Therapists Who Don’t Accept Insurance
| Nina Chamlou Modified on April 14, 2022
The shortage of mental health professionals has been going on for years. But since the onset of the pandemic, demand for therapy has increased even more. The number of psychologists who said their referrals increased in 2021 almost doubled compared to the previous year.
Nearly 7 in 10 psychologists with waitlists said the number of people on their waitlists increased since the start of COVID. Finding an available therapist — especially one that accepts insurance — is no easy feat. In fact, almost a third of therapists don't accept insurance at all.
Featured Expert: Peter H. Addy, Ph.D.
Peter H. Addy is a licensed professional counselor in Portland, Oregon. He earned his doctor of philosophy (Ph.D.) in clinical psychology from Sofia University in Palo Alto.
He has been working in private practice since 2018 but worked at agencies and hospitals for many years prior. At different points in his career, he has not accepted insurance at all, accepted every kind of insurance, and currently accepts a limited number of insurance plans.
His work has been featured in Newsweek, Scientific American, Vice, and other outlets.
Why So Many Therapists Don't Accept Insurance
There are many factors that can dissuade therapists from accepting insurance. Addy lays out the main reasons.
The average cost of a therapy session falls between $100-$200, resulting in $20-$50 copay for patients with insurance. If you didn't know better, you might assume that insurance companies reimburse therapists for the difference, but this isn't the case.
A therapist may bill an insurance company $200 for a session, but they only get reimbursed for half of that – or even less. This means a therapist who chooses not to accept insurance can easily make double the salary of a therapist with the same skills and educational background who does.
"Some of the reimbursement rates are kind of insulting, to be honest," Addy says. "Some of them are very decent and a living wage, but some of them just aren't."
Therapists cannot disclose the rates that specific companies reimburse them, but Addy was able to give a range. "Company A might give me $60 for a 1-hour session and Company B might give me $160 for that same hour-long session," he says. Since rates vary from company to company, a therapist may choose to work with one insurer, but not the other.
While most therapists would like to help people in need, they also have to pay the bills. Typical costs of business for therapists include renting an office space, advertising (like monthly fees to list their services on websites like Psychology Today), and liability insurance, not to mention the student loans associated with having a high level of education.
This is why some mental health professionals accept insurance at the beginning of their careers, while they are building clientele, and scale down or stop working with insurance companies once they've established themselves.
The hassle of interacting with insurance companies can also be a deterrent for therapists. In theory, establishing relationships with insurers should be easy. But therapists say this isn't the case.
Insurance companies create quotas for how many therapists they will work with in a certain geographic area and types of therapists. They may decide that they need more bilingual therapists or specialists in addiction, so they reject those without a specialty area.
Even after being accepted by an insurance company, the work isn't over. Some insurers require therapists to continually provide documentation to justify treatment of a patient. Why? Mostly because insurers profit from recipients not using their benefits. So, many of them set high standards to get claims accepted.
And because mental health can be more difficult to measure than physical health, it can be harder to prove that care is essential.
"Insurance companies can be pretty hands on with their management. Some only authorize eight sessions at a time. And then if you want to do another eight sessions, you'd have to reapply or they want to see a treatment plan or something like that," Addy says.
This is a large part of why visits to mental health providers are more than five times as likely to be out of network than primary care visits.
Some therapists choose to work with a third party to submit their claims so they can save time and energy. But this adds another cost – and deterrent – for therapists that accept insurance.
There are laws that aim to address this problem. The Mental Health Parity and Addiction Equity Act, passed in 2008, sought to prevent insurers from imposing excessive limitations on certain mental healthcare-related benefits. And under the Affordable Care Act, stricter rules were imposed on insurance companies, requiring them to offer health plans with sufficient provider networks.
But some companies haven't followed the rules, such as Centene, one of the largest Medicaid managed-care contractors in the U.S. The company faced a class action lawsuit for failing to provide customers adequate access to its list of in-network providers in 2018.
It's hard to say how many more instances of this behavior are slipping through the cracks. Unfortunately, few clients — and even providers — understand their rights when it comes to insurance coverage, causing violations to go unreported.
Ironically, the shortage of therapists also contributes to the low rate of providers who accept insurance.
Demand for therapy is so high that some mental health professionals, especially those that are highly sought-after, don't accept insurance or work with a very limited number of insurers. This is simply because there is an abundance of patients who will pay out-of-pocket.
Nearly 150 million people in the U.S. live in a mental health practitioner shortage area, according to the U.S. Health Resources and Services Administration. That's well over a third of the population.
"If I'm full and I'm having to do referrals, I just can't take everyone who comes to me," Addy explains. This puts the responsibility on therapists to try to prioritize clients in the most need, and to sacrifice income to do so.
