Demand for behavioral health services is surging at a time when access to care remains limited. In rural and underserved markets, the gap is particularly acute. Organizations looking to open new facilities to address that unmet need face a daunting roadblock: payer contracting.

New facilities typically have no existing managed care agreements in place. Without existing payer relationships and dedicated managed care teams, leaders often struggle to navigate uncertainty around payer requirements, market-aligned rates, and contracting timelines. Establishing payer contracts quickly and at the right rate levels is mission critical. Every delay puts patient access, financial performance, and long-term sustainability at risk.

Below are five common contracting challenges facing new behavioral health facilities, along with a timeline and practical actions to keep pace with opening/launch plans.

1. Understanding Market-Commensurate Reimbursement Levels for New and Existing Providers

Before launching new services, determine how reimbursement levels compare across markets, payers, and provider status. This analysis helps identify potential gaps between expected revenue and operating costs and informs pricing and contracting strategies.

• Complete a benchmarking assessment to understand market- and payer-specific reimbursement levels by service, including differences between new and existing providers, and use findings to inform pro forma development and assess whether reimbursement is adequate to cover costs.
• Confirm service coverage under Medicare and state Medicaid programs, and develop justification for carve-out rates for services that are not covered.

2. Garnering Payer Engagement without Preexisting Relationships

In the absence of established payer relationships, a proactive and structured outreach approach is essential to build awareness and credibility. Clear positioning of the facility’s role within the local behavioral health delivery system can help payers quickly understand its relevance and value to their networks.

• Identify the appropriate behavioral health payer contacts across all applicable lines of business, and secure meetings with payers to introduce the facility.
• Develop a tailored, concise, and compelling value proposition that articulates why the facility is a value-add for each payer’s network by highlighting access gaps, populations served, and net new services.

3. Meeting Payer Requirements

Successfully executing payer contracts requires early clarity on administrative, regulatory, and operational requirements, which often vary by payer. Understanding these expectations up front, and strategically sequencing activities, can help avoid delays and accelerate time to contract execution.

• Confirm the payer-specific requirements for contracting by line of business (e.g., licensure, accreditation, Medicare Certification Number [CCN] and Medicaid certification).
• Understand which negotiation components can happen in parallel to speed up the contracting timeline (i.e., begin rate and contract language discussions while required documentation is pending).

4. Prolonged and Potentially Contentious Rate Negotiations

Rate negotiations often extend over long timelines and may require multiple rounds of discussion. Entering these negotiations with a well-defined strategy is critical to aligning expectations across multiple stakeholders and maintaining financial viability.

• Using the previously completed benchmarking assessment, develop a rigorous pricing strategy, inclusive of out-the-door, target, and minimum reimbursement rates.
• Justify requested rates using benchmarks, unique clinical model characteristics, and access to net new services. Be prepared to remain out of network with payers that are unwilling to offer rates at the minimum acceptable level.

5. Accounting for Payer Credentialing Timelines

Payer credentialing is often one of the longest aspects of the contracting process, creating a lag between facility opening and the ability to bill for services. Proactively planning for these timelines is essential to avoid cash flow disruptions and set realistic volume and revenue expectations.

• Pre-populate the payer applications, leaving placeholders for those items that are required but not available until the facility is open and operational. Upon receipt of the facility’s license and other required documentation, finalize and submit the completed credentialing applications as soon as possible.
• Account for credentialing timelines in financial and volume projections, recognizing that the facility cannot start credentialing until it is licensed and accredited—and therefore may not be fully contracted for four to six months after opening (potentially longer if the suggested actions above are not taken).

Setting the Foundation for Effective Payer Contracting

Payer contracting is a critical workstream for new behavioral health facilities. Facilities that start the process early, understand payer requirements, and develop a robust pricing strategy are best positioned for a more efficient and timely contracting process. In rural and underserved markets, this preparation is especially important, as contracting delays directly impact much needed access to behavioral health services for the communities that need it most.