The Benefits of Therapists Joining Insurance Panels vs. Benefits of Being a Private Pay Therapist

To join an insurance panel or not — that is the question.

Well, at least one of the many questions a therapist or mental health professional can find themselves asking. Especially at the start of their private practice journey. 

Deciding what payment business model to move forward with can be tough. After all, your choice can pretty much decide the path your practice is going to take. Whether or not you accept insurance or private pay clients will determine how you get paid, how much money you’ll make, and the types of clients you’ll attract to your practice. 

What payment method does your practice use? Do you take insurance, private pay clients only, or both? 

The best decision for you could be quite different from other therapists – depending on your situation, personal/professional goals, location, target market, and more. 

There’s no perfect answer that applies to every person because the reasons behind accepting certain methods of payment can be quite nuanced. Even so, we can offer you guidance and help you make smart, well-informed decisions regarding this topic.

Let’s take a look at both business models - based on private pay clients vs. joining an insurance panel, their pros and cons, and how to decide which is the best fit for your practice. 

What Is an Insurance Panel and Should a Therapist Get Credentialed by Insurance?

An insurance panel — also known as a provider or payer panel — is a group of medical professionals who work with a specific health insurance company. 

By joining a panel, you’ll be agreeing to terms and conditions set by that insurance company who operates that panel. This means you’ll be required to follow the rules set by them in order to offer your services to clients that use that insurance coverage.

Those clients can come to see you for services and treatments without paying any fees up front, or out of pocket. Instead, the insurance company will reimburse you. 

Can I Leave an Insurance Panel?

No matter which payment model you decide to go with, it doesn’t have to be a permanent decision. You can leave an insurance panel if you realize later on that it isn’t working well for you, or if you want to move your business in a different direction. 

Joining an Insurance Panel

Did you know that psychiatrists are the least likely to accept insurance when compared to other types of doctors and healthcare professionals? 

Part of the reason is because joining insurance panels is notoriously difficult.

In order to join a panel, you need to get credentialed. This means submitting an application to the insurance company and also registering with the Council for Affordable Quality Healthcare (CAQH) database. With this application, documents need to be provided – including your resume, licensure information, proof of advanced training, malpractice insurance, and more.

Time-wise, It can take up to 10 hours total to apply to each insurance panel. You’ll probably need to follow-up regularly on your application too, or it could get stuck in limbo. If that happens you’ll have to start the process all over again. 

Benefits of Therapists Joining Insurance Panels

Well now, you’re probably wondering, with the amount of time it takes to apply to an insurance panel and no guarantee of approval – why should I bother with it? 

Here are a couple of perks you can enjoy thanks to insurance panels.

Built-in Referral System

Working with established insurance companies means you’ll get to enjoy a built-in referral network — and quite a large one at that.

This is one of the biggest reasons why private practice therapists choose to join insurance panels. You’re likely to get more referrals thanks to other therapists and medical providers who are paired with the insurer and using their in-network provider list. 

Larger and More Diverse Client Base

With an insurance panel, you get access to a larger and more diverse client base. You won’t be limited to the people within your immediate area or the group of people you regularly encounter.

Think about all the companies and businesses that offer health insurance through the provider you paneled for — they likely have a diverse employee population, all of whom could be potential clients.

Ability To Accept Low-income Clients

If you want to serve low-income areas or rural communities, then joining an insurance panel could work really well for you. Since mental health coverage is more commonly included in employer-provided insurance, it gives clients with limited financial resources access to therapy without having to pay out-of-pocket.

Steady or Regular Caseload

Therapists on insurance panels usually have more sustained and steady caseloads. One reason for this is the continued funds to pay for therapy sessions. Clients are also likely to continue to come in since they aren’t paying directly for it themselves. Another reason is that insurance providers sometimes specify a minimum number of sessions, which can guarantee at least several scheduled meetings. 

Credibility as a Private Practice

Getting credentialed can add to your credibility, especially if you’re a new therapist. Being affiliated with a well-known insurance company can make you seem more legitimate in the eyes of a potential client. 

Limitations With Joining Insurance Panels 

So there are some really great upsides to joining an insurance panel, but everything comes at a cost. Here are some of the downsides. 

Time-consuming Paperwork

Getting reimbursed by an insurance company means doing a bit of paperwork. Part of the submission to the company includes the claim, along with any additional documentation proving that the session was necessary and qualifies for reimbursement. 

This means you’ll probably need to set aside additional time in your day or week to complete this, and that could mean seeing less clients. 

Reimbursement Issues

Unfortunately, rates between different insurance companies can be quite inconsistent. Some might only reimburse somewhere around around $50 to $80 per session. Additionally, there can be delays with receiving the payment, claims can get rejected, denied, lost or paid incorrectly. 

Set Covered Services

Not all insurers cover all modalities of therapy or mental health services. There’s a possibility that you might have to take additional steps to get a type of service approved for reimbursement. 

Which Insurance Payer Do You Choose?

One of the secrets to enjoying the more perks and less drawbacks with an insurance panel is to choose the right insurance company. 

