If you’ve been looking to start therapy, you’ve probably noticed that it’s hard to find a therapist who takes insurance nowadays. You might leave messages for 20 therapists on your insurance company’s list of “in-network” therapists, half of whom don’t call you back, and of the rest, at least half no longer take that insurance. The remaining few might have long wait lists to get in and actually start having therapy.
Many people saw the recent news where the CEO of United Healthcare was shot and killed by a disgruntled insured person, who had experienced a serious injury to his back. The chilling words he had written in his journal were, “these parasites simply had it coming.”
While gun violence is never justified in my opinion, many people can unfortunately relate to the now common struggle of fighting to get insurance to cover their medical expenses. Insurance companies seem to use every trick in the book to avoid paying claims. Here is a #1 bestselling book about it by Jay M. Feinman.
The Top 3 Health Insurance Companies Made a Combined $44 BILLION Dollars in Profit, Just in 2023.
Insurance companies make outrageous profits by charging consumers a ton of money for insurance premiums (The average cost per family is up to $26,000 per year) and then creating practices designed to keep as much of that money as possible.
Those practices are: denying claims, underpaying or refusing to pay providers for services already provided, and trying to pass as much of the cost of their healthcare on to their customers as they can (co-insurance/co-pays and impossible deductibles, I’m looking at you). Now insurance companies are even using AI to generate denials for 90% of claims made.
No Insurance Company Pays a Sustainable Wage
Each insurance company sets their own rate that they will pay for a therapy session. The #1 reason so many therapists don’t take insurance, is that even the best rates insurance companies offer is equivalent to the Phoenix market rate for an intern (a student who is still in graduate school). Interns don’t have the financial burden of paying the cost of operating a business.
Even new graduates, who are beginning to translate their academic learning into real world skill in working with clients, typically charge $20+ per session more than the highest insurance company rate. The current Phoenix market rate for an experienced, independently licensed therapist is closer to double what insurance offers. However, the rate the therapist actually charges is irrelevant. If a therapist agrees to be “in-network” with an insurance company, they agree to accept whatever rate that insurance company decides to pay.
The lowest insurance company rates don’t allow therapists to stay in business
If the insurance you have is one of the lower paying ones, it will be even harder to find a therapist that accepts it. Therapists might start out thinking they can accept the lower rates if they offset them with higher paying insurance and cash-pay clients. However, insurance company contracts require that the therapist doesn’t discriminate in accepting their clients. If an in-network therapist has an opening, the therapist is not allowed to turn a client away due to the insurance they have.
This leads to therapists having all their appointments filled by the lowest-paying insurance clients (because so few therapists will take that insurance), which will cause their business to go under. The only way a therapist can prevent this, is to not work with that insurance anymore.
To make matters worse, a bunch of insurance companies recently dropped the rate they were paying therapists even lower, and therapists have no control or ability to negotiate this, except to discontinue working with that insurance.
This explains why lists of “in-network” therapists are often called “ghost lists.” It looks like a list with lots of options, but the list is not accurate- it’s full of practices that are closed, or lists therapists that no longer take that insurance.
Therapists often have high business expenses
Most therapists have a heart to help others and want therapy to be accessible, but financial demands are a reality that can’t be ignored for long. There are therapists that actually go into debt running their practices when they accept insurance. That’s obviously an unsustainable business model. The financial burden of making therapy accessible to more people shouldn’t fall on individual therapists, it should fall on insurance companies who are flush with all those profits.
Many therapists can’t afford to accept even the best insurance company rates. Between huge student loan payments for 6+ years of higher education, required business expenses such as liability insurance, licensure renewals and ongoing training, office rent and utilities, electronic medical record software, and debit/credit card fees, some therapists who accept insurance can’t afford to have in-person offices anymore. This is one reason so many therapists now only offer virtual therapy. Not to mention, whatever is left over after taxes is the therapist’s income to pay their own costs of living.
Due to the emotional labor of the work therapists do, and the critical need to maintain their own mental health, full time employment for a therapist is 20 therapy sessions per week. Given the low pay insurance offers, therapists often need to do closer to double the amount of therapy sessions in a week to make ends meet. This creates conditions for therapists to be burned out or have “compassion fatigue,” be disconnected from their work, have trouble keeping all their client’s info organized in their heads, and just in general being overwhelmed.
Insurance Companies Know their Process Makes it Difficult and Confusing for Therapists to Get Paid, and That is Intentional
Insurance companies routinely give themselves 60-90 days to pay for that session you just had. Considering all the different insurance companies, a therapist has to pay a bookkeeper to track what’s been paid for and what hasn’t. I’ve recently heard that some insurance companies have postponed payments for 6 months or longer. Therapists have no control when this happens. The bills the therapist has to pay won’t wait.
