The pros and cons of accepting health insurance

By Ellen Anderson, Ph.D
September 30th, 2023

Solo practitioners face challenges

Have you considered joining or leaving an insurance panel? More than one out of four psychologists are self-employed and nearly half (45 percent) work in private practice settings. Psychologists in independent practice often do not accept health insurance, citing low reimbursement rates and difficulties getting paid.

I think of myself as a woman in my “pre-retirement” years and as such, I no longer have the burden of student loans, my kids’ college tuition, or other wallet-draining burdens. As such, I decided to rejoin some health insurance panels several years ago. Initially, it seemed that accepting insurance was not as challenging as it had been in years past. Electronic submission of claims was straightforward, and claims were processed in a timely manner. But after about 18 months, I began to appreciate the current challenges involved for solo practitioners in accepting insurance.

Con: Diminishing returns. It is difficult in the age of telehealth to accept insurance without also accepting credit cards, whose fees reduce the overall payment. Copayment costs vary, depending on whether the patient has had an in-person versus telehealth appointment.

“As a health psychologist, most of my patients have co-morbid physical illness. Given that medical illness can lead to loss of income, I do not want to impose the additional burden of self-pay for psychotherapy if I can help it. People pay high premiums for their health insurance and should be entitled to utilize it.”

Even though my electronic medical record keeps track of the copayment due, it is up to me to ensure that the copayment is paid. Finding the time to chase down the $5.00 copayment feels like a lamentably poor use of my time.

In addition, everyone (and their brother) appears to want a cut of the meager pie. I learned quite accidentally from a new client, that she had paid her copay via her insurance company online. Puzzled, I searched a bit and found that her insurer contracted with a third party, giving patients the ability to pay their copayment online.

Providers then need to register with the third party and “claim” the payment. It feels a bit like the “Where’s Waldo?” game. Unfortunately, despite searching for this elusive copay, efforts on my part to “claim” the payment have been unsuccessful thus far.

Pro: Removing a cost-prohibitive barrier for clients. As a health psychologist, most of my patients have co-morbid physical illness. Given that medical illness can lead to loss of income, I do not want to impose the additional burden of self-pay for psychotherapy if I can help it. People pay high premiums for their health insurance and should be entitled to utilize it.

Con: Clawback. This term refers to an unreasonable demand for money, already disbursed, under the guise that the payment was made in error. It took me about 18 months to begin to appreciate how often this occurs. Thus far, I have had one insurer claw back numerous payments for many clients, claiming that benefits were not coordinated, the client was no longer eligible for their insurance, or the client had not met their deductible at the date of service.

Infuriatingly, the insurer saw fit to deduct these alleged overpayments from payment due for current clients. Tracking down clients to recoup funds for payments dating back 12 months then falls to me, as the practitioner.

Pro: Electronic remittance advice. Reconciliation of insurance payments is easier than it has ever been for the solo practitioner. The process of enrolling to receive the electronic remittance advice (ERA) was a bit challenging. But once it was set up, the ERA appeared in my electronic health record, automating the process of posting payments.

Con: Pareto principle. The principle that 80 percent of the hassle and stress in dealing with insurance companies is a consequence of only 20 percent of claims. Many claims process quickly and without a problem. However, the claims that are problematic can be extremely difficult to resolve.

For example, after multiple months of not being paid correctly for a single client, I was able to eventually escalate the case to an advocate who worked to resolve the problem. Unfortunately, insurance companies are large, behavioral health is often carved out to another entity, and communication within the organization is poor.

Within months, I began to receive overpayment notices that undid the work done by the original advocate. Undaunted, I called and emailed but she went silent. I was ghosted by my insurance advocate!

I called another front line representative and after 45 minutes of trying and failing to help, she initiated a three-way call with the original advocate. Why did she ghost me? She explained that she could only work on tasks assigned in her queue. I ignored my desire to point out that she might have responded with a brief email to explain the process and instead, persevered to the point that she agreed to re-open the ticket and assign it to herself.

Take away lesson: though most claims process correctly, those that do not can take countless hours to resolve.

Pro: Demand exceeds supply. For early career practitioners, participating in health insurance panels is one way to quickly fill up a practice. It is incredibly difficult for clients to find psychologists who participate in their health care plan. Providers on insurance panels have little difficulty in filling their hours.

Con: Insurance companies often do not adhere to their own policies. It is hard to believe, but true! Reimbursement rates for one of my three payors were 30 percent lower than the other two. Their policy stated that they would review a contracted rate after three years and would respond to my request for a rate increase within 120 days.

Naively, I was optimistic that my request to match the rates paid by other payers would be granted. I waited 120 days before calling to follow up. My calls were answered by front line workers who earnestly assured me that they would escalate my request to the proper department. I called, wrote, and diligently followed up. After 240 days (eight months) I eventually gave up and submitted my resignation letter. I received a call from their contracting department shortly afterward, offering a three percent increase.

I declined, explaining that three percent would not close the >30 percent gap between them and their competitors. The representative told me that I was required to give 120 days’ notice to my clients from the time of resignation. Thus, it came to be, that a full year passed between the onset of my ill-fated attempt to obtain parity between payers and the termination of my participation.

The cons outweigh the pros: After several years of sustained effort, I can only conclude that the current fee-for-service model of health insurance reimbursement for outpatient mental health still does not operate effectively or efficiently.

My sole reason for accepting health insurance is for the benefit of my patients. It is difficult, though not impossible, as a solo provider, to accept health insurance unless you are prepared to work with a billing service. If you are considering joining or rejoining an insurance panel, these are factors to take into consideration before signing a contract.

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