“You get paid what per session?!” I asked my wife after noticing her low monthly payment from the group practice.

“On average insurance pays them $60 so my split is $30,” she replied.

“That’s outrageous!”

It wasn’t her fault, and if you’re getting paid similarly ridiculous amounts per session, it’s not your fault either. You’ve probably become what I call a “Walmart therapist,” suffering from an extreme imbalance of power.

As the largest retailer in the world, Walmart can pressure suppliers into lowering their prices. This is good for Walmart’s customers (assuming they’re not too picky), but not so good for the suppliers, without whom those customers wouldn’t have anything to buy, nor Walmart anything to sell.

Now, if you’re supplying Walmart with widgets, getting $1 profit per item instead of $5 is not bad if you can sell millions of units a year through Walmart’s massive chain of stores. But if you’re a therapist, and especially if you’re part of someone else’s group practice, you can’t scale up like that.

For you, getting $30 a session means you may only take home $2000 a month if you don’t take too many vacations. If you live in an area like central Maryland, just renting a three-bedroom apartment (forget about getting approved for a mortgage!) could be more than 75% of that!

Even more important, as a therapist you're not making widgets or doodads that decorate a shelf or peel a vegetable. You're helping alleviate emotional pain and save relationships, the very foundations of society!

Rubbing salt into your wounds, insurers require you to jump through endless hoops to get paid, so you may hire a billing service. Poof! There went another 7-10% of your meager earnings. Worse, it turns out that insurers often decline claims, even valid ones, without even looking at your client’s records! They probably count on most people never bothering to refile, so declining valid claims easily siphons a bunch of money from your meager accounts and those of your clients to their already-fat bottom line.

Finally, adding insult to injury, insurers frequently take weeks, months, and even years before paying up - Risa once had to wait two years to get paid by one client’s insurance plan! It’s no wonder she vowed that when she opened her own practice, she’d never accept insurance.

Why Many Therapists Do Accept Insurance

The two main reasons that many therapists accept insurance are:

• Insurance plans provide access to a huge pool of potential clients, making it easier to build a full case-load without (much) marketing
• Insurance allows some clients to get therapy they would not otherwise be able to afford

Both of these are more important in rural and/or poor areas, where finding clients willing and able to pay full fee can be difficult, and where access to care can be challenging.

Why Many Therapists Don’t Accept Insurance

There are a host of reasons why many therapists don’t accept insurance:

• Their therapy services may not be covered – for example, Risa is a Marriage and Family Therapist who works mostly with couples, and couples therapy is not covered by most plans
• Insurance requires “medical necessity” so you’re forced to diagnose the client as having a mental disorder out of the DSM V; however, in many cases clients have no disorder and are merely dealing with relationship challenges, in which case diagnosing them is inappropriate at best and outright fraud at worst! And let's not forget the stigma attached to mental health issues in our society, and especially for clients whose jobs require carrying a firearm and/or maintaining security clearance, where needlessly diagnosing them could cost them their job
• Insurance breaks client privacy – clients rightfully expect that what happens in therapy stays between them and you; however, if they use their insurance, one or (many) more people at the insurance company may review client records you’re forced to provide
• Using insurance allows insurer employees who never met your client (and may not even read his records) to interfere in your treatment plan
• Reimbursement rates are much lower than what most private-pay clients would pay
• Insurance requires you to either hire a billing specialist or service which eats up part of your already-low reimbursement rate; or alternatively, chase after the reimbursement yourself, wasting unpaid time better spent helping clients
• Without insurance your client pays you in full at the time service is provided; there’s no separately collecting copay from the client and reimbursement from the insurer, no complicated billing forms, and no worrying if the insurer might come back months later, claiming they mistakenly overpaid you on a client you no longer even see, and claw back the money they claim they overpaid out of your current client payments
• There’s no worrying if your client might have lost his coverage without your realizing it, leaving you with the choice between going after the client (or former client – good luck with that!) for payment due, or eating the loss

Why I Disagree with the Reasons Some Therapists Accept Insurance

I’m the first to agree that health insurance is a great and needed service (though I’m outraged that our premiums have more than tripled over the past several years!). However, different than physicians, the way therapists are treated by insurance plans is shameful, if not outright abusive.

If you’re in private practice, dropping insurance will cause you a short-term dip, but when you bounce back, you’ll be earning more while working less, and be your best therapist self for each client you see, each session. No more insane days of eight, nine, or even 10 sessions, where by session 6 or 7 you’re totally fried, and by year 5 or 10 you’re wondering if it’s time to change careers.

In addition, even if you don't accept insurance, there is nothing preventing the client from seeking reimbursement for out-of-network services if his plan offers such coverage. You merely provide him with a super-bill and let him work with his insurance as to whether he gets reimbursed and to what extent.

As for helping clients who can’t afford your full fee, you can set aside a number of weekly sessions for sliding scale, or even pro-bono therapy. You can also volunteer with a local pro-bono therapy project. Finally, when your discounted slots are taken, you can refer clients who can’t afford therapy to such local resources.

If you’re driven by avoidance of marketing and/or want to provide therapy at the lowest cost possible, perhaps an agency job would be a better fit than private practice. The agency would provide all the clients you’d ever want to see, most likely for less than insurance co-pays. Of course, your salary may only be $25k – $30k compared to the very real possibility of a 6-figure income from a private-pay-only solo practice, but that’s par for the course.

What You Can Do

Your first step is to decide if you’re willing to stand up to insurers and declare “I’m not a commodity, and I’m not a Walmart therapist!” When I say this, I’m speaking figuratively, not literally. Some people seem to think that writing letters to insurers, explaining therapists’ point of view, would convince those insurers to change their practices. I’m not naïve enough to think that insurers care a fig about what you or I think about them, as long as they keep making money.

Would you suggest to a client in an abusive relationship that she should explain to her husband how it makes her feel when he beats her black and blue?! Of course not! You’d advocate for her to leave that abusive husband and call the police!

Similarly, the only thing insurance companies will understand is when all therapists (or as close to that as possible) resign from their panels, and customers complain to their states’ insurance commissioners. Then, when investigators and auditors start hounding insurers, perhaps things will change.

This is a systemic problem, and it's not your job as a therapist to accept the abuses of working with insurance under the current setup. It's up to politicians and the insurance commissioner to make fundamental changes to the system so the contract between an insurer and a mental health provider is a fair one. How is it fair that a GS-12 civil servant bachelors-level engineer with a few years' experience merits a $106,000 salary plus excellent benefits, while a master's level or PhD therapist with decades of experience can't expect to make $100,000 a year with zero benefits and having to pay her own self-employment taxes?

Until that happens, you need to learn how to market your services ethically by knowing your ideal client, his pain points, and how to share with him your services as an opportunity to solve those problems. With that knowledge, you can build a highly successful practice that allows you to make a real difference for all your clients and rewards you appropriately for making that difference.

As a clinician I coach reports, “I was on insurance panels for 18 years until recently, after countless wasted hours in rageful phone calls, lost and stolen income (i.e., those times where, due to a client's error they were dropped from membership without my knowledge and I had to eat the denied claims), anxiety over new, unreasonable rules and audits, I finally beat my dependency on the abusive-husband-like relationship I had with insurances. Since cutting that cord, my numbers dipped for two months, then have now jumped up to where my last month post-insurance brought in $5000 more after expenses than my final month with insurance, and with less hours of work.”

If that speaks to you, leave a comment below or use my contact form so we can explore if my coaching would be a good fit for you too.