Debunking The Myths Of Becoming a Private Pay Therapist

Have you been considering modeling your practice around private pay? 

As one of the two main payment options for mental health professionals, you’ve likely thought about this, and you’re not the only one. 

Most therapists that are just starting their private practices have to weigh the pros and cons of getting credentialed by insurance panels, going private pay, or doing both. 

If you’ve talked to colleagues in the field, you may have heard some myths and misconceptions about private pay in order to dissuade you from going that route. But trust us, there are a lot of benefits for not only you, but your client as well. 

We’re going to set the record straight and bust some myths so you can see how great the potential is with private pay. 

What Does it Mean to be an Out-of-Network Therapist?

Before we get to the good stuff, let’s clear up what private pay actually means.

Private pay is different from private practice. Private practice is when you work for yourself. Private pay is the method in which you receive payment for services. 

With private pay, you can set your own fees, and collect the fees the same day directly from your client. This means you’re not waiting potentially weeks to receive reimbursement from the insurance company or completing additional paperwork. 

This also allows you freedom to skip some of the processes and fine print associated with insurance companies. Instead of getting credentialed with an insurance panel and following their rules, the bill goes straight to the client.

Debunking Popular Private Pay Therapist Myths

It’s likely that there's some grain of truth to myths, similar to rumors – these don’t just spring up out of nowhere after all.

Oftentimes when these come to light, they’re due to misunderstandings, prejudices, or outdated information. Unfortunately, these also play into some of the negatively viewed aspects of private pay. 

In truth, a private pay business model is a great option, and when compared to an insurance panel – it can offer just as many, or more benefits. 

There’s no right or wrong direction for your practice will go in – both work well, and the choice is up to you.

We’re all about making informed decisions, so here are some popular myths about private pay that we’ll clear up for you.

Myth 1: It’s Near-impossible To Grow Your Private Pay Therapist Income Without Insurance Panels Funneling Your Clients

Truth: It’s harder compared to working with insurance panels — but definitely not impossible.

Solution: Utilize digital and online marketing, leverage your networks, referrals, website, and more to attract more clients.

This is one of those myths that is rooted in some truth, but ended up becoming a bit over exaggerated. Finding clients and getting referrals is certainly a challenge of running any private practice. When you decide to go the private pay route, there aren’t insurance panels sending you clients, so you don’t sit back and wait for them to come to you. 

What does this mean for you? 

It means you’ve got to commit to the daily grind in the beginning, and do some things the old fashioned way – like networking and marketing yourself. 

There are plenty of clients that will self-pay, and many thriving practices that operate this way. Some clients don’t have insurance and others have high deductibles that won’t bother using their policy. 

The key is deciding who your target audience is and focusing your marketing efforts on them.

Thanks to the internet and social media, it’s become a lot easier to market yourself in order to fill your caseload.

Here are a few ideas to get you started:

• Have a solid online marketing strategy.
• Meet and network with other therapists, counselors, and doctors.
• Make sure you have a website up and running.
• Publish blogs on your website to showcase your expertise.
• Write guest blogs for other websites.
• Leverage best practices for digital and online marketing.
• Create informational videos for YouTube or Instagram.
• Be more active on relevant social media sites.
• Get listed as an expert source on HARO.

Once you’ve got a few clients in the door, don’t be afraid to take the initiative and ask them for referrals. If they are coming in and paying privately, they likely have friends, co-workers or family members that can do the same. Other therapy colleagues, and acquaintances are great for this as well, and would likely appreciate it if you returned the favor by referring clients their way. 

Myth 2: Private Pay Therapists Can’t Serve Low-Income Individuals

Truth: Some individuals may not be able to pay, especially the full fee upfront, but this doesn’t mean that you can’t see them as clients. 

Solution: Set up a sliding scale fee or installment payments to make your services more accessible.

Since you’re in charge of your own rates, you can choose to set more affordable rates to help lower-income individuals afford therapy. A sliding scale fee is one way of making your services more accessible.

Sliding scale means that your fee per session isn’t always the same. With this setup, you can offer a rate within a suggested range you’ll take based on your client’s ability to pay that day.  You can still charge your regular fees to those that can afford the sessions, and be more flexible with those that might be in tighter financial situations. 

New clients can be offered a sliding scale right away, or it can even be implemented later on if they go through a life change affecting their financial situation.

For example, if you had a client suddenly lose their job and not be able to afford your fees anymore, you could offer them a sliding scale rate. This could allow sessions to continue without putting a heavy financial burden on their shoulders. As a result, they’ll feel well cared for, and be likely to refer you to their friends. 

Here are just a few benefits of offering sliding scale payments:

• Helps more people in need of mental health care
• Further diversifies your client base
• Gain more referrals because of happy clients
• Continued access to mental health services

Myth 3: It’s Difficult to Make Ends Meet with Private Pay Therapist Income

Truth: You can definitely make enough money to support yourself — and even your family. It just takes a little more strategizing.

Solution: Decide on a fee that works for you, while offering a sliding scale option to keep your services accessible, and continue marketing yourself. 

Depending on the insurance panel, reimbursements can be quite low, so private pay can become the more lucrative option. You could potentially generate more income while seeing fewer clients in these cases. 

One of the best things about private pay is that you can set your rates as you see fit. You’re not limited to the figure you agreed to with an insurance panel.

