Starting your own therapy private practice is an exciting milestone, but the legal requirements can quickly become overwhelming. This comprehensive guide simplifies the process by breaking down the essential steps you need to take to ensure your practice complies with regulations, while upholding ethical and legal standards. With this checklist, you'll have a clear, organized approach to navigating the legal landscape—giving you the confidence to open your doors and focus on providing exceptional care to your clients.

Legal requirements to meet before opening your therapy private practice

Before launching your therapy practice, it’s crucial to lay a solid foundation by taking key steps that establish your practice as a legitimate, professional business. These steps will not only ensure you uphold ethical standards and best practices, but also help maintain a clear boundary between your personal and professional life. By setting the right framework early on, you’ll create a trustworthy environment for your clients while also positioning your practice for long-term success and compliance with necessary regulations.

3 steps for legal compliance

• Register Your Business: Choose the right legal structure for your practice (LLC, sole proprietorship, or corporation) and file the necessary paperwork with your state’s business bureau.
• Obtain an EIN: Register for an Employer Identification Number (EIN) through the IRS if you plan to hire employees or become involved with an existing business.
• Open a Business Bank Account: Keep your personal and business finances separate to simplify accounting and maintain legal compliance. Taking this step can simplify your taxes, improve your loan eligibility, and keep your papers in order in case of an audit. 

Obtaining licensing and permits

• Professional Licensing: Ensure your therapy license is active and valid in the state(s) where you will practice. For telehealth services, verify the state-specific requirements for providing care across state lines.
• Business License: Many states and municipalities require a business license to operate a private practice, whether physical or telehealth. 
• State-Specific Requirements: Research any additional permits or certifications required in your state for mental health providers. Speciality organizations such as the American Psychological Association or the American Counseling Assocation can be valuable resources in identifying your professional responsibilities. 

State and federal therapy telehealth laws

• HIPAA-Compliance Laws: Invest in HIPAA-compliant software for telehealth, email communication, and storing patient records to ensure practice security and patient confidentiality. Healthie provides a HIPAA-compliant solution tailored to the needs of therapy private practices.

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Insurance policies every private practice needs

‍Obtaining liability insurance is an important step to protect your therapy private practice from unexpected issues like accidents or data breaches. Professional liability insurance protects you and your practice from potential lawsuits, and grants you greater peace of mind to focus on your clients. 

Essential insurance for therapy practices

• Malpractice Insurance: Protect yourself from claims of professional negligence. You can research the average malpractice insurance cost and compare providers to find the best fit. If relevant to your practice, verify that your malpractice insurance covers telehealth services, as some policies may have limitations.
• General Liability Insurance: Cover unintended accidents that may occur at your physical office. To get started, explore general liability insurance plans to ensure adequate coverage.
• Cybersecurity Insurance: While less common, this can safeguard your practice against cyberattacks or data breaches that could compromise patient health information.

State-specific private practice requirements

• Insurance Mandates: Some states require specific types of coverage for private practices, such as workers' compensation insurance if you decide to hire staff.
• Medicaid or Medicare Enrollment: If you plan to accept Medicaid or Medicare, ensure you meet all federal and state credentialing requirements. The Centers for Medicare & Medicaid Services (CMS) provides guidelines.

Running a legally compliant therapy private practice

‍Ensuring legal compliance in daily operations involves proper documentation, ethical adherence, and secure record-keeping. Here are a number of suggestions to stay compliant with your many day-to-day administrative and operational responsibilities: H3: Using the right therapy forms and permissions

• Client Intake Forms: Include consent to treat forms, financial agreements, and HIPAA-compliant privacy notices.
• Telehealth Consent: Obtain specific consent forms for virtual services, outlining how telehealth works and its limitations.
• Release of Information Forms: Ensure proper documentation before sharing any patient information with third parties.

Check out the 40 therapy forms for running your private practice. 

