1. Taking insurance means automatically that you must not only follow the insurance contract, but you also must follow state and federal guidelines that affect the contracts, and a vast amount of restrictive rules and regulations that are constantly changing. 
2. Delayed payments – Insurances can take up to 90 days or MUCH longer to pay claims.  This makes it difficult to have money to rely on to pay bills. 
3. Audits and authorization requirements for insurances can be overwhelming and result in the therapist feeling/being punished monetarily even though they provide good to excellent therapy services to clients.
4. Contracting with insurance usually involves the therapist doing a lot more work for a lot less pay then if a client is a self pay client.
5. Therapists can work less hours per week/have overall less stress if seeing self pay clients versus Insurance clients if they are in practice for themselves. Group practices are more likely to take insurance then an individual practitioner who can be overwhelmed by all of the unexpected requirements and restrictions. 
6. Many Insurance panels do not allow new Individual therapists on their panels. Being on an insurance panel, is another word for being “in network”.  Unless the client has “out of network” benefits, the therapist who wants to take insurance, but can’t, would not be able to bill claims for the client. Group practices that are already on panels are allowed to add new therapists under their group.  
7. Getting credentialed to be an “in-network” therapist with even an “Open Panel” can be difficult, time consuming and can sometimes take up to 9 months, even though the insurance will usually say it will take no more than 120 days. These kinds of delays incentivize new therapists to give up being “in network” with that insurance company. 
8. Fear of punitive action by insurance companies based on experience or experiences of other therapists they know who have advised them of real situations that have happened to them or others they know.  (Word gets around in the therapist community)

What are Difficult Restrictions for Therapists when They Take Insurance?

A good therapist just wants to do good therapy!  Having contracts with insurances can make this quite complicated:

• Once a therapist signs an insurance contract, they must comply with that contract until such time that therapist gives notice that they are ending the contract with that insurance company – and that the notice becomes effective (end date of contract). 
• Once under contract, a  therapist must understand all of that insurance’s rules and regulations. Each Insurance company is different so the therapist must familiarize themselves with ALL info for each company and their continuous updates which can require a LOT of time to remain compliant.  Insurance companies often do audits to ensure compliance is maintained. 
• With some insurances, if therapist items are not totally compliant with what the auditor interprets their checklist to demand, a therapist can fail an audit and be required to pay back money for sessions, even though therapy was provided and the client benefited from the session. 

  Audits include:

1.  Physical audits:  If the insurance company is not happy with your location, they may require you to move within a certain time frame, not being concerned about any lease you have that you may be unable to get out of, or any loss of money incurred.  Even a small thing such as not having certain things posted in a waiting room can cause a therapist to “fail” an audit, which may or not involve punitive action towards the therapist, such as paying back money to the insurance company (Often, a LOT of money!)  All insurance companies do not do this – some do – and it is usually in the fine print of the contract, or in one of the many updates that the therapist did not have time to keep abreast of. 
2. Desktop/note audits: Random notes are perused by the auditor and if one they are not 100% correct, some insurances will just inform you of the discrepancy, some will warn you to change discrepancies, some will do a follow up audit to ensure the discrepancies are fixed, and others will do some of the above AND take the money back they paid you for the session where your note was not 100% correct.  Other more aggressive companies will use calculations that take more money from you, based on their assumption of how many other sessions you wrote notes incorrectly. (By incorrectly, that means not listing everything that is needed based on their latest manual updates that the therapist may or may not have had time to look at, or even be informed of its existence.) 

• Most insurances require that deductibles and co-pays and coinsurance all be paid by the client or they consider that the therapist is committing insurance fraud. This is the same for medical practitioners and is why you often see signs in waiting areas that co-pays and such must be paid at the time of appt.   During Covid, some insurances waived copays and deductibles for a short or extended period of time. This was an update that therapists would have to be alerted to for a couple of reasons: 

1. If they made an announcement not to collect copays, if the therapist collects, and does not find out until the claims come back (at a much later date) the therapist now owes their client money – which the client may or may not be frustrated with the therapist about.  
2. If the insurance company doesn’t pay the therapist correctly – and the therapist was not aware of the change, they are charging the client for something the client does not need to pay.  The insurance company’s billing systems are not always accurate, and this may or may not be uncovered if the therapist did not stay updated on the insurance changes.   

