Insurance Based vs. Out-of-Network Therapy
This blog is intended to inform clients about the pros and cons of insurance-based and out-of-network therapy in order for you to make the best choice about your therapeutic care. Sometimes, it’s useful to use your insurance coverage for therapy but if you’re wanting a longer term and more sustainable relationship with a therapist, it is worth considering out-of-network providers. Due to insurance structures that don’t support the client or the therapist well, it’s often worth the investment in out-of-network therapy to get care that actually prioritizes you as opposed to your insurance provider’s bottom line.
First, if you cannot afford therapy without insurance, it’s important to utilize your benefits to get care when you need it. The quality of that care may not be as excellent or personalized as it would be out-of-network but it can be available if you want to put in some legwork to find a provider in network with your insurance company. However, many people are surprised to learn that with reimbursement, they aren’t paying much more for out-of-network care and they are getting much greater quality of care. I’m not suggesting that therapists who take insurance are low quality, but rather that there are limitations to how they can serve you under insurance restraints that limit quality care.
How does out-of-network therapy reimbursement work?
Historically, this model of therapy has required that you pay for roughly a month of services out of pocket, your therapist provides you with a superbill (invoice) at the end of the month that you submit to your insurance company for reimbursement. You get a check in the mail a few weeks later with 50-90% of the fee you already paid returned to you.
For example, if you pay your therapist $150 per session on a biweekly cadence, you would pay out $300 in a month. Your therapist would then give you a superbill and in a few weeks, you would likely get a check from your insurance provider for roughly $200. So, at the end of that process, you have paid $100 in total for therapy for the month. Between deductibles and copays, you very likely would have paid the therapist anywhere from $60-$300 for the month, had you billed your insurance directly. As you can see, the investment isn’t near as large as you might think when you work with an out-of-network therapist if you have reimbursement benefits through your insurance company.
Additionally, there are now companies that are working with therapists and clients to allow the therapist to submit claims on your behalf. This allows you to only pay the portion of the service that insurance won’t reimburse for up front. Therapists get paid the remaining balance through the third-party company. It’s worth exploring this option with your provider if it helps you access out-of-network care without the upfront costs.
Why do many therapists not take insurance?
It may seem like therapists are making a really good living when you multiply their hourly rate by 40 but there are so many reasons why that assumption simply isn’t true for most providers. First, nobody is seeing 40 clients per week and if they are, run don’t walk, in the opposite direction. Therapists only get paid for the hours that they are face to face with a client. They spend many additional hours attending to the operation of their practice, treatment planning, spending time on hold with insurance companies, accounting, marketing, etc. They are running a small business and incurring the costs associated with that on only part-time paid hours. When you add in a low insurance reimbursement rate to this, it’s simply unsustainable for many therapists to cover costs and pay themselves a living wage on part time paid hours with full time working hours. The system also doesn’t compensate in a way that is consistent or reliable, making income very insecure for providers who take insurance. Below are a few bullet point summaries of why many therapists choose not to take insurance.
Low Reimbursement Rates:
As mentioned, clinicians are getting significantly less per hour from insurance companies than they do from private pay client hours; as low as 40% of their rate. Without additional income streams, such as a partner’s income, this makes insurance-based care unsustainable for many therapists. It is unfortunately not uncommon for therapists with graduate degrees to be working second jobs on top of their therapy job in order to make ends meet. Those student loans aren’t cheap and neither should your therapist be!
Administrative Burdens:
Have you ever spent hours on the phone with your insurance company only for the call to be dropped or your issue to go completely unresolved? Imagine doing that for 20 people. It’s a massive time suck when therapists are already stretched thin from low reimbursement rates. There is also a lot of bureaucracy that limits the therapist’s ability to provide best care for you.
Restrictions on Frequency and Coverage:
Many insurance policies limit the number of sessions a client is able to see their therapist for. They also limit what types of therapy they will cover, hindering appropriate treatment in many cases. The model is built on crisis management, not preventative care.
Lack of Reliable Billing:
When accepting insurance, it is not uncommon for clinicians to be faced with unexpected financial losses. Insurance has been known to come back to the provider months after payout for claims and determine that they incorrectly covered the fees and are now demanding it be returned to the insurance company, leaving the clinician completely unpaid for sessions that took place months ago. The risks are quite high for the provider and reliability of income is low.
Ethical Concerns:
Insurance can request anyone’s personal mental health records at any time to determine whether or not they will continue paying for services. This can pressure clinicians to make treatment decisions based on insurance coverage as opposed to the best interest of the client. It also requires that the client have a mental health diagnosis on record and jeopardizes the confidentiality of your personal healthcare information.
How do you determine if you have out-of-network benefits?
If you would like to pursue out-of-network therapy, you’ll want to call your insurance company directly and ask the following questions:
Do I have out-of-network psychotherapy or out-patient mental health benefits?
If so, what percentage do you reimburse at?
Do I have to meet my deductible, coinsurance, or out of pocket max before I get reimbursed?
When does my deductible reset?
Are there any limits on the number of sessions that I can receive in a year?
What is the time limit after completed sessions to submit for reimbursement?
As you can see, there is a lot of complexity to the issue of insurance vs. out-of-network therapy. However, your therapist can help you through the process and there are a number of ways to make it easier. It’s good to consider what you are needing out of therapy and if the investment in out-of-network care might be in your best interest. Investing in your mental health care with a competent and caring provider is the most importance thing, no matter how you decide to pay for it. We are here to be of help as you look for someone to walk alongside you on your unique path.