How to Start a Psychiatry Private Practice: A Step-by-Step Checklist for Psychiatrists

To start a psychiatry private practice, hold a full medical license in each state where your patients are located, form your business and get a tax ID, set up your NPI, DEA registration and malpractice coverage, choose an EHR with electronic prescribing for controlled substances, decide how you will handle Medicare, and apply to insurance plans 4 to 6 months before you want insured patients. Credentialing is the longest step, often 90 to 180 days, so many psychiatrists open with self-pay patients and add insurance as each plan approves them.

Psychiatrists are in short supply in most of the country, so a new practice can usually fill its schedule. The hard part is the business side: entity setup, prescribing registrations, insurance enrollment, Medicare decisions and billing. This checklist puts those steps in order. Psychiatric nurse practitioners can follow our PMHNP private practice guide.

The checklist at a glance

Step	What to do	Typical time
1	Confirm your medical license, board status and state ownership rules	1 to 2 weeks
2	Form your business, get an EIN and open a business bank account	1 to 3 weeks
3	Set up NPI, DEA, state controlled substance and PDMP registrations	2 to 8 weeks
4	Get malpractice and business insurance	1 to 2 weeks
5	Choose an EHR with e-prescribing and telehealth	1 to 2 weeks
6	Choose insurance, self-pay or both, and your Medicare status	1 week
7	Complete CAQH and apply to insurance plans	90 to 180 days
8	Plan telehealth and each additional state: licenses, DEA, payers	90 to 180 days per state
9	Set your fees, policies and HIPAA basics	1 to 2 weeks
10	Set up billing and send your first claims	When each plan approves you

Several steps run at the same time. The order that matters most: start credentialing as early as you can, because it takes the longest.

Step 1: Confirm your license, board status and ownership rules

• A full, unrestricted medical license from the state medical board, or the osteopathic board in states that license DOs separately, in every state where your patients will be located.
• Board certification. Your license is what lets you practice, but most insurance plans ask about board certification through the American Board of Psychiatry and Neurology (ABPN), and some require board certification or board eligibility to join their network.
• Hospital affiliations. An outpatient practice does not need hospital privileges, but credentialing applications ask about hospital affiliations, so be ready to explain how your patients are admitted when they need inpatient care.
• Practice ownership rules. Many states have a corporate practice of medicine rule that limits ownership of a medical practice to licensed physicians. It matters if you plan to bring in a non-physician partner or investor, so ask a healthcare attorney first.

Step 2: Form your business

• Choose a business structure. Many psychiatrists form a professional corporation (PC) or professional limited liability company (PLLC). Which entity types are allowed for physicians depends on your state.
• Get an EIN (federal tax ID) from the IRS. It is free.
• Open a business bank account and keep practice money separate from personal money.
• Register with your state and city or county as required, including any business license.

Step 3: Set up your provider numbers and prescribing registrations

• Individual NPI (Type 1) with the psychiatry taxonomy, 2084P0800X, or 2084P0804X for child and adolescent psychiatry. Make sure your NPPES address and taxonomy match what you will put on insurance applications.
• Group NPI (Type 2) if you will bill under your business’s tax ID, which most physician practices do.
• DEA registration in each state where you will prescribe controlled substances, tied to an address in that state.
• State controlled substance registration, if your state requires one in addition to DEA.
• PDMP account in each state where you prescribe controlled substances.
• Electronic prescribing of controlled substances (EPCS). Many states and Medicare Part D require controlled substance prescriptions to be sent electronically, so choose an EHR or e-prescribing tool that supports EPCS.

Step 4: Get insurance for the practice

• Malpractice (professional liability) insurance in your own name, covering the states and services you will provide, including telehealth and prescribing. Many insurance plans ask for limits of $1 million per claim and $3 million aggregate; check each plan’s requirement.
• General liability insurance if you rent office space.
• Cyber liability insurance is worth considering because you will store patient records.

