Why I Don’t Accept Insurance (As A Therapist)

Therapists In Private Practice Are Small Business Owners

The hourly fee a therapist charges is not the actual fee they are paid.

• My business expenses as of 2023:

  • Monthly Expenses

    • Federal taxes (24% - 26%)

    • City taxes (~1%)

    • Medical, dental, and vision insurance ($500 - $600 monthly)

    • Bookkeeping ($40 monthly)

    • Business address ($50 monthly)

    • Credit card processing fees (3.15% + .30 cents per transaction)

    • 401K/retirement fund (15% monthly)

    • Consultation & supervision ($300 - $500 monthly)

    • Electronic health record system ($80 monthly)

    • Website hosting and domain ($25 monthly)

    • Marketing & advertising ($300 - $400 monthly)

    • Internet ($120 monthly)

    • Cell phone ($80 monthly)

    • Business phone number ($25 monthly)

  • Annual Expenses

    • Unpaid time off: sick days, client cancellations, holidays, professional development, and vacation (6 weeks; or a month and a half of salary)

    • Malpractice and liability insurance ($800 - $1,000 annually)

    • Annual licensing renewal ($160 annually)

    • Business and city licenses ($300 annually)

    • Continuing education including certifications, workshops, training, conferences, books, etc. ($6,000 - $8,000 a year)

    • Professional memberships ($400 - $700 annually)

    • And more

Lack of Adequate Pay Raises

• Most insurance panels do not raise fees for therapists annually to account for inflation and cost of living.

• When there is an increase, it can be as little as 50 cents to $2.50 every 4-5 years depending on the insurance company.

Health Insurance Companies Generate Billions In Revenue

• Insurance companies can increase the pay for mental health therapists to a livable wage ($160 - $200 per hour). However, they choose not to.

• Therapists do not see 40 clients a week as this is a recipe for burn out. Full time ranges anywhere from 24-35 clients per week. I see 14–15 clients per week. After cancellations, this averages to about 12-14 clients a week.

• Premiums and co-pays for clients keep increasing every year, but pay raises for therapists do not reflect this increase (insurance profits more and charges clients more).

• As of 2023, these are the most profitable health insurance companies:

• United ($286 billion in revenue)

• Anthem ($138 billion in revenue)

• Kaiser ($89 billion)

• Premera ($3.4 billion)

From https://www.statista.com/statistics/985501/largest-health-insurance-companies-in-us-by-revenue/

Burn Out & Compassion Fatigue

• While I value the work being done by therapists who accept insurance, it does not work for me, my life, my values, and my practice long term.

• I’ve previously worked for agencies where therapy was free for the client or a low co-pay. However, I had a large caseload (80-100 clients total) where I could only see people once every 3-6 weeks and eventually burned out.

• Burn out would leave me feeling inadequate, exhausted, ineffective, frustrated, and considering leaving the field of mental health altogether.

• Some ways I prevent burn out is taking care of myself by taking time off, having a smaller caseload, and having enough money to live and spend on self care activities so I can fully present for all my clients in session.

Cost Of Living In Seattle

• Seattle’s cost of living (food, rent, transport, utilities) is about 53% higher than the national average

• In 2021, average one bedroom apartment rental is $1,979

• In 2023, median home price to purchase is $834,356

• Insurance reimbursement rates have not significantly increased over the years due to inflation and cost of living which means therapists have to see more clients in order to make a livable wage (this can lead to burn out and compassion fatigue)

Cost of Graduate School & Loan Interest Rates

• The cost of higher education in the United States is expensive.

• Therapists are not adequately compensated for their labor to pay back loans and pay rent.

• Unless one comes from wealth, has access to capital, and resources, taking out loans, seeking scholarships, and working part time during school is usually the reality.

Sample 2-3 Year Washington State Masters Degree Total Cost For The 2022-2023 Year

Living Expenses Are Excluded, About $12 - $18K Annually

Unpaid Internships During Graduate School

• During graduate school, students are required to complete unpaid practicum/internships (anywhere from 15-24 hours per week) and provide therapy to 15-20 clients weekly.