If you’re bringing in clients that are mostly on the affluent side, there’s not as much to consider, aside from your financial goals. As long as your marketing efforts continue and referrals are sent to your practice, with time you’ll find yourself successful. 

Serving lower-income clients means that there may be a need to implement a sliding scale fee structure. Though you might want to offer discounted services to everyone that can’t afford your standard fees, keep in mind that you have to take care of your financial health as well. Deciding how many sliding scale clients you can take on at one time can help you stay on track with your budget.

If you need some help with this, our fee calculator can help you determine how many sliding scale sessions you can offer, and the number of clients you need, while still meeting your income goals.

Myth 4: The Paperwork and Process for Clients’ Out-of-Network Therapist Benefits Is Overwhelming and Too Confusing

Truth: It doesn’t have to be overwhelming at all – there are many resources available now that help make this process easy to navigate. 

Solution: Join us at Clarity Cooperative to take advantage of our resources and participate in our community with other mental health professionals.

It can seem like a daunting task to take care of the paperwork required for clients with out-of-network benefits, but it doesn’t have to be. Once you learn how to complete them, it can actually turn out to be quite simple. The most challenging part is at the beginning when you’re figuring out your processes. 

With these clients, you can either provide them a superbill, or file claims for them as a courtesy. Superbills are basically itemized receipts for the service handed directly to the client, and the best part is that they handle the claim themselves. You don’t need to interact with the insurance company at all. 

To make it even easier, we have a superbill template here you can customize for your practice. 

If you file courtesy claims for them, you can also check out our out-of-network calculator to make computing and estimating your reimbursements much easier. Just sign up to join us at Clarity Cooperative, and this resource is all yours.

In reality, out-of-network clients will most likely be few and far between. This means you won’t need to sit around doing stacks of paperwork. Once you’ve figured out your process for superbills, it’ll only take moments of your time and you might find that it’s well worth it. 

Myth 5: Private Pay Therapists Don’t Appear Credible

Truth: Credibility isn’t correlated with or dependent on insurance paneling.

Solution: With the advent of the internet and social media, there are many ways to build and share your credibility.

Getting credentialed with an insurance panel can sure make you feel like you’re jumping through some hoops. Some people might think that because you took the time to go through this process, it makes you more credible. It does to some extent, but it doesn’t mean you’d become instantly credible. 

Sure, being part of an insurance panel can help, but it's not the end-all-be-all of building your credibility as a therapist. 

Your therapeutic relationship with your clients is what will determine this in the end. When you gain trust and respect from your clients, a positive reputation in your field and community will follow.

There are tons of other ways to build your credibility now with the ability to market yourself online. Here are just a few ideas:

• Be an expert resource for a reporter on HARO.
• Create webinars for schools, companies, and organizations.
• Become a speaker for mental health events.
• Grow your social media following as an expert in your niche.
• Bolster your content through informative blogs, videos, or podcasts.
• Be an active member of your local community.
• Collaborate and network with other respected mental health professionals.

Myth 6: Clients Don’t Like Private Pay Therapist Setups

Truth: Private pay offers potential benefits for your client, and you’ll find plenty that prefer to self-pay rather than deal with their insurance company and high deductibles. 

Solution: Carefully and thoroughly explain to clients how private pay works and how it can benefit them during the initial consultation. 

We’ve been focusing on how private pay is beneficial to you as the therapist, but there are upsides for your client as well. 

First, high deductibles on some insurance plans can keep a client from getting any coverage for therapy. Depending on the individual’s policy, they might not get reimbursed any amount for sessions until they’ve met their deductible. With some deductibles being unrealistically high, this means the client will have to pay for the full session fee out of their own pocket.

Second, not all insurance plans cover services like online therapy, telemedicine, or couple’s counseling. Some policies haven’t even begun offering reimbursement for a more comprehensive list of mental health services. 

Third, not everyone wants their mental health diagnosis documented permanently into their health record — which is exactly what happens if they pay for their therapy sessions through their insurance. With progress notes and diagnosis codes being sent to a third party, even if it's not public, other people are accessing this information. 

We’ve only gone over three reasons, and these alone can make self-pay an attractive option for a client. There are several other advantages though, and they’re listed here:

• There are no insurance-specified time limits for therapy sessions.
• A mental health diagnosis is not mandatory to schedule or pay for sessions.
• There’s no need for an early or premature mental health diagnosis for children to justify therapy as “medically necessary” for insurers.
• They get more flexible scheduling and availability.
• There’s an option for sliding scale rates.
• There are no worries about getting a higher insurance premium rate due to mental health diagnosis.
• They can stay with their current therapist even if their policy coverage changes.

Letting your clients know the advantages that come with self-pay can help them feel more positive about paying your fees out of pocket. A great time to bring this up is during the initial consultation, but it can also be posted on your website, blog, or turned into videos for social media content for those that might just be browsing. 

Choosing the Best for You and Your Clients

As a therapist, finding the happy medium between what’s best for you and your clients is most beneficial — with regards to mental well-being and your financial standing. In many cases, that’s exactly what private pay offers.

Turning to credible sources can help you determine what is myth or bust. By joining a community like Clarity Cooperative, you can rest better knowing that you have the information and support you need to build a thriving practice. 

At Clarity Cooperative, we have all the resources and tools to help you grow your private practice. Our community is a space where you can ask questions and connect with other therapists regarding anything practice related. 

Try out all of our resources and calculators with a free 30 day trial, or sign up here today.