"The main reason [I accept insurance] is so that I can offer my services to people who would otherwise not be able to afford it," Addy says. But even therapists like Addy, who are determined to help financially strapped clients, can only offer a certain number of slots to those who can't pay out-of-pocket and still make a livable wage.
"In order for me to be a good therapist, I need to have some financial security — as much as anyone in today's world."
To strike a balance, some therapists devote a certain fraction of their slots to patients using insurance, for example, 12 out of 20 sessions per week. "And that can help to make your income a little bit more predictable," Addy says.
Why It Matters
The obvious problem with the shortage of therapists – and lack of therapists who accept insurance – is that "the people who need our help the most are the people who aren't able to afford it," Addy says.
This creates a system where certain groups, such as the working class and people of color who need mental healthcare, have a disproportionately difficult time finding appropriate therapists. And the few therapists who are available to them are likely to be less experienced. So, those who can pay out-of-pocket get easier access to care – and superior care.
"I think that the problems that we're grappling with here are just indicative of capitalism in general and a capitalist healthcare industry," Addy says.
If more students pursued careers in mental healthcare, the supply and demand issue would begin to balance out, making it easier to find a therapist. This would also encourage more therapists to accept insurance to compete for clients.
But this wouldn't fix the problem of low reimbursement rates. In fact, if more therapists enter the market and apply to work with insurance companies, this could discourage insurers from raising rates or embolden them to lower their rates even more.
So, what's the solution?
Addy points out that if therapists stopped working with companies that offer unfair reimbursement rates, these insurers may be swayed to raise rates.
But in this scenario, anyone insured by a company that therapists are avoiding would have limited therapists available to them. "So in the short term, it might be unfair to the clients, but in the long term, I think that it would increase fairness and opportunity to encourage those providers to pay their therapists better," Addy says.
Insurers discourage this scenario by prohibiting therapists from communicating their reimbursement rates to one another. But if insurers don't begin to offer fair compensation, the invisible hand may cause a natural migration away from them.
Another potential way to improve the situation is through telehealth. Virtual appointments allow therapists to treat patients throughout the entire state(s) in which they're licensed. Addy, who is licensed in Oregon and Washington, has clients spread out from Portland to Seattle.
The pandemic has popularized use of telehealth, giving those who live in scarcity areas access to a wider pool of providers. This reduces the geographic element of the supply and demand problem.
And for therapists, telehealth can also be a way to reduce costs.
"If a therapist doesn't have to pay to rent [an office space], their rate can be a little bit lower, which can make you more affordable to people," Addy says. "It can help a little bit to kind of keep therapy costs down, which in turn keeps client payments down – but not as much as having a good insurance plan."
While use of telehealth skyrocketed during the pandemic, the simultaneous surge in demand for therapy dampened any noticeable positive effects it had on the therapist shortage.
But there's no doubt that its increased usage helped many people find therapists that otherwise would not have been able to.
A major way that therapists help clients in need is by offering sliding-scale therapy. The idea is to charge clients different rates based on their income without going through insurance.
Some therapists assign a specific fee to each income bracket. For example, a therapist might charge a client who makes $35,000 per year $35 per session and one who makes $130,000 per year $130 per session.
"The advice I received is to set up a procedure that you use for everyone. You can't play favorites. You know, you can't say, 'I'm going to charge this person less because they asked me nicely' … You have to apply it fairly," Addy says. "So for me, it's based on income and I think that's how most people do it."
Of course, the sliding-scale model doesn't work when all clients are of a low-income bracket. A therapist must have a client base with a wide range of incomes to achieve a livable income.
You can find therapists that offer sliding-scale therapy on the Open Path Collective.
While this model is a good temporary fix, it's not a cure-all solution to the problem. Therapists shouldn't have to sacrifice income for morality. And clients shouldn't have to rely on the generosity of others to receive necessary care.
Professional organizations and advocacy groups are working to address the crux of the issue: reimbursement. If reimbursement rates improved, more therapists would be willing to work with insurers and wait times for therapy would eventually shorten.
The APA has been asking relevant government associations to change policies surrounding reimbursement. It's also helping psychologists get paid for all qualifying services by educating them on the current procedural terminology codes that are currently available.
At the state level, advocacy organizations are pushing for better reimbursement rates. For example, in Oregon, COPACT, the legislative arm of the state's counseling association, helped to draft House Bill 3046. The bill addresses practices that have "driven many counselors and therapists away from insurance panels."
Other states are making similar moves, but these changes are happening slowly. As mental health stigma continues to diminish, policies that force therapists to continually justify coverage of mental healthcare will face increasing criticism.
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- Small L. (2018). Centene slapped with lawsuit over provider networks in ACA exchange plans.