Why I Don’t Accept Insurance as a Therapist
Why I Don’t Accept Insurance as a Therapist
Some harsh realities of the mental health field
I love what I do for work. It doesn’t feel like work for me most days. However, there are some things that I don’t like about the mental health field. Insurance is one them. Let me explain.
Typically in the United States, health insurance companies cover mental health services in the same way they might cover other medical services1. Ideally, depending on the type of coverage, insurance could cover a certain number of therapy sessions, or just a portion.
In theory, this is great. People who need mental health or medical services don’t have to bear the full cost of the service, provided that their clinician accepts their insurance. However, if that’s the case, then why do some therapists decide against accepting insurance?2 There are a lot of reasons why that might be; but for me, there are at least three reasons why I don’t accept insurance as a clinical mental health counselor.
Privacy & Confidentiality
First and foremost, I don’t take insurance for confidentiality and privacy purposes. Generally speaking, therapy is private and confidential3 — as it should be.
There are laws are in place to protect privacy. The Health Insurance Portability and Accountability Act (HIPAA) includes provisions for privacy to protect individuals' medical records and personal health information, including mental health information4. Clinicians and health insurance companies are legally bound by HIPAA rules5. In fact, as a clinical mental health counselor, I’m also ethically bound to protect my client’s privacy6. So far so good, right?
Well, there’s more to it. The problem is this: ‘our health insurance landscape currently requires disclosure of a great deal of confidential health information for processing of claims and other administrative purposes’7. The disclosure of protected health information (PHI) is permitted for ‘specified insurance functions’8. In short, when insurance is used to pay for therapy, insurance companies have access to psychotherapy notes and treatment plans to determine what level of care is covered9.
Insurance companies do this because they’re the ones paying the bills. They routinely request access to private health information for auditing purposes10. They dictate the types of treatments covered11. Essentially, they’re the ones that call the shots.
Once insurance companies are involved, we have very little control over who sees your personal and private health information. This could prevent some from seeking mental health services — especially due to the sensitive nature of topics that could be discussed in session12. This brings me to my second point.
Compelled Diagnoses
Insurance companies require therapists to provide a diagnosis to justify ‘medical necessity’13. This is worth repeating: when insurance is used to pay for therapy, you can be certain you’ll be given a diagnosis14. The compelled nature of diagnosis puts both therapists and clients in potentially compromising situations. The issue is twofold: 1) you may not meet the criteria for a diagnosis that insurance might cover and, 2 ) the diagnosis goes on your permanent health record.
For therapists, clients regularly come in with ‘presenting issues’ that aren’t eligible for insurance coverage (e.g., life transition, breakups, etc.). Sometimes life gets hard and people just need a little extra support. That doesn’t mean they qualify for a mental health disorder.
However, because insurance is paying, the therapist is put in a sticky situation. The therapist must provide a diagnosis and therein lies an ethical and legal risk. If a diagnosis is not warranted or covered, does the therapist fabricate a diagnosis and commit insurance fraud?
It’s a terrible situation to be in, one I’d rather avoid if possible. I’m generally cautious of diagnostic labels and certainly wouldn’t be ok giving someone a fake one.
The situation can be tricky for clients as well. When you’re saddled with a diagnosis, it follows you around and stays on your medical chart.
‘Having a mental health diagnosis on your record means that you will forever have a pre-existing condition that is accessible by insurance companies or government agencies’15
This relates to the first issue of privacy and confidentiality. It may or may not be an issue for some. But understand that a mental health diagnosis can come back to haunt you.
Applying for a job that requests your medical records as part of the background check? There’s your major depressive disorder. Someone’s taken you to court and subpoenaed your medical and mental health records? (e.g., divorce proceeding) There’s your borderline personality disorder. Applying for life or disability insurance? There’s your alcohol use disorder…oh and your premium just went up too.
It’s not fun to think about the implications. And it may not play out exactly like this; but again, when insurance is involved we have less control over who has access to your information. This is unfortunately one of the harsh realities of the mental health field.
It’s a headache
The final reason I don’t accept insurance is mostly selfish in nature: it is a headache. Accepting insurance often means additional paperwork (and time), potential for retroactive claim denials16, rate cuts17, and delayed payments18.
Beyond that, insurance companies dictate the reimbursement rate for therapists. They base rates off the therapist’s qualifications but also off arbitrary factors (like, how many clinicians are paneled in the area, etc)19. Often, the result is that therapists end up doing more work to get paid less.
In short, in order for the insurance company to maximize profits, they will try to minimize treatments covered and payments made. For insurers, ‘medical necessity’ seems to mean ‘cost-effective.’20
Final thoughts
There’s not really a great solution here. But there are a few other options.
