Insurance companies may be limiting your growth potential

Many private psychotherapists choose to be on insurance panels as part of their initial business model. Taking insurance is a great way to gain access to clients, particularly those who need cost-effective services. Being on insurance panels can help you fill your business quickly; this is what I was told by other private practitioners when I started and I followed suit. But after nine years in private practice, I decided to transition to a self-pay only business model.

The decision came from my entrepreneurial mindset which focused on growth potential, professional control, and ease of workload. I had three significant experiences that helped me see how insurance was not in alignment with my business goals.

The first experience was when I received a decrease in pay-rate from one year to the next. The insurance company dropped their rates from my original contract because of an economic recession. While this was, hopefully, an unusual occurrence, insurance companies do not often raise their rates, and when they do, they do so very modestly. Despite my years of experience in the field, I would not be eligible for any significant raise to compensate for my work or experience. I began to realize there was a limitation in growth potential here.

The second unexpected occurrence happened when the insurance companies shifted to using ICD-10 diagnosis codes. The insurance panel I was on was not prepared for this change and payouts were stalled for months as they dealt with technical issues.

While I did eventually get paid, I had to consider what other job would my pay be withheld for months because of clerical errors? I was not prepared for the pause in pay, and it was a very stressful time. I had originally started a private practice to have more control over my work, and now I had an experience that was grossly out of my control and affected my livelihood dramatically.

The last experience that finally prompted me to end my contracts with insurance panels was considering the amount of time I spent tracking down my payouts. I dedicated time each week to billing of course, but then in some situations, I spent hours on the phone figuring out why a claim was denied.

In one clinical review meeting, where I had to verify the client’s need for services, I wondered how many entrepreneurs needed to defend their work so that they could get paid. Did I really need to advocate this strongly to be given my paycheck for work that I successfully completed?

During some insurance calls, I found out that a client’s insurance had changed and I was no longer in-network, which led clients to abruptly stop treatment with me.

Some of these clients needed payment plans to pay unexpected out-of-pocket costs that they unknowingly accrued. The disruption to my life and to my client’s treatment started to add up and weigh on me. As I began to chart how much time I spent on billing and claim adjustment, I realized my hourly rate for client-care was divided between client care and insurance calls. This meant my hourly pay was even lower than I thought.

When I did the math, offering even a low-end sliding scale option to my clients became worth it. When I felt the clarity and ease of receiving pay for same-day work, self-pay became worth it. When I realized I could easily give myself a raise when I saw fit, self-pay became worth it.

Coming off insurance panels is not for everyone. Many therapists still work easily with insurance companies and find the drawbacks worth the benefits. Yet, as a full-time private practitioner, when you consider your business’s financial potential, you may find, like I did, that your growth is hampered by the insurance company business model.