Crucial counseling decisions: The pros and cons of taking insurance in your practice

Deciding whether to take insurance is a complex decision for many mental health providers. With potentially overwhelming application processes, extended wait times, and competitive panel spots, applying to and communicating with insurance providers can prove challenging. 

Despite the barriers, you may choose to offer popular insurance options to your clients for various reasons, including accessibility of care to those with financial challenges. Learning more about the advantages and disadvantages of this process can help you make the decision that fits your practice.

How to accept insurance as a therapist 

Before you decide whether to accept insurance, knowing how its done can be valuable. For many, the process includes applying to insurance panels.

You should plan to mail or electronically submit your applications to the correct address of each insurance company's application department. You can check in after a week and continue to call for updates whenever necessary. Once you receive your approval, you can start accepting insurance upon signing your contract. You can re-apply or contest the decision if you receive a denial due to a "full" status or another reason.

Advantages of paneling with insurance providers

There are several potential advantages of paneling with insurance providers. Consider the following factors in order to support making an informed decision for yourself.  

A wider range of clients

Accepting insurance can allow you to offer your services to more clients. Therapy can be expensive, and many clients can only afford it through co-pays or full-coverage insurance. Although accepting clients who pay out-of-pocket can provide funds quickly, taking insurance can allow you to fill your schedule and may encourage clients to return for future appointments. 

If regular clients not covered by insurance experience financial challenges, they may lose the ability to continue paying for sessions, which could increase your turnover rate. With insurance, clients may be able to stay on your caseload even through challenging changes in their financial situation. You could also increase trust and rapport with those you offer coverage by demonstrating that you support their financial needs.

Potential referrals

Many insurance companies provide direct client referrals to therapists. Because of this, they often look for providers offering crisis services, taking on many clients, or those with specialized  skills. When clients come to their insurance provider seeking a list of in-network therapists, you may be listed as an option, driving a higher client intake rate. Being paneled in this way can take away some of the burden of needing to self-advertise, as insurance companies have their own directories.

In some cases, insurance companies can require doctor referrals. Your clients may come to you from a medical professional referring their existing clients due to mental health symptoms or diagnosis.

A positive reputation 

When community members search for a therapist, they may be looking for an established therapist who accepts multiple forms of insurance. Although you are a licensed provider, those seeking support may not understand the distinction between being professionally licensed and being paneled with insurance. 

In addition, if you work with government health insurance agencies like Medicaid or Medicare, clients experiencing financial difficulties, disability, or retirement can feel they have someone on their side.

Potential financial increases

With more clients, you may start gaining more with your practice. Although insurance companies may not provide full reimbursement at your going rate, having a full schedule could provide stability to maintain a steady income. Without insurance, clients may struggle to make weekly appointments or stay in treatment long-term. 

Due to mental health conditions, stress, and other factors, clients may have periods of crisis or distress where they struggle to work or make money to afford therapy. With insurance, you may have a solid confirmation of payout for your time as long as the paperwork is filed correctly and includes the relevant information for each client. 

Diversity and flexibility

People in specific communities may be more likely to experience financial distress or seek care through insurance. When offering insurance, you can meet clients from all walks of life, including those who might live in rural locations or neighborhoods impacted by income disparities. 

Those with disabilities and older adults often use government health plans. When accepting these plans, you can provide an option to those who may otherwise struggle to find a provider in their area. 

Disadvantages of taking insurance in your practice

Although there are advantages to taking insurance, below are several disadvantages you might encounter. 

The process of applying to panels

For many, the process of applying to panels is a significant disadvantage. With wait times often over a month, therapists can spend a few months to a year calling insurance companies, tracking their progress, and resubmitting paperwork. In addition, the process can be competitive, and there may not always be spots open for therapists without unique skills or credentials. Being denied by an insurance panel can feel discouraging, and the appeal process can take months. 

If you're struggling to apply for panels in your state, you may be able to hire a financial assistant to support you.

Reimbursement rates

Therapists with their own practice may enjoy the freedom of being able to select the rates for their services. However, when accepting insurance, you must be paid the rates outlined in your contract for each service. In some cases, you could be making significantly less than you might accept from out-of-pocket clients. 

The billing process

The insurance billing process for therapists can be complex, and providers might hire an administrative assistant or bookkeeper to keep the paperwork up-to-date and filed on time. However, if you do not have the funds for an assistant, you could find yourself spending extra hours or cutting out a session of the day to fill out your billing paperwork and file claims. 

If you make mistakes on the claim forms, the insurance company may not reimburse you for your time. Many insurance companies have a deadline that claims must be filed by. You won't be paid if you miss one claim or deadline, which can be a significant downside. Additionally, each insurance company has unique billing requirements and guidelines. As you receive approvals for each, you may have to read through several billing guides and contracts, which could prove time-consuming. 

Delayed payment 

After submitting your claims within the correct timeline, insurance providers have around 30 to 90 days to reimburse you for the cost. When accepting clients without insurance, you can receive immediate payment. With insurance, you may wait a month or two for compensation. If you've recently started accepting insurance, this can leave a gap in your monthly salary. 

If you make mistakes on forms or insurance deems your claims "not medically necessary," you may be required to submit an appeal, which can delay payment even more. In these cases, having an administrative assistant can be valuable, as many therapists might not want to spend time on the phone discussing options with insurance companies. 

Required diagnosis

Many significant insurance providers require diagnostic coding on claims or client records, which requires you to diagnose your client with a mental illness from the DSM-5 or using ICD-10 codes. You must also use a current procedural terminology code (CPT code). Insurance companies can request client notes and diagnoses to offer reimbursement. 

When providing a diagnostic code, ensure it is accurate. Providing an inaccurate diagnosis may cause legal issues. The insurance providers are trying to ensure that sessions are "medically necessary." You may also choose to tell your client about the required diagnostic code in case they notice it on their insurance bills. 

Couples and family therapy barriers

Therapists might be unable to accept couples and families under insurance plans unless one of the individuals in the group has a mental illness or diagnosis accepted by insurance. For many, this limits the range of services provided if one is a marriage and family therapist or hoping to support clients requesting these services.

How can I find a reputable insurance company? 

If you're interested in applying to take insurance, consider the following tips to look for a reputable company: 

• Check other therapists' websites in your area to see what companies they are paneled with.
• Ask your colleagues for recommendations.
• See which insurance companies your clients work with the most.
• Check online question boards and forums for therapist input on insurance paneling.
• Apply to the largest insurance companies first. 
• Check the reimbursement rates of various companies.
• Ensure you meet the requirements of the panels you're interested in.
• Familiarize yourself with the billing process before applying.