It’s a Good Time to Discuss Why Many Therapists Don’t Accept Insurance

If you’ve ever searched for a therapist and became frustrated to find many don’t accept insurance, and the ones that do often don’t have availability, you’re not alone. Many potential therapy clients wonder why this is the case. Therapists are compassionate by nature and rigorously trained in ethics prior to licensure, so if anyone would be empathetic toward the struggles of another person, it would be a therapist, right? This gives a clue to what they must be up against that would cause many to abandon the health insurance system altogether in favor of private pay practices. It may be tempting to label it as greed, but just like many other struggling business owners, there are reasons why therapists feel so disillusioned with the system. Exploring them can help with understanding what actually needs to change to increase access to care.

Insurance is a Hot Topic Right Now

In the wake of the tragic murder of UnitedHealthcare CEO Brian Thomson, some of the most glaring and unethical practices of insurance companies have become front page news. While murder is never the answer, and it shouldn’t take one to draw attention to an issue, we can only hope that a silver lining after such unnecessary violence lies in the opportunity for reform. If you’re unfamiliar with some of the scathing indictments against UnitedHealthcare and the insurance industry as a whole, let’s explore some recent news:

The use of faulty artificial intelligence to systematically deny claims

In November 2023, UnitedHealthcare was hit with a class-action lawsuit alleging the company used an AI model with a 90% error rate to systematically deny Medicare claims for elderly patients. The model was used due to the fact that only a small percentage of policy holders will actually appeal a denial. It seems it pays to deny first and then walk it back later if you are called to the floor. Taking advantage of the elderly who struggle to navigate your system is not much different from calling them with a scam and asking them to send money. These are only allegations of course, and top corporate lawyers will surely be vigorously defending UnitedHealthcare.

Systematic denial of ER claims

In 2022, CEO of Envision Jim Rechtin sued UnitedHealthcare for the systematic denial of emergency services of commercial policy holders in Tennessee. Later in the same year, TeamHealth filed suit for the same denials of emergency care in Nevada. Some of the individual case examples involved children suffering while doctors struggled to get them the help they needed.

Insider trading and fraud

In early 2024, UnitedHealthcare CEO Brian Thomson was accused of insider trading and fraud. The suit, filed by the Hollywood Firefighter’s Pension Fund, alleges that Brian Thomson sold 15 million worth of his personally held UnitedHealth shares just as the DOJ was reopening an antitrust investigation into the company.

These are just a few examples. Across the internet and social media, individual and personal anecdotes of nightmarish scenarios involving insurance denials and corruption are rampant. It draws into question if having a corporate for profit entity in between you and your healthcare providers can ever be made into a fair or ethical system. As insurance giants like UnitedHealthcare have consolidated and become too big to dispute, their power and ability to crush doctors and hospitals who raise alarm bells has only increased, making it quite apparent the system is currently out of control.

What About Therapists?

If doctors and hospitals find themselves unable to successfully challenge these titans of modern day monopoly, you can only imagine how therapists fair. The tactics used to decrease costs and discourage therapists from accepting insurance are as follows:

Abysmally Low Reimbursement Rates

The market rate for a cash pay therapist is typically $150 - 200 per session. Keep in mind, this accounts for all the work necessary outside of the therapy hour to run a practice, the office space, HIPAA compliant software and communication services, training requirements, self-employment taxes, advertising, liability and malpractice insurance, etc. Therapists rarely see a client every hour 40 hours per week. A sustainable caseload is typically 20-25 clients. You don’t want your therapist falling asleep from exhaustion while you’re trying to process through your most difficult traumas. So what do insurance companies pay for the same hour? Far less, sometimes lower than half the therapist’s hourly rate. This leaves therapists needing to take on more clients or scale down their costs by offering less in-person services.

Incredible and Unnecessary Documentation Burdens

To get your claim approved, therapists have to jump through flaming rings of fire in the form of endless mile long forms and documents detailing every personal detail of your life to painstakingly prove that you are in desperate medical need, hanging on by a thread, and simply cannot survive another day without therapy (maybe I’m exaggerating a bit, but not much). Then therapists have to be ready to be challenged and routinely have your case “reviewed” to try to poke holes in your need for care. This can consume hours of a therapist’s time, time they could have been focused on helping you. Remember, therapists must perform all of these tasks outside of the billable hour when they are not being paid, and they are being paid less by taking insurance.