• If a student is working part time to pay for living expenses, they are working two jobs which is the equivalent of a near full time job (40+ hours) and attending school full time (3-5 classes).

• Many students are already exhausted and/or burned out before they graduate.

Post Graduate Training & Licensure

• In Washington, once a master’s student graduates from their program, they must accrue anywhere from 2-3 years of supervised clinical experience before being allowed to take their board exam and then earning their independent license if they pass.

• Supervision hours are free/included in the employment contract if you work for a community mental health agency which pays poorly ($40,000 - $50,000) compared to working for yourself in private practice. I made $32,000 my first job out of school and supervision was included as part of the employment.

• If you decide to work for yourself in private practice as an associate therapist, you must pay for supervision yourself which can vary depending on your license type.

  • For social workers, as of 2022, we must have at minimum 130 clinical supervision hours.

  • If a supervisor charges $50 per hour for supervision, total supervision cost is $6,500. Most charge more though, so the cost will be higher (e.g. $100 will cost $13,000).

• Therapists must also continue to learn how to be effective clinicians so they should probably attend trainings from time to learn.

• Post graduate training is expensive. Sample training fees are below as of 2023. Note this excludes cost of hotels and flights if training is in person and out-of-state. On average, I spend about $6,000 - $8,000 per year for professional development, training, and consultation.

  • Cognitive Processing Therapy: $450 - $1,600

  • Dialectical Therapy Foundational Training: $1,595

  • Dialectical Therapy Skills Introduction: $325

  • EMDR: $1,100 - $1,900

  • Emotionally Focused Therapy Externship: $900 - $1,100

  • Emotionally Focused Therapy Core Skills: $1,800

  • Gestalt Therapy Training (Seattle Program): $1,250 per year

  • Narrative Therapy Foundations Level 1: $645

  • Narrative Therapy Foundations Level 2: $340

  • Narrative Therapy Level 3: $645

  • NARM Level 1: $1,400 ($2,500 overall with required consultations)

  • NARM Level 2: $5,600 ($7,000 overall with required consultations)

  • PACT Couples Therapy Level 1: $1,899

  • PACT Couples Therapy Level 2: $1,899

  • PACT Couples Therapy Level 3: $5,700

  • Radically Open DBT Level 1: $250

  • Radically Open DBT Level 2: $1,000

  • Radically Open DBT Level 3: $900

  • Seattle Psychoanalytic Institute 2 Year Program: $2,640 per year

  • Sensorimotor Psychotherapy Level 1: $3,100 ($4,000 with required consultation and sessions)

  • Sensorimotor Psychotherapy Level 2: $5,500

  • Sensorimotor Psychotherapy Level 3: $6,500

  • Somatic Experiencing (1 Module): $1,080 (to receive the SEP credential, the cost of the 3 year program exceeds $13,000 with required personal sessions and consultations)

  • Internal Family Systems Level 1: $3,200 - $5,200

  • Internal Family Systems Level 2: $2,400 - $3,800

  • Internal Family Systems Level 3: $2,500

  • Psychedelic Assisted Therapy Experiential Training: $3,500 - $5,000

  • Psychedelic Assisted Therapy Certificate Programs: $10,000 - $13,000

  • Gottman Couples Therapy Level 1: $249 - $500 (depending if pre-recorded or live/in person)

  • Gottman Couples Therapy Level 2: $399 - $850 (depending if pre-recorded or live/in person)

  • Gottman Couples Therapy Level 3: $900 - $1,400

  • Acceptance & Commitment Therapy Foundations/Immersion 1: $629

No Balance Billing

• Balance billing is when a therapist bills the client for the balance between the provider's full fee and their agreed contracted insurance fee/reimbursement.

• If a therapist accepts insurance, they agree to a reduced contracted flat fee.

  • Example: A therapist charges $180 for a 50-minute session, but their insurance company only pays them $100 for a 50-minute session per their contract they signed.