• By most insurance contracts, a therapist must charge the same thing to a self-pay client as they bill to the insurance company.  The insurance company views that their normal rate of service billed to self pay clients should be exactly the same as billed to them.  Many therapists want to offer a sliding scale fee. However, if the therapist decided to bill one client $25 for a session because that is all they can afford, and you are billing the insurance $100 for the same type of session for another client, the insurance company will view that as insurance fraud. Therefore a sliding scale fee is not feasible when a therapist/counselor is bound by most insurance contracts.  If you are under NO contract with an insurance company, you are able to do a sliding scale.  
• Some insurances do not allow the counselor/therapist to mention in any advertising that they are paneled/”in network” with them.  It can’t be listed on the therapist website, or in any marketing materials. Other insurances give strict instructions of how you mention them in advertising, the exact letters to use, how to mention them.   Some insurances state you can only refer to other practitioners who take the same insurance, even though a list of them is not supplied to you. These are just a few of the many kinds of things a therapist or any medical practitioner has to abide by once they sign insurance contracts.

Why do Insurance Companies Make Things so Complicated for Therapists/Counselors/Psychologists?

Some insurance companies have contracts with entities such as state and local governments which allow them to keep what they don’t spend at the end of the fiscal year. This can result in incentives for them to not allow new providers on panels, reduce payments, complete more audits,  require more pre-auths to be done, which basically ensures that therapists get overwhelmed, discouraged, and drop off of their lists.  If that happens, they don’t have to pay out as many claims throughout the year, which results in them keeping more money.  Some systems and contracts unknowingly encourage this kind of behavior, and more and more this is being recognized.  Sometimes changes are made, sometimes not.  The state legislature in each state makes the rules for the insurances who provide insurance in that state.  Federal insurance rules and statutes are dictated by Congress.  If you have issues/concerns, contact the appropriate representative so that they are aware of how this affects you. This is not the focus of this website, to go into these kinds of issues, but they really exist and contribute to the reality of why many therapists don’t take insurance. 

Regardless of how the tone of this article sounds, for the most part, it is not the “fault” of the insurance companies.They have to turn a profit to stay in business,  legally comply with State and Federal Statutes, and comply with their own contracts they have with their money source.  They must prove that they are doing all they can to fulfill their contracts.   For the therapist, all this downhill overflow is a lot to contend with, when all they wanted to do is just to provide therapy, be the best therapist they can be, and enjoy some satisfaction when they see their clients getting better.  Thus, the trend towards not taking insurance.  Who suffers the most when therapists don’t take insurance?  Clients and potential clients do.  Who suffers the most when they DO take insurance and they aren’t able to keep up/aren’t prepared, or are not with a group practice that takes care of the insurance complications?  The therapist does. 

What are some other Problems Therapists have with Insurance companies?

