter your TIN/EIN or, if you do not have one, your Social Security Number (SSN). Translation: if you choose to not start a business entity under which you practice as an independent individual, you are required to list your personal SSN on all claim forms for client insurance billing. Because of this, even if a private practice therapist does not have any interest in running a business per se or even if they are practicing as an independent contractor at a group private practice, many will choose to simply start their own business as an added layer of liability protection.

Considering your layers of protection and what you are comfortable with in the process of beginning your private practice career is essential. Remember that, as has been a theme in my previous articles, everyone does it differently. So, if you choose to file to start your own business, also know that there are several options. In my state of Michigan, the most commonly used legal business structures for private practices are a Limited Liability Company (“LLC” or “LC”) or a Professional Limited Liability Company (“PLLC” or “PLC”). The difference is that a PLLC requires a formal professional license (this is where your NPI and state licensing information comes in) and, therefore, has an additional layer of protection should someone sue you. By contrast, any random person can start an LLC to charge to paint houses. You do not need a professional painter’s license. A PLLC, on the other hand, holds different clout because the business structure implies there is a credentialed professional providing services.

Another consideration is that some insurance companies will not credential you unless you are applying with a Group NPI (a.k.a. “NPI2”). Here is where it can get (even more) complicated. Let me break it down for you.

There are actually two different kinds of NPIs: a “NPI1” (a NPI number assigned to an individual) and a “NPI2” (a NPI assigned to a legal entity). Because I personally am both an individual provider and also own my own solo private practice, Inner Peace Counseling, PLC, I have both an NPI1 and NPI2. When I started my own private practice, there was an insurance company common in my area that had not opened up their insurance panel to new individual providers in nearly a decade. However, they were accepting applications for Group NPIs (e.g. “NPI2”s). So, I applied to be in the network and got approved as a “group” practice using my NPI2, whereas my colleagues who did not start their own businesses and only had their NPI1 could not even complete an application because that insurance company was not taking on new individual providers.

Other Practical Steps

That may feel like a lot to consider. And, yes, starting your own business involves extra paperwork and yearly fees. But, it will also allow for creative opportunities, like identifying a business name that you like.

Once you have what you are doing on the business end sorted, if you are taking insurance, the next step is to complete what is called a CAQH profile. Let me be blunt here, a CAQH is a waste of time. But, unfortunately, this provider portal was developed by the Council for Affordable Quality Healthcare to be the place that insurances verify the information you include in an application to be credentialed. So, it is redundant. But, no CAQH profile, no insurance panel approvals.

Another practice consideration is taxes. While some group private practices do allow social workers to practice as formal employees within their private practice, which allows for taxes to automatically be deducted, this is not always the case. So, you will need to determine how much of your income to set aside for the quarterly estimated taxes that you will pay. Talking with your accountant is essential here. If it helps, though, most private practice clinicians find that setting aside 20-35% of their income covers what they will need to pay.

Beyond the Red Tape

After you have sorted out what you would like to do with your NPI(s), TIN/EIN versus SSN, a potential business entity, and taxes, you will need a bank account. Your banking information, similar to your professional license identification numbers, is required to complete the applications for being in network with insurances as they need to know where to send your money.

After this step, though, you can make things fun by finding office space and furniture for yourself or finding a HIPAA-compliant telehealth platform provider if you are going the virtual therapist route. My personal favorite is Doxy.me, which offers a free professional account on their website simply to promote more access to healthcare: https://doxy.me/en/pricing/. While you are online, you can also find the applications to credential with insurance companies on their various provider websites. Make sure you know your practice location first, though, because the address at which services are rendered and from which you bill is required on your application. And, it is usually a pain to change any personal information with insurance companies in the future (especially if you like to get paid).

Next comes the marketing approaches, whether social media, business cards, or networking events. Given that industry standards encourage therapists to acquire 50% of their referrals from online sources, having a quality website with good search rankings (i.e. Search Engine Optimization) is a must. Remember that our society tends to not see a business as legitimate unless it has a (good) website.

