People love to hate on insurance companies. I get it, they can be a pain, require diagnosis, reimburse as little as they can get away with and require a whole extra step that you as a business owner then have to manage (or pay someone else to manage). As a practice-builder, I’m not supposed to encourage you to even consider managed care. I’m supposed to say “follow your private pay dream! And I do! When the circumstances are right.

Do you have more than nine months of living expenses saved up?An established part time private  pay practice where you’ve been turning potential clients away? Do you have a partner or a parent or a trust fund that can financially support you while you build? If you do, awesome! I strongly encourage you to go the non-managed care route and go for private pay all the way.

For those of you in a different position, I write the following:

An Argument For Insurance

When you are establishing yourself as a private practice therapist you have some extra stress and pressure. There’s a business learning curve that isn’t too sharp but is present. There’s the pressure of paying rent somewhere; there’s the stress of having committed to this. Getting clients can take a little while. Getting full can take longer.

You’re still getting your sea legs with private practice and confidently stating your fee on the phone with potential clients and explaining that you don’t take their insurance is much easier later, once you’re confident in your private practice-hood.

Now, if you are struggling with any of the following, you’re facing a block, not a real legitimate concern:

  • You don’t think anyone will pay full fee.
  • You are really uncomfortable talking about money with clients and taking insurance helps you avoid that.
  • You don’t think you’re worth $XXX/session.

If you have a block, I highly suggest we talk. It’s just going to hold you back, even if you intend to take insurance for the life of your business.

I had a consultation with one of the big name practice-builders when I was 3 months in to private practice. I wasn’t taking insurance and barely had any clients. I was freaking out. The consultant told me that of the thousands of therapists and coaches she’d worked with, she sees a national average of 2 years before a therapist is full if s/he doesn’t take insurance. That’s been true in my experience with friends and clients who have built without insurance. Now, that’s not as bad as it sounds– you’re probably making more per client if you aren’t taking insurance and full means you’re maintaining your ideal full number without significant dips. Maybe you even have a waiting list, which makes me cringe (more on that in a future newsletter).

Some people don’t take insurance simply because it’s a world they don’t understand and it seems overwhelming to learn. I promise you it’s pretty easy. I offer all sorts of handholding in my ebook with videos showing how to bill and a layout of complicated-sounding things like CPT Codes and Bookkeeping. Don’t let not knowing how to do insurance keep you from it if you need to build quickly. You can learn what you need to know in less than an hour.

My Experience with Insurance

I’ve been on insurance panels in two different cities. After those 3 months of panic in Seattle I realized I needed some referrals faster than I was getting them. I was networking my ass off and was getting referrals but not enough to build quickly in a crazy expensive city.

I was full a few months after getting paneled. My full fee was $125 and the insurance reimbursement was between $112 & $119. I billed each client in less than 30 seconds and never had a claim unpaid. I think I spent about 2 hours total on the phone with insurance over three years. The only extra work involved sending in treatment plans after every 20 sessions, which kept me on my clinical game.  I was only working with the two insurance companies that reimbursed the highest. I wasn’t willing to take the $60/session reimbursement some other companies offered. I didn’t have ethical issues with diagnosis because the majority of my clients had eating disorders and in my mind, diagnosing that makes sense. I could have gotten off insurance panels in Seattle and stayed full, I had a very strong referral network, but I liked the accessibility being on panels provided for my clients and since insurance wasn’t a pain point for me in any way, it didn’t seem important.

We moved to Asheville quickly & without the financial cushion I would have liked. Family illness brought us back to the Southeast & both my husband and I were building caseloads. We needed to build quickly so we didn’t completely decimate our savings.  So I hopped on insurance panels expecting the same experience I’d had in Seattle. Yes, my caseload built quickly but these insurance companies were more burdensome and I had a $25 pay cut per session. I made the conscious decision to build my reputation and referral sources before getting off the panels. I developed a timeline and a plan for that so that I could prioritize my family’s financial well-being and be less of a stress case. Once you have strong referral sources and you are known in your community, it’s much easier to build a full fee practice.

An Argument Against Insurance

Some insurance companies earn their bad reputations. Their reimbursement rates vary greatly, even within the same city. They can change their reimbursement rates without letting you know. When 2014 rolled over to 2015, the local BCBS panel decided sessions were worth $1.06 less each. I’m not fretting about the $1.06, but the fact that they can just change the rate to whatever they want without informing anyone is sketchy.

You can certainly make more money doing private pay only which allows you to work less and make more. No one hates that. There’s also the ethical issue many therapists have with diagnosing in order to bill insurance or sharing a diagnosis with an insurance panel that may impact the future of a client’s health care accessibility. These are valid concerns.

I’ve definitely made some human errors with insurance that both cost me a lot of money and stressed me out (like crying on the phone to the poor customer service representative kind of a situation). I described a few painful mistakes in my ebook.

It also takes time to communicate with the insurance companies that are difficult to deal with. Time and frustration. It’s stressful to try to squeeze in a phone call to an insurance company during your lunch break and there’s no guarantee the issue will get settled in that hour. Big picture- I went into private practice for many reasons, one of which is to deal with as few bureaucracies as possible. Insurance companies are an optional one and I prefer to opt out because of the hassle and the pay cut.

The Bottom Line

In some parts of the country, taking insurance is rare and in others private pay is rare. You can take into account what everyone else is doing, but it doesn’t have to impact this very personal decision. Taking insurance doesn’t make you a better or a worse clinician or a better or a worse business person. It’s an entirely personal choice.

Ultimately, it all comes down to how quickly you need to build, what your personal ethics say about diagnosing and what insurance companies are like where you practice. I appreciate what insurance has afforded me in my career. While the reimbursement is lower than my full fee, I can’t say it’s low pay by any stretch of the imagination. I know most people would kill to make $100-ish an hour and I stay grateful for that.

 

 

Allison Puryear is an LCSW with a nearly diagnosable obsession with business development. She has started practices in three different states and wants you to know that building a private practice is shockingly doable when you have a plan and support. After retiring her individual consultation services, she opened the Abundance Party, where you can get practice-building help for the cost of a copay. You can download a free private practice checklist to make sure you have your ducks in a row, get weekly private practice tips, listen to the podcast, hop into the free Facebook Group, and get help from Allison and a small group of new, close friends in Abundance Practice-Building Group. Allison is all about helping you gain the confidence and tools you need to succeed.

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