Step 5: Choose your EHR and telehealth tools

For a psychiatry practice, look for an EHR that includes:

• E-prescribing with EPCS
• Psychiatric evaluation and E/M note templates
• Built-in telehealth, or a HIPAA-compliant video tool that will sign a BAA
• Insurance claims and ERA support, or easy access for your billing company
• Patient portal, intake forms, rating scales and reminders

Common choices for psychiatry practices include Osmind, Valant, AdvancedMD, Tebra and SimplePractice.

Step 6: Choose insurance, self-pay or both, and your Medicare status

Model	Pros	Cons
Insurance	More referrals, steadier schedule, patients pay less out of pocket	Credentialing wait, payer rules, billing and denials
Self-pay (cash)	Simpler, set your own rates, no credentialing	Fewer patients can afford it
Hybrid	Start self-pay, add a few plans as they approve you	You manage both workflows

Medicare is its own decision. A physician has three options:

Medicare status	What it means
Participating	You accept assignment on every claim and receive the full Medicare fee schedule amount: Medicare’s share plus the patient’s coinsurance.
Non-participating	You still file claims but are paid 5% less. You can accept assignment claim by claim, and on claims you do not accept, you can charge the patient up to Medicare’s limiting charge.
Opt out	You sign a private contract with each Medicare patient and bill them directly; nobody bills Medicare. The opt-out covers all your Medicare patients, lasts two years and renews automatically unless you cancel it.

Opting out is hard to undo quickly, so decide before you see your first Medicare patient. Medicaid is optional too, and each state runs its own program.

Step 7: Get credentialed with insurance plans

This is the longest step. Start it as soon as your NPI, malpractice and business details are final.

1. Complete your CAQH ProView profile and attest it. See our CAQH guide.
2. Pick your payers. Look at which plans your target patients have. In many areas, a few commercial plans and Medicare cover most adult patients.
3. Watch for behavioral health carve-outs. Many health plans send mental health to a separate company, such as Optum, Carelon or Evernorth, which needs its own application.
4. Enroll in Medicare through PECOS if you will participate or bill as non-participating.
5. Enroll in Medicaid if you will see Medicaid patients. In Georgia, see our Georgia Medicaid credentialing guide.
6. Follow up every week until each plan sends a signed contract and an effective date.

Commercial plans often take 90 to 180 days. See how to get paneled with insurance and how long credentialing takes, by payer.

Step 8: Telehealth and practicing in more than one state

The rule that decides everything: the patient’s location at the time of the visit sets the requirements, not where you sit.

For each additional state, you generally need:

Requirement	What it means
Medical license in that state	Apply through that state’s medical board, or through the Interstate Medical Licensure Compact if you qualify.
DEA registration in that state	Required to prescribe controlled substances to patients located there, plus any state controlled substance registration and a PDMP account.
Credentialing with that state’s payers	Insurance networks are organized by state or market, and Blue Cross Blue Shield plans are separate companies in each state. Each state is its own credentialing project.
That state’s Medicaid program	Only if you will see Medicaid patients there.
Malpractice coverage for that state	Confirm your policy covers patients located in every state you serve.
Business registration	If you have staff, an office or other presence in that state, your business may need to register there. Ask your accountant or attorney.
That state’s telehealth and prescribing rules	Consent, prescribing and documentation rules differ, and some states are stricter for certain medications.

The Interstate Medical Licensure Compact. As of October 2026, 44 states plus Washington, D.C. and Guam have joined. Most already issue licenses through it, and a few, including Alaska, Arkansas, New Mexico and Rhode Island, are still setting up. To qualify you generally need specialty board certification, a full unrestricted license in your “state of principal license” and a clean disciplinary record. The compact speeds things up, but each state still issues, and charges for, its own license. Check current status at the compact’s website, imlcc.com.

Controlled substances by telehealth. Federal telemedicine flexibilities currently allow DEA-registered practitioners to prescribe controlled substances by telehealth without a prior in-person visit through December 31, 2026. A permanent rule has not been finalized, and state rules can be stricter.

Medicare and telehealth. Medicare covers mental health visits by telehealth, including in the patient’s home. Congress has repeatedly delayed an in-person visit requirement for telehealth mental health patients, so check CMS’s current rules before you build a telehealth-only Medicare practice.

