Insurance vs Private Pay Private Practice | My Experience with Insurance

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A major question people ask when first starting out in private practice is whether they ought to be on insurance panels. In this video I’ll share my own experience being on insurance panels in private practice.

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This video is geared for therapists of all kinds, including psychologists, MFTs, LPCCs, social workers, and others in the clinical counseling field.

Welcome to Private Practice Skills! I’m Dr. Marie Fang, psychologist in private practice. I post videos offering tools I learned the hard way about starting and growing private practice so that you don’t have to.

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This video is not intended as professional or legal advice. Be sure to seek the services of a professional if you are in need of them.

After I saw that my first postdoc in private practice wasn’t getting me my hours for licensure quickly enough, I joined a clinic that primarily accepted clients paying through insurance. Here are some of the pros and cons I experienced in that setting, plus all the things I did wrong:

Pros:
Full Practice.

No Marketing. Piggybacking off of that pro, I didn’t have to do any marketing at all. Potential clients called in because they got our clinic’s name through their insurance.

More accessible for clients.

Cons:
Lack of Control. I didn’t have any control over what clients I met with. Unless I was completely unqualified to work with a particular client, I had to take everyone who called.

Pay. Pay was a HUGE con. Insurance decides how much they believe the going rate is for your services based on your qualifications and zip code, but they often judge this as much lower than market rate. From that, they only pay you a PERCENTAGE of that rate. They think they deserve a cut for getting you that client without you having to do any marketing.

Okay, fair enough. But it gets worse. Even after going through a thorough pre-approval process to make sure a potential client qualified to apply their insurance for my services, still about 50% of the claims would get denied. Think about that – you put in all this work and you might only get to take home the copay from the client – which was usually around $25 per session. That’s not even enough to break even. As an intern, that came out to just a couple dollars on the hour reflected in my paycheck.

Wasted Time. I spent around 3-5 hours per week on hold with insurance companies contesting denied claims. Not only did this waste my time, this was time that I could have been meeting with clients, so I also see this affecting pay as well.

Disrupted Therapy. Even though about half my claims were denied, I often didn’t receive a denied claim from insurance until several months after submitting my first claim for a particular client. So I would be 3 months in to weekly therapy with a client only to find out that they now owe me $1500 they didn’t expect to pay. Can you imagine if that happened when you went to go pick up your car from a tune-up? They initially quoted it would cost you a couple hundred bucks, and now you suddenly owe well over a thousand? It’s totally unfair. Often clients would stop therapy at this point, and I received many angry phone calls from clients when they would get the news.

Stigmatization. Insurance only pays when we give an ICD-10 diagnosis, and even then it often needs to be moderate or severe for them to cover it. Not everyone meets criteria for a more severe diagnosis, and for those who do they may not wish to have that on their insurance record.

What I think I did wrong (or in this case, my supervisor did wrong):
Get specialized training. Insurance billing is a PROCESS. If you’re thinking of billing insurance yourself, explore coursework specifically designed to teach you how to do it. It’s not a “learn as you go” type of endeavor. Any little error on a claim is cause for insurance to deny the claim.

Employ someone to bill insurance. Don’t like the idea of spending 20% of your workweek on hold with insurance? You may want to consider hiring someone to do that for you. In my opinion, this is the best way to have a successful insurance-based practice while maintaining your sanity. If you work in a group practice, it’s much more manageable to hire one person to do the billing for everyone.

If you’re considering accepting insurance in private practice, it’s a good idea to think through these items. Next week we’ll compare insurance-based practices and private-pay practices side-by side. So be sure to stay tuned for that!

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