Counselors have run cash practices since the beginning of psychoanalysis.

Today, however, a wave of change is occurring wherein clients are, more than ever, demanding that their counselors accept health insurance.

There are many reasons for this, but consider these three points:

  • In tough economic times, clients have less discretionary cash.
  • Mental health parity means that counseling is almost always a covered health care benefit.
  • As counseling has established itself as an important medical service, clients now see their counselors in the same light as their family physicians (who have always accepted insurance).

Although these changes have been going on for years, a tipping point has taken place. Today’s clients aren’t sheepishly asking, “Will you accept my insurance?” They’re demanding it.

Private pay or managed care?

Some counselors are in such high demand that they will never need to accept insurance. If you’ve reached this status, congratulations! For the rest of us, however, not accepting health insurance means a significant percentage of potential new clients will simply schedule with the counselor down the block (and these days, there are a lot of therapists from which to choose).

One solution is to get credentialed with insurance companies and bill third-party payers for your services (full disclosure: My company helps counselors do this). An alternative solution is to remain private pay and work hard at creating an extraordinary service for which clients willingly pay out of pocket. Both options are good ones.

Unfortunately, some private-pay counselors are using questionable methods to convince clients to pay out of pocket for care. Two methods are addressed below.

Method one: The Superbill

A superbill is a receipt for services that contains the basic information requested by insurance companies (generally from the provider) before payment is rendered. Private-pay counselors can require clients to pay up front for services and then issue clients a superbill receipt. Although there is nothing unethical about this, the way superbills are presented to clients can be misleading. What follows are two quotations (taken from counselor websites) that exemplify how the superbill is often explained to clients:

“I will give you a ‘Superbill’ fee statement for you to submit directly to your insurance company for reimbursement. I will work with you as you work with your insurance company to receive maximum benefits.”

“[Name Removed] Counseling, LLC will provide you with a ‘superbill’ for each date of service. This ‘superbill’ will provide all the information your insurance company requires in order to reimburse you.”

Optimism and responsibility

The preceding quotations are problematic in their optimism. In fact, an argument can be made that they contain a “lie of omission,” which is that, for many clients, superbills are ineffective for obtaining reimbursement. It is always the client’s responsibility to check his or her benefits. However, if counselors oversell the superbill, clients will feel burned when they realize the superbill wasn’t so “super” after all.

Here are three reasons why the statements are too optimistic:

  • Insurance rarely pays a counselor’s full fee. Providers might suggest that their superbills will facilitate insurance to pay their full fee. This almost never happens. A counselor’s full fee is usually double what insurance companies consider their “customary rate.” For instance, although a typical counseling fee might be $140, the customary insurance rate is about $75 ($55 after the client’s copay). Insurance plans, even those with out-of-network benefits, rarely pay above their customary rate.
  • Out-of-network benefits often cover only a percentage of the customary rate. This is a type of “penalty” clients endure for selecting a provider out of their network. For example, an insurance company might pay 80 percent of its customary rate of $75. That’s $60 (less the copay) reimbursed after the client has paid $140 to the counselor.

In addition, some insurance companies have deductibles for out-of-network services that differ from the in-network deductible. Hence, even if clients have out-of-network benefits on their policies and have met their deductibles for in-network benefits, they may have not met their out-of-network deductibles, meaning they might not receive any reimbursement.

Many clients don’t have out-of-network benefits. As health care costs increase, many individuals are opting for HMO (health maintenance organization) plans over PPO (preferred provider organization) plans. Generally, this means out-of-network benefits are nonexistent. In these instances, the client will receive no reimbursement after seeing a counselor.

Truthfulness and transparency

A truly transparent statement regarding a superbill’s efficacy would sound like this:

“Although we don’t accept insurance, we are happy to provide you with a superbill. Some clients will receive a portion of counseling fees reimbursed to them from their insurance companies. Many clients will not receive any reimbursement. Being reimbursed our full fee is extremely rare.”

Method two: Promoting fear

Some counselors who do not want to accept insurance attempt to persuade clients to pay for counseling out of pocket by using fear. Consider the real examples that follow, which are similar to versions posted on many counselors’ websites:

“For your protection and confidentiality I recommend that, if possible, you pay for your counseling without using insurance. Insurance companies require me to disclose highly personal information about you. The confidentiality and privacy of this information cannot be guaranteed. They also often restrict the number of sessions they will authorize, even if you and I feel you still need help.”

“Please be aware that if you choose to submit a superbill to your insurance company, your private medical information will be released. This may impact your future insurance coverage, rates and reimbursement.”

“To get therapy paid for by your medical insurance of any kind, you will have to be diagnosed with a mental ‘disorder’ of some kind. That will be in the computer database, available to insurance companies and, possibly, to future employers (and to the press if you run for president).”

In summary, the messages some counselors use to scare clients include:

  • Your “permanent record” will show that you are psychologically unbalanced!
  • Your premiums will skyrocket!
  • You might become uninsurable!
  • Don’t use the insurance benefits that you’re paying for — it’s too dangerous!

George Ohlschlager, who has written extensively on counseling ethics, describes the issue as “an overblown fear.” He notes he has not encountered a single firsthand (or verifiable real-world) example of a person suffering damages after using health insurance to pay for mental health services. Although conceding that “outlandish things are possible,” he describes the aforementioned fears as “issues of anxiety to be talked about in therapy,” not reasons to avoid using health insurance.

In contrast, a colleague and friend who had seen a psychiatrist for roughly three years for substance abuse and depression was later denied life insurance by the same company paying for his mental health services. It is plausible that the two are related.

Still, a question ensues: What kind of health care provider dissuades patients from using their insurance? The answer: A provider who doesn’t want to accept insurance.

Here’s a truthful disclosure counselors can use to inform clients about health insurance risks:

“Millions of people have seen counselors and used their insurance to pay for services. The vast majority has noticed no change in their personal insurability, or health insurance premiums, as a result. However, such an occurrence is possible. My concern for your health insurance premiums has very little to do with my decision not to accept your health insurance.”

Private-pay and insurance-pay counselors

Running a private-pay practice has its benefits. There is less paperwork, and the provider gets to set his or her own rates of service. With a focus on customer service and a strong reputation in one’s community, building a private-pay practice is achievable — especially if you only desire a part-time caseload.

Alternatively, getting credentialed with insurance companies is also a good option. Family doctors, chiropractors and even dentists have accepted insurance for years. There are many companies (of which Thriveworks, my company, is just one) that can help you to get on insurance panels, and medical billing can be outsourced so that you can remain focused on your passion — seeing clients.

Whichever route you choose, be open and honest with clients about why your practice accepts (or doesn’t accept) particular payment methods.

Dr. Anthony Centore