Paneling with every single company will take up too much time, and could actually backfire on you — you could end up with way too many clients being sent your way and get burned out, or even have to turn people away.  If you’re getting reimbursed a large amount per session, it might seem tempting, but realistically it can be more of a headache than its worth. 

Here are some tips to help you choose an insurance panel:

• Know the contracted rate
• Avoid payers who pay less than Medicare
• Ask other therapists about their experience with certain panels
• Know which insurers contract with the largest employers in your area

Private Practice = Private Pay?

If you’re a new therapist, or new to the private practice model, you might be wondering if private practice means clients have to self-pay. Opening a private practice does not automatically mean you need to use a private pay method. 

Private practice simply means you’re self-employed — you run your own clinic or practice, rather than working at a larger office as an employee. 

Meanwhile, private pay means you accept payment for your services directly from your clients. There are no insurers or paperwork involved; your clients simply pay you with cash, credit, or debit, etc. 

Benefits of Being a Private Pay Therapist

If you’d rather not deal with more administrative work than necessary or you just prefer not to work with insurance companies, then choosing the private pay model could be the best for you.

Below are some of the major perks you’ll enjoy with private pay clients.

Immediate Payments

What most therapists love about private pay is that you don’t have to wait for your claims to get approved. There’s no delay in receiving your compensation. Your clients show up for their sessions, and pay you the same day. 

Ability to Set Your Rates

Private pay allows you the freedom to set your own rates.  

You can choose to bill higher or lower than the average rates in your area and create a healthy income for yourself, depending on your goals. 

This can also allow you the opportunity to offer a sliding scale model to those that are lower-income. 

Greater Client Privacy

Less paperwork regarding your client’s health information and treatments getting sent to different places means more privacy. Some people just aren’t comfortable with having their mental health information available to anyone else, including their insurance provider. 

More Time With Clients

With less paperwork to submit to insurance companies, you can use that time instead for yourself, or to see more clients. If you take on more sessions, that increases your billable hours, which ultimately means more income for your practice. 

Greater Control Over Your Time

Insurance providers sometimes require a minimum number of clients you need to see within a period of a week or month. If you aren’t able to hit this number, this could potentially put your panel membership in jeopardy because you would be seen as less than profitable. 

Choosing the private pay option means you have more control over your caseload. You get to decide how many client’s and sessions you’d like. There’s no quota to meet and you don’t need to stick to 53+ minute appointments to bill for code 90837. 

Limitations of Private Pay

So far, setting up as a private pay practice seems like it's all rainbows and butterflies, but it does have some limitations. 

Need To Build Your Own Referral Network

With private pay, you won’t receive referrals from other credentialed providers on the panel. You’ll have to build your own referral network. If you’re a newly practicing therapist, this means you might be building your network from scratch.

Less Diverse Client Base

Private pay can expose you to a wider potential client population since you aren’t limited to the people who are covered by the insurance company. Ironically though, there’s a higher chance your private pay client base will have less diversity potentially in terms of race, economic status, and more.

More Challenge in Getting Low-income Clients

It’s often more difficult to accept low-income clients when you have a private pay fee schedule. This is because many of them rely on employer-provided coverage to afford various health services, including therapy.

The Wild Card: Superbills

If you thought you had to choose either or, that's not necessarily the case. It’s possible to get the best of both worlds in some situations. 

If you decide to become a private pay practice, you can opt to receive insurance reimbursement as an out-of-network provider at the same time. The key to this is using superbills.

Superbills are itemized invoices that you provide to your clients, so that they can submit this to their insurance provider. Just like you would with in-network claims, you’ll need to use the appropriate billing codes and provide documents showing the necessity of the treatment.

This option can be convenient, because you don’t have to deal with the insurer directly – that’s your client’s responsibility. You would also receive payment for the sessions upfront as any insurance reimbursements would go directly to the client, not to you. 

Clients might come to you seeking your assistance with submitting their superbills, or needing to make edits so that they will go through with their particular insurance company. You may also need to explain how the process works with out-of-network benefits.

We understand that explaining and calculating out-of-network insurance payments can be a challenge, so we created an out-of-network insurance calculator to help make things easier. With this tool, you’ll be able to communicate better with your clients about the reimbursement process and help them feel empowered to make decisions regarding their healthcare. 

Should a Therapist Get Credentialed by Insurance?

Making decisions for your private practice can feel difficult at times — especially ones that could directly affect your income. 

We understand that it can all feel overwhelming, especially if you’ve found yourself as a new therapist and business owner all at once. 

If you’re looking for more support, and a place you can go to for guidance from experienced mental health professionals — joining a community like Clarity Cooperative can help you. Here, you’ll meet other like-minded practitioners from all over the country in every stage of their career. 

We also have a large library of essential resources to help you become more confident in growing your business. All of our comprehensive how-to guides, including the practice toolbox, and calculators are available to you. Check out our Pro subscription with a free 30 day trial today and give our out-of-network insurance calculator a whirl.