1. Time spent  with insurance companies ensuring that all claims are paid correctly. This can take up a lot of time with phone calls and secure emails back and forth. 
2. Fear of money loss because of the above restrictions
3. Punitive practices by some insurance companies that either a therapist experiences themselves or they have heard about from other therapists, which encourages that therapist to not be on the panel of that specific insurance company, or possibly ANY insurance company. 
4. Some Insurance panels are closed to therapists in many regions of the US because they say they have enough therapists in the region, based on their per capita formula.  This is even though therapists who no longer see clients with that insurance may not have been taken off the list, the lists are rarely updated, etc.  Unless the client has out-of-network benefits, the therapist may not be able to see the client.
5. Therapists don’t know how to negotiate with insurances for higher rates (which is only sometimes possible, depending on how much the insurance needs new therapists in that region) so they are offered the lowest rate, and they take it and are locked in to that rate. 
6. Many therapists don’t understand the complicated billing requirements of “in network” vs. “out of network” insurance policies, so therefore prefer not to take the insurance to ensure their services will be paid for by policies they understand.
7. Therapists who have been in the business for a while and have frustrated and punished by insurance companies, often left those same Insurance panels and encourage counselors/therapists/psychologists not to get involved with insurances because of the many kinds of harm that could be done to the therapist – including their own mental health and ability to pay their bills.  
8. Taking Insurance means you have to wait for payment, and 100% of completed claims must be paid to the therapist within 90 days of billing, according to some federal and some State statutes. Ninety days is a long time to wait for payment.  “Completed claims” can be a sticking point, as some insurances say that the claim they received was not completed.  Some insurances pay everything quickly, some you have to continually stay on top of to ensure the claims are not only paid, but paid correctly.  One insurance may pay the therapist down the road 100% of the time correctly within a week, but another therapist may struggle with the same insurance company, getting claims paid accurately only when they stay on the phone or have regular meetings with an insurance rep in their region. A therapist can’t predict the outcome for their own practice. 
9. Therapists often have difficulty being credentialed by insurance companies in a timely manner. They may be under the impression they are credentialed but once they bill for services they find out they are not, because they did not understand there were extra steps to take after they got an acceptance letter from an insurance company. If they started providing services and bill the claims, they will not get paid and insurances don’t backdate effective dates. This is money the therapist counted on to pay their bills, and they will never receive it. 
10. With all of these restrictions, and the amount of extra work/time/risk involved when taking insurances, it is important to note that insurances usually pay less then self-pay clients.
11. Therapists who don’t take insurance are likely to have less clients but they get paid immediately and don’t have to spend time and energy trying to get claims paid, face audits, take risks with not being able to pay bills, etc. 
12. Therapists who don’t take insurance and who don’t keep electronic notes do not have to follow as many state and federal restricted guidelines as those who take insurance, keep electronic notes and do electronic billing. 
13. Amounts of money paid by different insurances are vastly different and are often paid differently based on region.  Fee amounts are in contracts.  Out of pocket amounts if you are not in a contract, and are “out of network” are difficult to find out, until claims are billed. 
14. Many therapists consider full-time therapy and private practice 25 to 30 sessions per week. Some view it as 20-25 hours per week.  This is to reduce overwhelm and feel like they are giving their clients their best. Many do not consider they are capable of doing more sessions than that,which can limit their income when they work with insurance.
15. Therapists who take insurance, have electronic notes and do electronic billing have many more restrictions because of HIPAA compliance requirements. A therapist who takes no insurance and does not have electronic notes is relieved of most requirements and restrictions.  
16. Therapists who take insurance for most of their clients, often find it better for them to be on the panels of at least 3-4 different insurances to offset delays in payments. If one Insurance isn’t paying or has delays due to their systems, waiting on funding getting approved for their fiscal year, etc. there are others that will continue paying while the other is delayed. 
17. Full credentialing for many insurance companies can take from 60 days to 9 months which discourages many licensed therapists from obtaining the ability to see insurance clients.  Each licensed therapist must be credentialed independently, to ensure their credentials are confirmed, to include transcripts, state licensure, and other items. This is a good thing, confirmation of credentials, but the time it takes for many companies to complete this seems excessive. 
18. Therapists often have to follow up to ensure everything is good to go on a frequent basis to ensure paperwork is not lost, the process is continuing, etc.  There are many pieces to the credentialing process with some insurances and if you’re not familiar with all of the pieces a clinician could think that you were credentialed when they really weren’t. It is not uncommon for a therapist to believe they are credentialed, when they still have more steps to take before they are able to start billing for services rendered.  If the steps are not taken, and claims are billed, they will be denied and that money is not recoverable for the therapist. There seems to be a lot of disconnect between the licensed clinician and the insurance companies in cases like this. 
19. A lot of time is spent ensuring that a therapist will get reimbursed for sessions from insurance if their main living is from taking insurances. Some insurances have many plans, so verifying a client’s benefits before starting, making sure the client is informed of the correct amount of deductibles/co-pays or coinsurance is essential for the client, the therapist, and the therapist-client relationship.  If a therapist does not ensure that the client’s insurance will cover the sessions, there is a possibility that the client will be responsible for the amount. If that client is not able to pay, they may be angry or bitter that they were not told, and the therapist will not get paid for those sessions.  This could have been avoided by verifying insurance before sessions started.  However this can be time consuming and is another reason that many therapists do not want to work to take insurance – as it contributes to their overwhelm.  These kinds of issues are usually resolved in a group practice, where someone answers the phone and verifies insurance before the appointment is made, however this is very difficult for the individual practitioner. 
20. Obtaining payment from a self pay client for the session at the beginning of the session ensures that the therapist gets paid right away and is able to pay bills, etc. without guessing when money will come in. This is guaranteed payment, as agreed upon by the therapist/psychologist and the client.  With insurance companies, there is no absolute guaranteed payment because of different issues that may arise and the insurance company denies the claims.  

Below is a youtube video of a psychologist who brings up this point and many others:

Please note that because she is a psychologist in whatever region she lives, she is likely to get more referrals from insurances.  Many clients do not get referrals from their insurance, nor do they understand non user friendly online listings on their insurance website. Also, a diagnosis is not such an issue now as it was 10plus years ago.  It used to be that having a diagnosis prevented a client from getting jobs.  That is now true for only a very small amount of jobs – maybe this will be another article?  In most cases, having a diagnosis does no harm to clients or their careers. There are exceptions to this, but they are not common. Diagnoses are for the most part, a private thing that a person does not have to share with anyone if they choose not to.