And 60-90 days later, the insurance companies don’t always pay, even though the service has already been provided. Each insurance company has their own requirements in order for the therapist to be paid. They often will deny payment for therapy sessions unless there is evidence of medical necessity documented in every session, along with whatever else their individual requirements are. This means a therapist often needs to hire and pay an insurance billing specialist, too.
In order to meet insurance compay requirements, therapists often have to give inaccurate diagnoses
This can lead to therapists sometimes intentionally giving inaccurate diagnoses that are more severe problems, because the client’s real diagnosis might not indicate enough “medical necessity” and be denied by the insurance company. One example is that a person with childhood trauma might get diagnosed as having Bipolar Disorder, becuase that is always reimburseable. Insurance companies have decided that some mental health problems deserve therapy and others do not. Now that more severe and debilitating diagnosis is added to the client’s medical history with the insurance company. It’s why therapists who take insurance are required to give you a diagnosis in the first session.
Insurance companies often arbitrarily limit sessions
Insurance companies also are known to arbitrarily determine a pre-set amount of sessions depending on the diagnosis that is given – such as generalized anxiety disorder – You get six sessions, then your coverage is denied and you have to pay out of pocket. They may or may not communicate this to the therapist and client ahead of time.
Insurance companies violate client’s confidentiality just to look for petty technicalities
Many insurance companies require a copy of each completed therapy note, completed treatment plan, completed biopsychosocial assessment. They look for specific info that they require (such as medical necessity) that might be missing to use as a basis to deny payment. Not only are they are violating the client’s confidentiality in having their staff read the client’s very personal info, they add it to the client’s medical records in their system. And let’s be honest, they hold it against the client in determining future premiums and deductibles. I’ve experienced this personally.
Jumping through insurance companies’ hoops equals unpaid time for the therapist
This is all unpaid time for the therapist – making sure they know and document the individual requirements of each insurance company they work with, then the time to review and collect the records and securely fax or email the confidential info to the insurance company.
So if the insurance company can find any petty technicality to use to deny the claim (from 60-90 days ago, remember), then the therapist has to get on the phone and try to argue with level one support about why they should be paid for the work they already did. This is all hours of unpaid time, when the therapist could be seeing other clients and generating income to pay their bills.
When you factor in the very low pay in the first place, the need to also pay a bookkeeper and an insurance billing specialist, and the extra time to jump through their hoops and argue to get paid when they could be generating income, there isn’t much to motivate a therapist to work with any insurance companies.
If all that wasn’t enough, have you ever heard of “Clawbacks”?
There is one more potentially disastrous element to working with insurance. There is something called “clawbacks,” that insurance companies are known to do. Clawbacks mean the insurance company has up to 2 years to decide they don’t want to cover those sessions they already paid for.
The insurance company can “review” the case and decide to send the therapist a letter demanding back the money for all the client’s therapy sessions. The therapist has no choice but to pay it back. This can amount to thousands of dollars. I have even heard of insurance companies clawing back ALL the funds they paid for EVERY client that therapist worked with, all because one piece of info they require was missing from one therapy note or there was not sufficient “medical necessity” documented in one case.
No therapist has those huge sums in reserve to pay back the insurance company, especially when they are making such low pay in the first place. When this happens, the therapist then has to try and collect the full cost for all these past therapy sessions directly from the client, who may not even be working with them anymore. And the client certainly doesn’t expect to be hit with that bill.
So, If it’s So Terrible, Why Would any Therapists Take Insurance??
It’s mainly due to the prospect of a steady flow of new clients.
Group practices sometimes take insurance, because they might be large enough to absorb the extra cost and unpaid time. Group practices usually hire newly graduated therapists, who will typically work there for 2-3 years under supervision, until they get their independent licenses. The fully licensed owner of a group practice can be approved by insurance panels, and then the rotating cast of associate therapists actually do the therapy. Group practices need a steady flow of new clients for all their associate therapists, and insurance provides that.
In addition to new therapists who need experience, sometimes even more experienced therapists have a hard time attracting and retaining clients for various reasons, and if they accept insurance, they get a steady flow of new clients. It allows them to stay in business.
Is It Any Wonder So Many Therapists Don’t Take Insurance?
There is no doubt that our current insurance system in the US is badly broken. Insurance companies exploit their customers with huge premiums and passing as much of the actual cost of their healthcare on to them as they can. Insurance companies also exploit providers with unsustainably low pay, denials of payment, and making providers put in hours of unpaid time, just to fight to get paid. Even after the insurance company has paid, they have up to 2 years to demand all the money back.