Insurance Is Strict

• Therapists don’t get paid if clients miss/no show a session

  • Therapists have cancellation policies to ensure they get paid and can make a living (e.g. if multiple clients late-cancel or no-show, they would lose a portion of income)

• Therapists must follow all protocol, rules, and laws related to insurance, otherwise it could be considered fraud

  • Fraud can include:

    • Offering to waive coinsurance payments or deductibles

    • Completing paperwork incorrectly and with an incorrect diagnosis

• There are time limits for sessions (e.g. 38-45 minute sessions, 53-60 minutes)

  • This is why most therapists who accept insurance see clients for 45-minute sessions rather than 50-60 minutes

  • I prefer seeing clients for at least 53-minutes as I’ve found the longer time length benefits clients, especially those with a history of trauma

• Insurance requires documentation of medical necessity

  • Example: Insurance might ask, “Why does this client require 53-minute sessions instead of 45-minute sessions?”

  • “Why has this client been in therapy for over a year? What is the necessity? What is the client still struggling with? Do the notes reflect this necessity? Does the diagnosis match the quantity of time spent in therapy?”

Unable To Offer Reduced Fees

• Because I don’t accept insurance, I can offer reduced fee and pro-bono therapy to clients who would be unable to see me at my full price.

• If a client loses their job or experiences financial hardship, I will offer to temporarily reduce their fee to accommodate this life transition/adjustment so money isn’t impacting our work and they don’t have to end services with me prematurely.

• Example: If I accepted only Premera and First Choice insurances, I would not be able to offer reduced fees to clients who wanted to work with me, but whose insurance I did not accept (like Regence or Cigna) as this would be considered insurance fraud.

Smaller Caseload & Quality, Effective Care

• Trauma work is meaningful and challenging with a higher chance for burn out due to the intensity of the work.

• Being a trauma therapist is hard. Very few therapists see 35-40 clients a week because of emotional exhaustion. Imagine being the 7th client of your therapist’s day and them hearing 6 hours of traumatic experiences (violence, assault, abuse, neglect, pain, suffering) for the day.

  Most therapists see anywhere from 20-35 clients weekly and consider this full time and spend the rest of their time on administrative duties (e.g. notes, case management), but it depends on their workplace.

• I maintain a small caseload of clients (14-17 clients weekly) where I see 4-5 clients a day versus 6-9 people a day (30-45 clients weekly).

• I’ve previously worked in agencies where I had a caseload of over 80-90 clients and was only able to see clients once every month, and experienced first hand how the care I provided suffered.

• The higher quality of my life, the higher quality of service my clients receive because I am able to give them 100% of my effort, time, and energy in session. I am able to spend time reading books, consulting with supervisors and colleagues, and thinking about your case and issues because I have a smaller client caseload.

Clawbacks (Insurance Taking Back Money)

• Insurance companies can also conduct a clawback or retroactive payment denial (take back money earned).

• Clawbacks (paying insurance back/returning money to insurance) because notes do not meet insurance necessity or requirements, a clerical error of some sort like wrong CPT code or diagnosis.

• Read more here

Broken Insurance System

• The insurance system is complex, messy, and broken given the current system of healthcare we live within and under.

• Many insurance companies (like Kaiser, United, Aetna) have been sued due to various issues including not paying for mental health services, denying services, and month long wait times for urgent needs.

• Some insurance companies are terrible for consumers. Examples include: an outdated therapist directory (some therapists have died, are no longer practicing, are not accepting new clients, no longer accept insurance), high deductibles, making it hard for consumers to locate a therapist of their choice/preference, denying services, and long wait times.

• Insurance companies can also take months to pay therapists, take back money given to therapists for an administrative issue, and are generally unpleasant and time consuming to deal with because they are mostly profit driven.

• Meanwhile, over the years, deductibles and co-pays increase, while therapists’ fees do not increase, which makes no sense. Insurance companies make more money while their providers do not.

Medical Necessity

• Treatment must be deemed medically necessary by insurance companies (e.g. you need to be sick/ill enough and prove it to the insurance company), to get help for mental health issues.