• Many therapists are afraid of insurance companies for the reasons above and there are lots of YouTube videos and websites and courses that encourage therapists to get off of panels and that teach them how and why to get out of working with insurances. This is the goal for many therapists to get away from insurance because it is so difficult.  Here is a video by the same  psychologist in the video above that brings up points made in this article and some that don’t quite fit here, but may cover in other articles. https://www.youtube.com/watch?v=zvtl029wKTU
•  As an example of the above, in the county of this writer, a few years ago, there was an announcement made by an insurance company that they were going to make more restrictive changes to their policies starting JAN 1st of the following year.  Within a short time of that announcement, doctor offices and therapist offices had signs on their doors and websites that as of JAN 1st, they were either 1. Not taking new clients with that insurance or 2. They would no longer be seeing clients who had that insurance. Clients were referred to other practices/agencies before 1 JAN.  Years later, even more practices have stopped taking this insurance, as more and more restrictive policies come out each year.. 

• There are some very user-friendly (therapist friendly) insurances (remember that each state has MANY different insurances who operate in the state) but once a counselor/psychologist has had a bad experience with a couple of insurances or heard of bad experiences from other therapists, it is likely that therapist would not want to try other insurances.  Often those therapist-friendly ones have closed panels because they ARE user-friendly. Those therapists already on the panels are not likely to continue working with insurances that require a lot of time and not pay well or not pay in a timely manner. 
• Unfortunately most consumers/clients/potential clients think that having health insurance means you’ll be able to use your insurance with any therapist that you want.  It is only after signing up for the insurance that sometimes it becomes clear that your choices are limited. Often the insurances that cost the least are insurances that are most restrictive for therapist choices. This is not always true, but seems to be a trend. 
•  If you have a therapist now that you’re working with and progress is being made, before you change your insurance (sometimes companies give choices), it is important to talk to your therapist  before you make that change as they may not take your new insurance. 

What more risks are there for Therapists who take Insurance?

1. Retroactive claim denials:  This happens more commonly than one would think and some states have no laws concerning this, so the therapist is unprotected. In short, an insurance company can decide, for whatever reason, they are going to deny payments already made to a therapist, going back several years.  This isn’t because the therapist didn’t provide services, this is usually because of a paperwork or coding issue.  It’s better to just read an example here:

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?fbclid=IwAR3Jnoat78AZuc1iOnhLlDbEyYtQotKklCO4h3TitscqRKQzxAMu2pwJkRI

2. Therapists at times have to take legal action because of recoupments (insurance taking money back they paid – up to several years back) so huge that it can put them out of business.  Small recoupments, even if the therapist disagrees,  can chip away at the therapist until they decide at some point that they need a plan to stop taking insurances. Large recoupments require an attorney who specializes in these kinds of cases, which is very expensive, and most therapists may not be able to afford representation.
3. Often when verifying insurance before sessions start, clarification may be sought over the phone with insurances.  Unfortunately, bad info may be given, the therapist goes about their business providing services, but when the claims are either denied at the time, or retroactively.  (Verifications kept securely in writing are the best case scenario for being able to “argue a point with an insurance company.)

Takeaways:

Potential or Current Clients:

• Please note that insurance in one state may be very restrictive and it is difficult to find a licensed therapist who takes that insurance.  However, the same insurance may be less restrictive in another state and there may be lots of choices.  State and Federal statutes rule the insurance companies choices, combined with the philosophy of who is running the business overall, to include CEO’s, advisory boards and shareholders. State statutes are created by the state legislature. Scroll down to “State Laws and Regulations”:

https://www.usa.gov/how-laws-are-made

 If you have any issues finding  a therapist who takes your insurance you may want to contact your state representative and let them know there is an issue.  This is feedback they can use.  Only the legislature can make changes so that insurances are more user-friendly to therapists – whether it be the State legislature or for Federal Insurances, Congress. Federal insurance rules are decided by Congress. https://www.loc.gov/law/help/statutes.php#:~:text=Federal%20statutes%20are%20laws%20enacted,law%20incorporated%20into%20a%20code.

 In that case contacting your Congressional representative is important. 

•  There ARE therapists who take insurances, and now with online counseling being paid by many more insurances (more and more are doing this permanently, not just during the pandemic), a potential client has many more choices outside of his local area. (The therapist still must be licensed in the state you are in.) You can go to your insurance website for a listing and then look up the therapists online to see if they are a good fit based on what you can read about them, and if so, call and schedule your online appt.

(Make sure you call your insurance to see if they cover online therapy and for how long).

• If you don’t want a diagnosis, then you are not going to be able to use your insurance, and you will need to find a therapist who only does self pay and tell them that you do not want to be diagnosed. Make sure you are in agreement before the therapy starts.

• Potential Therapists: understanding reasons WHY many don’t take insurances, is a good start for you to do research before you start practicing, what the lay of the land looks like for certain insurances in your area.   Peers are usually eager to share info. 
• Current Therapists: boundary lines and decision making have been a part of your life.  Hopefully you know that you are not alone in your frustrations.  You must weigh your priorities to ensure you can stay healthy so that your can deliver the best services to your clients.