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What’s the deal with therapists and insurance?


When I was in grad school, I took an administrative position at a large, in-network group practice. I previously only had experiences in private practices that were exclusively out-of-network, and I was eager to figure out why every therapist I shadowed always warned me not to get on panels. During this part-time position, I began to see why.


As a part of my duties, I received the mail and processed insurance payments. When I received  one of the first insurance checks I was astonished. The payout for 4 sessions was a total of $6.32. I remember that distinctly. I figured this could not be the full coverage, there must be a payment that I am not aware of that was already processed. That assumption was wrong. Other payouts from insurance ranged in the $40-60 range. The highest payout I saw was  about $130, but seeing triple digits was rare. 


I was a bit disheartened. As a professional with an advanced degree, thousands of hours of training, and a license our time is valuable. However, once you are credentialed with an insurance company, your value is appraised in accordance to the company’s preferred profit margin.


There is also a concern of receiving overpayment. Simply put, when you are on an insurance panel you are offered a range of rates for specific services. These rates are often much lower than the standard market rates. If the insurance company states that they will pay $100 per session, but accidentally pays $150 per session the therapist is responsible for the balance, regardless of how long ago the error occurred. As you can imagine, a therapist cannot keep the specifics of each client’s insurance benefits at top of mind to ensure that the insurance payout is accurate. I know of one provider that receives a bill in the 2nd quarter of the year for $5000, due to an internal billing error made by the insurer. The timing is important, because that perceived “income” was reported to the IRS and fully taxed. So not only was there a bill for the repayment, but the therapist paid income tax for that full amount to the IRS. This financial loss does not count as a business expense and cannot be used to reduce taxable income of another year.


Insurance companies also will not cover sessions that a client does not attend. Which in theory makes sense. However, it also means that for no show appointments or late cancellations, there is no compensation other than the copay for that time and no way to recoup that cost. 


This is all also assuming that the claims are accepted and processed smoothly on the first attempt. Most claims are electronically filed and are scanned by algorithms prone to error. It is not uncommon for insurance companies to consistently reject out-of-network claims because a provider who is not credentialed with them is not in their system. Their scanning process can also miss crucial information if it is not printed in a standard format. For example, I have received rejection notifications when necessary information, such as DOB, diagnostic codes, or CPT codes, are “missing”, despite being provided on the same superbill used for a previous submission. These errors serve the insurance company very well, and there is no incentive for them to improve or streamline the process.


In addition to this, it is standard practice for therapists to be responsible for both their income and their payroll taxes, which is about 30% of their income. It is also typical to have a commission split with the practice owner to cover operating costs, and a generous split is about 60% for the therapist who completed the service. So for therapists who are in network, with their rate determined by the insurance company, after taxes and commission on a high end hourly rate is $55, and the more common wages are closer to $21.


Processing claims and managing insurance payments is a full time job in and of itself. It takes away energy that the therapist would much rather use to research a new therapeutic method or be with their clients. In addition, the time it takes to manage this one position is not paid, and so being in network with insurers is simply not sustainable for most small practices. 


The benefits for clients:


Being OON also provides many benefits to our clients! When private pay, a therapist does not have to adhere to any restrictions an insurance company has. When you take advantage of you OON benefits, the calculations and process of reimbursement is much simpler. The insurance company does not get to dictate the length of the session, duration of treatment, the type of diagnosis that is treated, and do not demand notes and other personal information to substantiate the benefit of the treatment. When you see an OON therapist, you can choose the therapist  that is right for you, and the therapist can provide the standard and type of care using their highly trained, professional discretion. 

At the end of the day, the insurance company wants to offer the smallest payouts to providers in order to maximize their profits. In order to do so, they will have restrictive guidelines that exclude treatment of comorbidities, make it easier to use lower cost levels of care rather than the right standard of care, and they will only cover certain types of treatment. However, when a client requests reimbursement, many of these restrictions do not apply and clients can really make the most of their benefits. I have a few clients who, after reimbursement, have paid less than their copay would have been for an in network provider. 


How to make this work for you:

  1. When seeking a provider, inquire about their billing practices, Ensure that they offer a superbill or some other proof of payment that lists the following information very clearly

  • Clients name, address, and date of birth

  • Diagnostic Code in accordance to the DSM 5. 

  • Itemized session description listed by date of service with the correct CPT code.

  • The provider’s National Provider Number (NPI), tax number (EIN), name, license type and number, address and phone number, and some companies require the provider to sign the form.

  • Ask how often they generate these forms and what the delivery method is.

  1. Determine what process works best for you! Every insurer operates a bit differently. If you would like more guidance, call the number on the back of your card to inquire about their specific process. 

  • Submit a claim through your insurance company portal. There is typically a tab designated for claim submissions. Some are specific to type (Dental, medical, mental health, etc). You can then enter the information found on your superbill and then upload that form as well.

  • Submit a claim by mail. Look up the correct form by “googling’’ or otherwise searching the following terms:  insurer, out of network claim form, mental health. (Ex: United Healthcare, out of network claim form, mental health). You can complete the form by typing on the PDF or print and complete by hand. Then, mail this form and the superbills to the address indicated on the form.*Tip, fill out one form with all of the information that will be standard (CPT code, Diagnosis code, personal information, etc) and make copies for future use to save time*

  • See if your provider offers Courtesy Billing. This is a process we use at Cope & Calm Counseling, and we have had a lot of luck with it. In this situation, you pay for the session at the time of service, the provider will submit your claim for you, and your insurer will mail a check and your explanation of benefits to you.   Unfortunately, a few specific companies are more likely to reject these claims, because the provider is not in their system. In that case you will have to select a different option.

  • Use a service. There are a few online services that will run these claims for you, negotiate with the insurer for rejected claims, and manage your payout for a small fee, typically 5% of the reimbursement. Mentaya, Thrizer, and Advekit are a few of these providers.

  1. Don’t have OON benefits or have a really high deductible, you still have options! You can contact your company to learn about the following processes 

  • Request an Out of Network Exception, Prior Authorization, OR Single Case Agreement. These are  requests that allows you to get reimbursed for services in accordance with your in network benefits. You can search the type of program and your insurance company (ex:OON exception form aetna), and then see what your company’s specific process is. I highly recommend calling or live chatting with a benefits specialist at your insurer to learn more about which option is the most beneficial for you and what their specific processes are. Some will require that your General Practitioner complete a referral form, others will want the provider to complete the form.

  1. Look and see what your other OON benefits are! Many OON benefits come with wellness support. Of course these options vary by plan, but take a look and you might be surprised! These benefits may allow you to receive reimbursement for:

  • Gym Memberships

  • Personal training

  • Nutritionist Counseling

  • Meditation Coaching

  • Household exercise equipment

  • Smoking cessation programs

  • Fitness tracker

  • Stress Management Courses or Coaching

  • Occupational Therapy

  • Physical Therapy

  • Glasses

  • Aligner Braces

  • And my favorite, Massages


Once you get into the swing of things, submitting these claims will become as simple an errand as submitting a check for mobile deposit to your bank. The cost of these benefits are baked into your premium, and only the insurance company benefits from not submitting these claims. We all know how costly insurance is, so I hope you get the most out of that investment. You deserve it!

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