The name of the game is to make it too hard to justify continuing to fight for your claim. Insurance companies have teams of “utilization review” staff who can launch a sustained effort at wearing down providers with reviews, claims that a form wasn’t filled out correctly, or just a denial without much cause hoping it won’t be challenged. While therapists are busy providing therapy, they simply cannot keep up with people whose full time job is to deny care.

Delays in Payment and Clawbacks

Insurance companies routinely delay payment, sometimes for months, leaving therapists having to chase down their funds, and cover their expenses while waiting for payment. On top of that, once a therapist is paid, there’s no guarantee the insurance company won’t change their mind later and demand the money be returned. This is called a clawback. Some therapists have reported being asked to return tens of thousands of dollars out of the blue months later due to a form missing something, or the insurance company deciding they changed their mind and the care wasn’t necessary.

Given these incredible hurdles to running an insurance based practice, is it any wonder many therapists decide to opt out and offer sliding scale or pro bono slots as their contribution to the community? The drawbacks to insurance aren’t the only thing motivating therapists to leave insurance networks though, there are many other benefits that make private pay more attractive.

Benefits of a Private Pay Practice

Better Confidentiality

When therapists accept insurance, they are often required to provide detailed information about a client’s diagnosis and treatment. This information becomes part of the client’s permanent medical record, which can potentially be accessed by other entities, such as employers or insurance underwriters. For some therapists, the ability to ensure maximum privacy for their clients is a significant benefit to being private pay.

Avoiding the Diagnostic Requirements

Insurance reimbursement typically requires a formal mental health diagnosis. However, not all clients seeking therapy fit neatly into a diagnostic category or want a diagnosis. For instance, someone experiencing stress related to a life transition may not meet the criteria for a mental health disorder but could still benefit greatly from therapy. Therapists who don’t accept insurance have the flexibility to focus on individual needs without being constrained by diagnostic labels.

Maintaining a Sustainable Caseload

Without the need to take on as many clients as possible to offset low reimbursement rates, private pay therapist can maintain a caseload they can sustainably manage while staying healthy, sharp, and able to provide their best care. This naturally translates to a better client experience working with someone who has the time, energy, and undivided attention for their needs.

Freedom in Treatment Planning

Therapists who work outside the insurance system have greater autonomy in designing treatment plans tailored to their clients’ unique needs. Insurance companies may limit the number of sessions or require specific treatment modalities, potentially interfering with the therapeutic process. For example, you may have significant emotional trauma from your childhood that would respond well to EMDR or another trauma focused therapy. But without a severe enough life threatening event, you won’t qualify for a diagnosis of PTSD. Your therapist would have to give a diagnosis based on the symptoms you have related to your trauma (e.g., depression, anxiety) just to get your covered, and then insurance will dictate the approach, such as a few sessions of CBT for anxiety when you wanted to try EMDR for trauma. Private pay allows therapists and clients to decide together what approach and timeline work best.

So are There any Alternatives?

As a therapist who is sympathetic to the plight of the client looking to utilize their insurance, I have done my best to find options that can help my clients while also allowing me to sustain my practice without burning out. There are two innovative disrupter companies in the market currently that have surprised me in how well they mitigate the pitfalls of insurance.

Headway

Headway is large and growing company who uses their size to negotiate higher reimbursement rates and handle all the claims with insurance so that individual therapists don’t have to. Headway pays therapists a fair rate comparable or more than they could get by credentialing with insurance panels themselves, with the added benefit of handling all claims and paying out reimbursements every two weeks. I chose to go in network with one carrier through Headway but the rest offered rates too low for me to sustain my practice even with their help.

Thrizer

Thrizer is the out of network version of Headway’s in network model. Thrizer works by submitting out of network claims to your insurance company until your deductible is met. Once you reach your deductible and coinsurance kicks in, they only ask you to pay your coinsurance up front while they pay your therapist their full rate and wait to be reimbursed by your insurance company. They pay therapists weekly, making it a viable way for therapists to work with clients out of network. I cannot say enough about how well this model works, and it’s saved many of my clients a lot of money.

Conclusion

The decision to accept insurance is a complex one, involving systemic issues, personal and business sustainability concerns, and the willingness to work within the confines of a medical system not designed for psychotherapy. Many private practice therapists left facilities and organizations that demanded they burn themselves out for low pay where client care was a secondary concern to bureaucracy or the bottom line. To relive that all over again in their private practice is hardly attractive. But there are attempts being made to improve things and find ways to help therapists expand care to the insured. As these become available and prove to mitigate the worst of the insurance racket, I will be exploring them and working to include what makes the most sense for my practice and my clients.