Staying within your scope of practice

• Know Your Limits: Provide services only within your licensure and training. For example, therapists should avoid diagnosing medical conditions outside of their scope-of-practice. Instead, we recommend establishing a professional network so you can refer clients responsibly. 
• Supervision Requirements: If supervising pre-licensed therapists, ensure you meet state-specific requirements for supervision and maintain proper record-keeping.

Keeping accurate and up-to-date patient records

• Retention Policies: Know your state’s laws on how long to keep patient records after services end. The American Health Information Management Association (AHIMA) offers helpful retention guidelines.
• Documentation Standards: Follow state, federal, and association guidelines for legal and ethical note-taking, including secure storage for patient records and clear protocols in case of a security breach. Records are often required to be stored for 7-9 years, or potentially longer, depending on legal mandates. Choosing an cloud-based EHR platform will help you host your client records and ensure you’re securely storing documentation, keeping it accessible in the case of an audit, and reduce the burden of physical paperwork. 

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Ensuring ethical and legal standards among therapists

‍Beyond legal compliance, maintaining ethical standards within your practice is essential for patient trust as well as professional integrity. While ethical guidelines may vary across professional licenses, there are consistent best practices you can follow to ensure your license and practice remain in good-standing. 

Staff compliance in private practice

• Employee Training: If you choose to grow your team, provide ongoing training on HIPAA compliance, ethical standards, and workplace safety. For example, any team member that has access to protected health information (PHI) should complete regular HIPAA-compliance training. 
• Background Checks: Verify whether background checks are legally required in your state or for specific roles in your practice. Even if not mandated, conducting background checks before hiring staff helps ensure they meet professional and ethical standards. 

Supervising pre-licensed therapists

• State Laws: Verify supervision rules in your state, including required documentation and the number of supervision hours.
• Ethical Responsibility: Provide appropriate oversight to ensure pre-licensed therapists adhere to legal and ethical standards. Remember, supervisees are practicing under your licensed supervision, and must adhere to the same compliant practices that you follow.

Handling legal and ethical violations

• Internal Policies: Develop clear and consistent policies for addressing staff misconduct or ethical breaches. 
• Reporting Requirements: Understand your professional obligation to report certain violations to licensing boards or other authorities.

Hiring a therapy private practice lawyer: is it worth it?

‍Dealing with the legalities of opening and operating your therapy private practice can be intimidating. While many therapists do successfully navigate the legal requirements on their own, you may also choose to hire a lawyer to assist you throughout the process. ‍

Do you need a lawyer to start a private practice?

‍Hiring a business lawyer is not a requirement for your therapy private practice. While not mandated, hiring a lawyer can be helpful to set up your business structure, ensure compliance with state-specific private practice laws, provide customized legal checklists tailored to your state, and execute employee contracts. 

‍Obtaining legal advice for therapists

‍If you choose to hire a lawyer for your therapy private practice, it is helpful to search for an attorney that specializes in healthcare law, mental health regulations, and/or small business compliance. You can ask colleagues in your field for referrals, turn to organizations like the American Health Law Association (AHLA), or refer to your state’s Bar Association to find directories of lawyers specializing in healthcare law. 

Healthie’s all-in-one solution supports private practices in legal compliance

‍Managing the legal aspects of your practice is made easier by leveraging secure tools, like Healthie. Healthie’s platform streamlines many compliance-related tasks, including:

1. Integrated HIPAA-Compliant Software: Ensure secure record-keeping and charting with built-in HIPAA compliance features.
2. Customizable Forms: Access modifiable templates for client intake, telehealth consent, and more.
3. Secure Documentation: Healthie provides features such as e-fax and document uploading that is secure for PHI. 
4. Secure Telehealth Services: Offer virtual sessions, chat, and email with confidence using Healthie’s integrated HIPAA-compliant telehealth platform.

With Healthie, therapy private practice owners can focus more on patient care while ensuring simple and effective adherence to their legal and ethical standards.