Next on the list of things to do is to find a Practice Management Software/Electronic Health Records system so that you can have a platform through which you complete your progress notes, schedule, and bill. My personal favorite and one of the most popular is Simple Practice because it allows unlimited clients and general administrative notes, in addition to a whole host of other features, like free text and email reminders for client appointments. (You can even get a free trial and $150 off if you use a link from a fellow Simple Practice user, like this one: https://www.simplepractice.com/referral?p=fbf1bd7334).

There are many options out there. Use your resources. Complete the free trials and see which format and features meet your needs and preferences. Most of the popular ones like Simple Practice also offer internal credit card processing so that you do not also have to find a separate credit card processing company. If you happen to be joining a group practice, chances are they already have chosen a software. So, ask what they use and orient yourself to it before you take your first client.

Almost There!

With all of the above information, you can now apply for professional liability insurance coverage. As a proactive effort, my personal recommendation would also be to find a healthcare attorney you trust who can offer guidance on legally required paperwork (e.g. Consent to Treat, Electronic Communication Consent, Release of Information, HIPAA Notice of Privacy Practices, etc.). While expensive, I have never heard of anyone regretting hiring a healthcare attorney to give them added peace of mind about being as protected as possible.

Above all, educate yourself. Even if you are going to be an independent contractor at a group practice you trust, learn what a CMS-1500 insurance claim looks like and what information it requires. Understand what CPT codes are commonly billed and reimbursable. Read books on private practice. Take a business course. Collaborate with other private practice therapists or business owners.

As I mentioned in my previous article about the pros and cons of private practice, one challenge is that it can be isolating. So, perhaps become a member of a Facebook group for private practice therapists to learn more about the ins and out of what this means in real time. If it helps, some of my favorite resources are listed below.

Above all, empower yourself. Ask questions. Find others who can help coach you along the way. Remember: there is no “wrong” way to do it. There are just certain requirements and ways to minimize complications. You can do it! And, best of luck to you along the way!

Resources:

• Building Your Ideal Private Practice: A Guide for Therapists and Other Health Professionals by Lynn Grodzki – a life-changing book!

• Theinsurancemaze.com – website by a fellow therapist to help you navigate the craziness of the insurance maze

• National Association of Social Workers – Michigan Chapter. (2015). Starting A Clinical Private Practice: A Guide for Michigan Social Workers. National Association of Social Workers – Michigan Chapter. – an necessary resource for any social worker starting a private practice

• NASW Specialty Practice Sections (https://careers.socialworkers.org/documents/Opening%20a%20Private%20Practice.pdf) – a training resource for all things private practice

• NASW Michigan Private Practice Group (Registration: https://us02web.zoom.us/meeting/register/tZckf-CsrjsoE9XfZqJrYHPdRlUDI57Aa6L3#/registration) – an open peer-led group that meets the first Friday of the month; 10-11:30am EST

• Socialworkers.org/About/Legal/HIPAA-Help - NASW HIPAA “toolkit” for paperwork template examples

References:

Youngblood, A. C. (Fall 2024). Private Practice: The Pros and Cons. National Association of Social Workers’ The Bridge, pages 8, 29. https://cdn.ymaws.com/www.nasw-michigan.org/resource/resmgr/the_bridge/2024/the_bridge_fall_2024.pdf?fbclid=IwY2xjawF2Qk1leHRuA2FlbQIxMAABHdDoE5l_r96Xzt3C47ayhfwsR9RxvIGtl-DyZPOKs5C8UO3bc6OtOoKMTg_aem_nBFw5vzlnmt5FE2fw31QAQ

Youngblood, A. C. (Summer 2024). Private Practice as a Social Worker: My Story, Getting Started, and What You Should Know. National Association of Social Workers’ The Bridge, pages 19-20. https://cdn.ymaws.com/www.nasw-michigan.org/resource/resmgr/the_bridge/2024/Summer_2024.pdf?fbclid=IwZXh0bgNhZW0CMTAAAR3KllQpRekTy-V2nzFjPnV-no5CEzPcMR5STs1RYXmGVHVzXWZvGA-zrd0_aem_AfjmdzRIyq1EvUcZmj9xstVdioFS37Q3jOC39-F8TAZtHkUVV8t6VjGY5wp9zC4K92kqhtqpBvrccGn4VMM2bHs_