• Therapy can’t be solely focused on personal growth, existential issues, relationship issues, self-esteem, boundaries, or communication, but must be aimed at reducing medical symptoms (e.g., insomnia, anxiety, or depression) or reducing impairment.

Session Limit

• Insurance companies can limit the number of sessions you are allowed, though this isn’t legal due to parity laws (though many insurance companies have been sued like Kaiser & United for not approving adequate mental health care to its clients).

  • This is why insurance companies favor time-limited psychotherapy models such as CBT because they are 8-16 sessions in total.

• Often, healing can be unpredictable, especially for those healing from trauma.

  • Some people overcome an obstacle in 10 sessions, others need 20, while others may need 40 sessions.

Diagnosis (Pathology Based/Medical Model)

• To bill your insurance company, I need to diagnose you with a mental illness.

  • Common diagnoses include: Post Traumatic Stress Disorder, Generalized Anxiety Disorder, Bipolar Disorder, and Major Depressive Disorder.

• Any documented mental health treatment filed through your insurance company will go on your medical record.

• Sometimes having a mental health diagnosis can impact life insurance or future employment.

• I do not believe in pathologizing clients and assigning them a diagnosis.

  • While a diagnosis can be helpful in developing a treatment plan and finding evidence based research/models toward alleviation of pain and growth, it can also be limiting and restrictive in other ways (e.g. the racist, sexist, homophobic etiology of the DSM or Diagnostic Statistical Manual).

Couples Therapy Is Not Traditionally Covered

• If you are seeking couples therapy, ask if this is a benefit; many health insurance companies deem couples therapy to not be “medically necessary.”

• Issues such as: improving communication, intimacy, premarital issues, betrayal, infidelity, and conflict are not covered by insurance.

  • This is a diagnosed as Z Code “Z63.0, Relationship Distress With Spouse or Intimate Partner”, which is not covered by insurance.

• In order for couples therapy to be covered by an insurance company, one partner (“identified patient”) in the relationship must be diagnosed with a mental illness and the session must be focused on assisting the other partner in managing the problems as a result of the mental illness in the relationship.

• In this case, treatment is provided with the support person in the room with the goal to help alleviate symptoms of the client with the mental health diagnosis (e.g. Bipolar Disorder, Post Traumatic Stress Disorder, Substance Use Disorders, or Generalized Anxiety Disorder).

Low Reimbursement Rates

• When a therapist accepts insurance, they agree to accept a standard fee in exchange for steady referrals by being listed in the insurance’s directory.

  • Insurance reimbursements vary in range from $60-120 depending on the company.

• Some insurance companies are notorious for not raising rates to adjust for cost of living and inflation, even when it’s been over 6-10 years since the last rate increase. Imagine making the same salary for 6-10 years, when you put in countless hours and dollars to increase competence at your job.

• If therapists are being reimbursed at a lower rate, they must work with more clients to earn their desired salary.

• Unlike traditional jobs, therapists in private practice do not and probably should not see 8-10 clients a day, 5 days a week due to the emotional work it takes to do this work (this would likely lead to burn out and poorer client care).

Delayed Payments

• In general, insurance companies must pay a claim within 30 days. If the claim is denied, however, therapists could wait longer pending an appeal. They might not even get paid at all.

• It generally takes a minimum of one month for a health care provider to receive payment for services from an insurance company.

  • If therapists worried about receiving timely and fair compensation, clients likely wouldn’t get the care they deserve because of the uncertainty of insurance remittance for services provided.

• Imagine if your paycheck was delayed anywhere from 15-30 days consistently.

Paperwork & Case Management

• Accepting insurance requires more unpaid time involved with billing, authorization requirements, possible audits, and administrative issues related to managed care (anywhere from 2-5 hours a week).

• This is time I could spend with clients. It is also time I can be taking care of myself so I am at my best when I’m with clients, present and energetic.

• If a therapist is audited and fails this audit (e.g. not complying with the insurance company’s rules), they may be required to pay back money to the insurance company, even if the session was already provided.