Are You a “Walmart Therapist?”

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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.

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Comments (6)

  • B
    • 2018-07-13 20:07:48

    Man this article hit home for me. It's exactly where I'm at. I'm blessed to have a full practice, but with my group's split and low insurance reimbursement rates I'm not making anywhere near what I believe I'm worth. I feel so stuck though. I don't know how to transition to private pay and I don't know how to transition from a generalist to a specialist (which I know I need to do).

  • O
    • 2018-07-13 20:17:48

    I hear you Brandon. The way Risa, my wife, made the transition was to start her own private practice by renting an office in someone else's suite one day a week. She did not take insurance there, and increased her rate enough that one client session a week more than covered all her expenses. As time went on, that side practice filled up more and more, so she added another day, then another, etc. until she made more than enough to leave the group practice where she was making so little. By the way, my understanding is that a few years later that group practice was shut down. Once she had enough clients so it made sense to rent full-time, she wasn't able to get a single office all week in the suite where she was renting, so she went and rented her own suite, and started subletting (with the management company's permission) space to other therapists. If you're committed to building your own practice, this is the low-risk way of doing it, but it does take longer. Also, you need to have the right mindset and skill-set for the business side of things, or hire a coach to help with that ;).

  • B
    • 2018-07-28 19:10:22

    Thanks. That's a great idea, but unfortunately very risky. I can't make someone pay cash if I have a contract with their insurance provider to accept their insurance. I could get into a lot of trouble for doing that. I guess there's ways to limit the risk such as only taking on a cash paying client who doesn't have insurance or terminating with an insurance provider first and then taking on cash paying clients, but there are severe logistical limits there with those options. I feel like I have the right mindset, but I just can't seem to wrap my mind around how to go about implementing that strategy logistically. Thanks again.

  • O
    • 2018-07-28 21:03:47

    Absolutely you cannot and must not charge private pay from a client who has insurance where you're paneled with that plan! That would be a breach of your contract as a plan provider, and unethical in the extreme. Certainly, if you have a client come in who does not have any insurance plan where you're a plan provider, you can and should charge the appropriate fee (use my free worksheet as a starting point to figure out what that would be for you). What I guided one of my coaching clients to do recently was to stop accepting insurance by resigning from the panels where she was listed. Then, I recommended that she start charging new clients a new, more accurate fee, which was about 50% higher than her previous private pay rate, and more than double her insurance reimbursement rate. Within 4 months she increased her profits by more than 50% for the same number of hours of therapy. As her current clients gradually complete therapy and new clients come in at the new rate, I expect her profit to increase to more than double her previous level. As a wonderful side effect, she no longer has to pay for a billing service, no longer has to waste many hours on the phone with insurers who decline valid claims, and no longer runs the risk of not knowing when a client lost his/her coverage forcing her to eat the loss. All of this improved her profits, allowed her to take a day off each week, and drastically reduced her stress and upset. If you want or need help with the logistics of how to do this, I recommend you consider hiring a good business coach, whether that's me or someone else you feel a good connection and rapport with.

  • K
    • 2018-08-12 19:21:31

    Great article!! I would love to see your fee worksheet, if you would share, as I always wonder if my rates are lower than they “should” be. I have been in practice for 16 years and the amount of clients I need to see per week is beginning to wear on me. (In my younger years, it was not a problem). The problem for me, as you mentioned in your article, is that I live in a fairly rural area and thus have a concern that I would not have access to enough PP clients and also struggle with guilt about not meeting the needs of the community which I love ... thoughts?

  • O
    • 2018-08-12 22:53:57

    Thanks Kerri. You can have a free copy of my rate-setting worksheet here: Regarding the needs of the community, simply decide what fraction of your sessions you want to do at a reduced rate (I suggest not doing pro bono unless the clients truly can pay nothing, because then they have no skin in the game and are not likely to work as hard as they need to in order to benefit from therapy). Once you decide to let's say give a 50% discount to 10% of your clients, increase your full fee by 5% to offset the reduction in your income. This is important, since it allows you to not become resentful of them paying less, especially if you notice they drive a nicer car, live in a nicer part of town, etc. You can simply check in with them once in a while to see if they still need the discount or if they can release that discounted slot to someone who may need it more than they do. Finally, when you're in a more rural area, your costs are lower, so you can afford to charge less and still make a good living. Hope the all helps :).

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