Margie Ryerson is a licensed marriage and family therapist. Last week she wrote an article in the online magazine Slate discussing why she does not accept insurance. Ryerson said she has turned away many potential patients telling them she had no appointment openings. Often the real reason was that her practice is closed to those not willing or able to pay cash for their therapy. Those patients hoping to use their insurance card need not apply.
Not unlike other health professionals, back when she took insurance at all she had to limit her practice to a mix of privately insured and cash-paying customers. That is not uncommon. For instance, most physicians limit their Medicaid and Medicare patients to a mix of privately insured and cash-paying patients.
Many parents say it is almost impossible to find therapists who are available to treat their kids. Ryerson goes on to cite a recent article that blamed the situation on a shortage of therapists.
The article, published on Good Morning America’s website, described the increased rate of suicide among teen girls and women in their twenties, and how they wouldn’t—or couldn’t—seek therapy for depression, anxiety, and other serious conditions. The article offered an explanation that you’ve probably heard many times: there are not enough mental health professionals to meet the demand.
Ryerson says it’s not just due to a shortage of therapists. At issue are the rates that health plans pay for a 60-minute therapy session. This from a different article in Psychology.org.
The average cost of a therapy session falls between $100-$200, resulting in $20-$50 copay for patients with insurance. If you didn’t know better, you might assume that insurance companies reimburse therapists for the difference, but this isn’t the case.
A therapist may bill an insurance company $200 for a session, but they only get reimbursed for half of that or even less. This means a therapist who chooses not to accept insurance can easily make double the salary of a therapist with the same skills and educational background who does.
Furthermore, insurance reimbursements vary by company.
Therapists cannot disclose the rates that specific companies reimburse them, but Addy was able to give a range. “Company A might give me $60 for a 1-hour session and Company B might give me $160 for that same hour-long session,” he says. Since rates vary from company to company, a therapist may choose to work with one insurer, but not the other.
Ryerson discussed the hassle of dealing with health insurance companies. Peter H. Addy told Psychology.org some of the same reasons. Dr. Addy touched on the problem that mental health is not like physical health and thus more difficult to prove mental health care is essential.
“Insurance companies can be pretty hands on with their management. Some only authorize eight sessions at a time. And then if you want to do another eight sessions, you’d have to reapply or they want to see a treatment plan or something like that,” Addy says.
For an explanation of why health insurers are more hands on when it comes to therapy, we need to examine problem using economics. This is related to a brief analysis John Goodman wrote 20 years ago. There are no objective standards for mental health care:
On the patient side of the market, the condition of having incentives to waste other people’s money is called the problem of moral hazard. It is a problem inherent in all third-party insurance where individuals are able to draw resources from a common pool. Suppose a patient has a choice between two equally effective therapies. If someone else is paying the bill, the patient has no reason to choose the less expensive option. An apparent reflection of the problem of moral hazard is a National Bureau of Economic Research study finding that 38 percent of all mental health patients representing 28 percent of all treatment visits are people who do not have any mental health disorder.
Something else Dr. Addy attributed to why many therapists don’t take insurance; they don’t have to. There are more people needing counseling than there are therapists to treat them. The imbalance between supply and demand means therapists can pick and choose their patients.
This from Ryerson:
More and more therapists only see patients who pay us directly. None of my close colleagues who have been in practice for a long time accept insurance. A quick perusal of the Psychology Today website in my general community shows that less than twenty percent of the therapists listed accept insurance. Typically, these therapists are relatively new to the profession and are building their practices. Many therapists find it much more gratifying to be in charge of our own therapy practices instead of relying on insurance companies to treat us fairly. We set our own fees. Many of us offer sliding scale payments to try to accommodate those who can’t easily afford therapy.
Some therapists will take insurance, but only for a limited number of clients, and often when potential clients with insurance contact them, they will simply say they are unavailable instead of trying to explain the situation.
This brings me to another issue that I’ve noticed. People with insurance are resistant to paying cash for services they believe their health plan should pay. This is true even if they really like their doctors but changed health plans to one that doesn’t include their doctors. I have a doctor who does not accept insurance. When you enter his office he has several signs that explain in no uncertain terms, “I am not a Medicare participating provider.” He even makes you sign paperwork acknowledging he is not a Medicare provider and you cannot seek reimbursement from Medicare. He doesn’t accept Medicaid or any third-party payment. Prices are transparent and about $150 a visit. He had to install signs because people continually tried to use Medicare or their health plan even after he tells them he accepts neither.
Patients themselves are probably the only ones who most know how they feel and whether their therapy is working. Thus, it should not be out of the ordinary for patients to pay cash for care. That is also true in other areas of medicine. My deductible is $8,700 a year so I’m basically paying cash regardless of my insurance.