Why Therapists May Not Offer Insurance Coverage

Written By Jenevra Owen
 
 

I am sure you noticed that many therapists do not offer in-network insurance billing. I certainly understand wanting to make the most of your insurance benefits. However, there are many reasons therapists are choosing not to accept or bill insurance.

  • Insurance companies require a diagnosis and determine length of care based on your diagnosis. Insurance companies can decide that you are not progressing fast enough and when you should be done with therapy. In other words, your insurance company can decide your treatment.

  • In addition to providing a diagnosis, your therapist is also required to provide treatment notes to your insurance company in order to get paid. This undermines the basic premise of therapy and also gives a lot more people access to your private health information. 

  • Many are not aware that when your therapist is required to give a diagnosis to your insurance this stays on file in your health records with your insurance company. While this may not be a concern for every client, this can create future problems because you could be denied (or make it harder to obtain) life insurance due to certain mental health diagnoses.

  • Because mental health is still so stigmatized in many areas, when a diagnosis goes on a permanent record it sometimes creates more problems for clients seeking physical health care. For example, clients diagnosed with generalized anxiety disorder are sometimes ignored for physical health symptoms on the premise that their “symptoms are just anxiety.”

  • Even if clients are okay with their information being shared with their insurance provider, when it comes time to renew your insurance or switch plans, your premiums could rise as a result of your “pre-existing condition” (i.e. the mental health diagnosis your therapist is required to give to you and provide your insurance company).

  • Insurance companies can determine what is “medically necessary,” meaning they determine if your diagnosis is “bad enough” to receive treatment. Insurance may not pay when someone is experiencing normal life stressors, working on relationship issues, career concerns, or addressing past trauma.

  • Depending on your insurance plan, many clients are still paying the full price for therapy even with insurance (based on deductibles and other insurance plan requirements).

a Therapist Point of View:

  • Insurance providers expect therapists to provide services the same way other health fields provide care. However, a primary care doctor or a dentist can see multiple clients in one hour, but a therapist sees only one client per hour. So while a medical doctor is billing up to 48 clients a day, therapists can only bill between 7-8. In addition, because of the sensitive nature of therapy (i.e. discussing trauma, sensitive topics), research studies indicates that therapists should see no more than 26 clients per week in order to avoid burnout (note-that number can vary per clinician). However, in order to meet financial needs, client needs, and insurance demands, therapists are seeing 35+ client hours a week.

  • Therapists that take insurance are often mentally overextended in order to meet insurance financial and paperwork demands—sometimes spending more time on insurance demands than sitting with their clients. Clients deserve a therapist that is able to be engaging and present in client sessions, time to broaden therapist expertise in order to provide higher quality services, and the ability to take the time they need for self-care so that they can be focused, energized, and refreshed when they sit with you.

  • Many insurance panel reimbursement rates for psychotherapy have not changed in 10+ years. Therapists are constrained to the same systemic demands as their clients, and while the rates of reimbursement has remained low in many circumstances, cost for therapists to maintain their practice and cost for basic living expenses has increased, which has forced therapists to figure out alternative ways to earn a living outside of insurance reimbursement.

  • Insurance panels set the reimbursement rates, often with the belief that mental healthcare is not essential for overall healthcare, thus therapists end up struggling with insurance panels on the value and necessity of their work with and for clients.

  • Insurance companies get to determine which therapists they will panel (in-network) and reimburse. Insurance companies often make the process of being paneled very complicated. Therapists often apply to be paneled with insurance companies but are being denied. In addition, if a therapist does become paneled, insurance companies can still deny claims.

  • Therapists often have to chase down reimbursement from insurance companies, as payments can be delayed for several months or even denied after therapy services have already been provided.

  • There is something called “retroactive claim denials.” This is where claims can be audited for previous treatment, and if it is determined there were mistakes or inconsistencies in paperwork (which can include something as small as grammar, punctuation, etc.) that was missed when the claims were originally approved and paid, or if the audit comes back disagreeing with treatment, the insurance company will request the therapist return those fees. In other words, this essentially means that even if an insurance provider approved and reimbursed the therapist for treatment, the insurance company can come back months (sometimes years) later to the therapist and disapprove the treatment the therapist provided, and require therapists pay the insurance provider back for services rendered. While this does not happened to every therapist, if it does happen it could potentially bankrupt that mental health provider.

benefits for not using insurance for therapy:

  • You have more confidentiality, as your therapist is no longer required to share your diagnosis and treatment notes with your insurance provider.

  • You do not have to be given a mental health diagnosis.

  • You do not have to worry about a mental health diagnosis from therapy remaining on your permanent medical record.

  • You will not have to change providers if your insurance changes.

  • The frequency and length of sessions is determined by you and your provider, as opposed to a third party telling you what is allowed under your insurance plan.

  • You are able to seek treatment before your symptoms meet the criteria for a diagnosis.

  • You are likely to get in with a therapist faster.

  • You can choose your therapist, instead of having your insurance choose for you.

With all that said, I am aware that private-pay is not going to be feasible for everyone. This is not meant to deter individuals away from therapy, but rather to address some problems that currently reside in the mental health arena. Hopefully this gives you a better understanding of what goes on behind the scenes of psychotherapy services. Please know that there are still providers who do take insurance. Professional organizations and advocacy groups are working on the issue of reimbursement and how we address mental healthcare in the US. If working with insurance and reimbursement rates improved, more therapists would be able to provide in-network care, which would also shorten wait times for therapy. At the state level, many advocacy organizations are pushing for legislation which will improve reimbursement rates and further destigmatize mental health. Changes are happening, but they are happening slowly. In the mean time, if insurance is your only option in order to receive psychotherapy, I encourage you to check out the following options:

  1. Call your insurance provider and ask about your out-of network mental healthcare options. (Note that reimbursement for out-of-network services requires a diagnosis and insurance can still dictate what is “medically necessary.”)

  2. If you struggle getting reimbursed for approved out-of-network treatment, there are services that will advocate for you and request reimbursement on your behalf, like Reimbursify or Thrizer.

  3. Pay attention to and vote for mental health legislation that aligns with your needs for improved mental healthcare in the United States. (Although, I encourage following mental health legislation with or without ability to pay).

  4. Check out your community mental health clinics and local mental health advocacy groups.

  5. New therapists (i.e. pre-licensed/ associate license/ graduate license) tend to offer lower fees, and still provide quality mental healthcare.

  6. Open Path Psychotherapy Collective helps connect low-income clients to more affordable care.

  7. Mental Health Liberation is working to help find afordable counseling for BIPOC individuals.

In a nutshell, therapists face many barriers in providing quality mental health services, which ultimately makes it difficult for clients to find and access mental healthcare. As mental health stigma continues to decrease, the policies that force therapists to continually justify coverage of mental healthcare will be pressured to make changes—hopefully leading to greater equity for mental healthcare.

Please note that not all insurance providers are the same, and not all states respond the same to mental healthcare. Your experience could be different than what I described. I recognize that I did a lot of criticizing health insurance, so to show that I am not alone in pointing out the problems with mental healthcare, here are a few other sources to take a look at:

Jenevra Owen

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