Some health insurance plans will allow for reimbursement for out-of-network benefits21. Additionally some therapists (including myself), also offer a sliding scale — for me, this means I keep certain number of slots available that are below my regular fee for people with financial or other needs. And finally, oftentimes employers provide health savings accounts (HSA) — which are pre-tax — and are usually accepted by most clinicians.
It’s up to you whether or not to use insurance. There are certainly lots of pros and cons to consider. My hope is that in sharing my perspective, you can make more informed decisions and ultimately have greater control over your mental health care.
The Mental Health Parity and Addiction Equity Act (MHPAEA) | CMS. (n.d.). https://www.cms.gov/marketplace/private-health-insurance/mental-health-parity-addiction-equity#Summary_of_MHPAEA_Protections
See for example:
Wright, R. (2023, January 27). I Don’t Accept Insurance as a Therapist & Here’s Why. Rachel Wright -. https://rachelwrightnyc.com/i-dont-accept-insurance-as-a-therapist-mental-health-why/
Generally speaking, therapy is confidential. Clinicians don’t release any information without written consent from the client. However, there are some exceptions where clinicians are required or permitted by law:
Reporting child, elder and dependent adult abuse
when the client makes a serious threat of violence towards a reasonably identifiable victim
when the client is dangerous to him/herself or the person or property of another
Office for Civil Rights (2022, December 23). Information Related to Mental and Behavioral Health, including Opioid Overdose. HHS.gov. https://www.hhs.gov/hipaa/for-individuals/mental-health/index.html
HIPPA requires protected health information (PHI) to be secured. However, it does not require all patient information to be secured. See below:
Alder, S. (2023, December 7). How to secure patient Information (PHI). HIPAA Journal. https://www.hipaajournal.com/secure-patient-information-phi/
American Counseling Association (ACA). (2014). ACA Code of Ethics. Alexandria, VA: Author. https://www.counseling.org/resources/aca-code-of-ethics.pdf
Privacy protection in billing and health insurance communications. (2016). AMA Journal of Ethics, 18(3), 279–287. https://doi.org/10.1001/journalofethics.2016.18.3.pfor4-1603
Office for Civil Rights (2022b, October 19). Summary of the HIPAA Privacy Rule. HHS.gov. https://www.hhs.gov/hipaa/for-professionals/privacy/laws-regulations/index.html
Protecting your privacy: Understanding confidentiality in psychotherapy. (2019, October 30). https://www.apa.org. https://www.apa.org/topics/psychotherapy/confidentiality
Galiette, C., & Nessman, A. (2021, July 16). Responding to insurance audits of patient records when you are out-of-network. https://www.apaservices.org. https://www.apaservices.org/practice/legal/managed/insurance-audits-patient-out-network
Lazar, S. G., Bendat, M., Gabbard, G., Levy, K., McWILLIAMS, N., Plakun, E. M., Shedler, J., & Yeomans, F. (2018). Clinical Necessity Guidelines for Psychotherapy, Insurance Medical Necessity and Utilization Review Protocols, and Mental Health Parity. Journal of psychiatric practice, 24(3), 179–193. https://doi.org/10.1097/PRA.0000000000000309
English A, Gold RB, Nash E, Levine J. Confidentiality for individuals insured as dependents: a review of state laws and policies. New York, NY: Guttmacher Institute, Public Health Solutions; 2012. http://www.guttmacher.org/pubs/confidentiality-review.pdf.
Knoepflmacher, D. (2016). ‘Medical necessity’ in psychiatry: Whose definition is it anyway? Psychiatric News, 51(18), 1. https://doi.org/10.1176/appi.pn.2016.9b14
This is something that your therapist should discuss with you, your diagnosis — but anecdotally, I am not sure how often this happens.
Clark, Meagan. (2022, August 12). Pros and cons of using insurance to pay for therapy. Mental Health Match. https://mentalhealthmatch.com/articles/therapy/pros-and-cons-of-using-insurance-to-pay-for-therapy
Steph Solis (2019, May 7). Massachusetts therapist hit with a $28,000 bill from insurance company over retroactive claim denial. Masslive. https://www.masslive.com/politics/2019/05/massachusetts-therapist-hit-with-a-28000-bill-from-insurance-company-in-six-year-old-retroactive-claim-denial.html
Legal and Regulatory Affairs Staff. (2007, September 27). Responding to managed care rate cuts: A practical guide for psychologists. https://www.apaservices.org. https://www.apaservices.org/practice/legal/managed/response-cuts
Legal and Regulatory Affairs Staff. (2008, December 17). 10 tips for resolving issues with insurance companies. (n.d.). https://www.apaservices.org. https://www.apaservices.org/practice/update/2008/12-17/resolving-insurance-issues
See note #15
See note #13
Some therapists (including myself) can provide a ‘superbill’ receipt that you could give to your insurance company for potential reimbursement. Check your insurance provider to ask about their out-of-network benefits.