How to expand without losing months:

• Start with one or two states where most of your patients are.
• Add states one at a time, and start credentialing for the next state 4 to 6 months before you want to see insured patients there.
• Keep a tracker for every state: license, DEA, CAQH, payer applications, effective dates and renewal dates.
• Bill telehealth correctly. See POS 02 vs 10 and modifier 95.

Real example: we have run credentialing and billing for a telehealth psychiatry practice in 23 states, with more than 100 payer enrollments over 3 years.

Step 9: Fees, policies and HIPAA

• Self-pay rates for evaluations and follow-ups, based on your local market.
• Good Faith Estimates. Under the No Surprises Act, uninsured and self-pay patients are generally entitled to a Good Faith Estimate of expected charges.
• Office policies: cancellations, no-shows, controlled substance agreements, refills, prior authorizations and after-hours contact.
• HIPAA basics: a risk assessment, written policies, and a business associate agreement (BAA) with every vendor that handles patient information, including your EHR, telehealth tool and billing company.

Step 10: Billing and your first claims

The codes most psychiatry practices bill:

Code	What it is
90792	Psychiatric diagnostic evaluation with medical services
99202 to 99205	New patient office visits (E/M)
99212 to 99215	Established patient office visits (E/M)
90833, 90836, 90838	Psychotherapy add-ons with an E/M visit
90785	Interactive complexity add-on, when it applies

Most medication-management follow-ups use an E/M code, with a psychotherapy add-on when you also provide documented psychotherapy. See billing 99214 with 90833 and 90791 vs 90792.

Before your first insured visit, confirm each plan’s effective date, set up electronic claims, ERA and EFT, and verify every patient’s benefits, including behavioral health carve-outs. If you bill Medicare, you may also need to report quality data under MIPS once you pass Medicare’s low-volume threshold; clinicians in their first year of Medicare enrollment are exempt.

Growing your practice

• Adding PMHNPs. Many psychiatry practices grow by adding psychiatric nurse practitioners. In reduced and restricted practice states, you can serve as the collaborating or supervising physician if you meet that state’s rules; our PMHNP requirements by state tool shows each state’s category. NPs usually bill under their own NPI. Medicare’s incident-to rules allow billing under the physician only when strict conditions are met.
• Collaborative care. Psychiatrists can serve as the psychiatric consultant for primary care practices using the collaborative care model. See collaborative care billing, 99492 to 99494.
• Spravato and TMS. Both need their own setup: Spravato treatment sites must be certified under the Spravato REMS program, and TMS needs its own equipment and usually prior authorization. See Spravato billing and TMS billing.

A realistic timeline

When	What to do
4 to 6 months before opening	Confirm licensing, form the business, get EIN and NPI, start CAQH and credentialing
3 months before	DEA and state registrations, malpractice insurance, Medicare decision, choose EHR
1 month before	Set fees and policies, set up telehealth, test EPCS, set up billing
Opening	See self-pay patients, and insured patients for plans that have approved you
First 6 months	Add remaining plans as they approve you; review collections and denials monthly

Common mistakes

• Starting credentialing too late, then waiting months for insured patients.
• Seeing insured patients before the effective date, which leads to out-of-network denials.
• Opting out of Medicare without meaning to, or billing Medicare after opting out.
• Missing behavioral health carve-outs, so claims go to the wrong company.
• No license or DEA registration in a telehealth state where your patients are located.
• NPI, taxonomy or address mismatches between NPPES, CAQH and applications.
• Billing an E/M visit and a psychotherapy add-on without separate documentation for each.

This guide is general information, not legal, tax or clinical advice. Licensing, prescribing, Medicare and telehealth rules change, so confirm current requirements with your state medical board, the DEA, CMS and each payer before you act.

How RevenueCTRL can help

We help psychiatrists open and run their own practices. We handle mental health credentialing with commercial plans, Medicare and Medicaid in all 50 states, starting at $80 per payer, with 5 commercial payers credentialed free when you sign up for billing. Then we run your billing from 2.5% of collections, with no setup fee, no monthly minimum and no long-term contract. See psychiatry and PMHNP billing, billing for solo and private practices, or what billing companies charge.

Frequently asked questions