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The Pros and Cons of Out-of-Network vs. In-Network Insurance

January 3, 2023

Therapy Coverage

The challenges of dealing with mental health insurance in the United States often force us to ask this question: can we make therapy affordable for clients without cutting therapists’ salaries? 

Why insurance matters to mental health access

Accepting insurance can greatly increase the number of patients that a therapist can serve and can make mental healthcare more affordable for patients. However, only 55% of mental health care providers and therapists take insurance. This is substantially lower than the national average of 89% for other health care professionals. This low rate of insurance acceptance combined with a chronic national need for mental health services has created a mental healthcare crisis across the country. 

As published in JAMA Psychiatry, the Centers for Disease Control and Prevention estimates that 25% of Americans report having a mental illness and about 50% of all Americans will experience mental illness at some point in their life. Yet, despite this chronic need, accessing/providing high quality mental health care services remains a challenge for patients and therapists alike. This is due largely to the administrative headache of submitting mental health bills for insurance reimbursement, which can quickly become a nightmare causing many therapists to work exclusively out-of-network. 

Insurance options for therapists

Therapists have two options for dealing with a patient’s insurance for therapy – accepting insurance for therapy or staying out-of-network. Below we summarize each option and highlight some of the top points to consider when trying to make the decision about what’s right for you and your practice: 

1) Be an Out-of-Network Provider - Therapists may opt to work exclusively out-of-network, freeing them from the confines of fee schedules and contractual obligations and putting the burden of submitting claims on their clients. Alternatively, they may opt to submit claims on behalf of their clients and use services such as Nirvana, which offers a suite of tools to streamline billing and insurance operations for therapists, from client eligibility checks to claims submission to real-time claim statuses.

2) Join an Insurance Company's Provider Network (“Panel”) - If a therapist would prefer to receive reimbursement directly from their patient’s insurance company, they can opt to join the insurers’ preferred provider panel. However, this can require therapists to navigate a burdensome application process and take months to finish. The positive is that once a therapist has been registered with the insurer they can be paid directly by the insurance company and patients are often spared the task of paying out of pocket and submitting Superbills. 

5 pros of taking insurance

There are five primary benefits a therapist might consider when deciding whether to accept insurance:

1. Improved client retention. Clients can be more likely to stick with therapy if their care is covered by insurance because it can increase affordability.

2. Expanding your client base.  Accepting insurance can attract a more diverse client base, because they can find you from the insurance company's website and provider directories.

3. Increasing mental health care access. Accepting insurance can allow clients who otherwise would not be able to afford care to access services via programs such as Medicaid. 

4. Validating your credibility. Many clients view a therapist who accepts insurance as more trustworthy than a therapist who does not.

5. Increasing your revenue. Accepting insurance can increase a therapist's client roster, which in turns helps to increase a practice’s profits while simultaneously enabling clients to continue with their therapy for as long as needed.

5 cons of taking insurance

Accepting insurance may not be right for every therapist and every practice. 5 particular cons to be considered when making this decision are:

1. Reimbursement timelines can be unpredictable. In-network providers may have to wait up to 90 days to be paid for a session. Conversely, a client receiving care from an out-of-network provider may wait up to 4 weeks to receive reimbursement for their session.

2. The approved insurance rate may be less than the therapist’s rate. In-network providers may have a hard time negotiating a fair fee schedule for their services, and may get stuck being paid under market rate per session. Similarly, there can also be caps to the amount an insurance company will reimburse for out-of-network therapy, leaving a client with a high net cost per session. 

3. A mental healthcare service may not be covered by insurance. As we know, all insurance plans are created equal. Some plans do not cover mental health in general, or won’t cover routine services without an approved authorization of medical necessity.

4. Submitting Superbills to insurance companies can be an administrative burden. Submitting a superbill is not always easy. Dealing with denials due to typos or missing information puts the client in the middle of their insurance and therapist, sometimes straining their relationship.

5. Joining a provider panel can be a time-consuming challenge. Insurance companies may have long waitlists to join their network, oftentimes prioritizing larger groups and facilities over single-therapist practices.

5 pros of being out-of-network

Now that you know the basics of working with insurance in general, let’s dive deeper into the world of out-of-network mental health insurance!

1. A therapist can specialize their practice. One of the most frequently mentioned benefits of being an out-of-network provider is that you can focus your expertise on servicing clientele with a specific mental health need or psychological condition versus having to focus on the general public.

2. A therapist has exclusive control over their rates. The therapist may decide how much, or how little, they may charge for their services without having to adhere to an insurance’s company’s pre-approved rate.

3. A therapist can be selective about their client base. Working out-of-network gives therapists the freedom to pick and choose their clientele.  

4. No paperwork to file with insurance companies. Clients, or a service like Nirvana, will submit the Superbills instead.

5. Instantaneous payments at the time of service. No waiting for payments from insurance companies.

5 cons of being out-of-network

The negatives of this approach can be: 

1. Learning curve for patients. Having to teach clients how to submit claims and Superbills to their insurance.

2. Patient acquisition falls on the therapist. Having to build and maintain a marketing plan for your practice to acquire clients instead of relying on a referral network. 

3. Retention risks because of learning curve. Clients (and indirectly, therapists) may find submitting Superbills too difficult and may look for in-network therapist.

4. Lag in reimbursement payment by the insurance company to your clients. In her own words Dr. Jessica Behr, a licensed therapist, describes her early days of working with her clients’ insurance: “I tried submitting [claims] myself. I would submit my Superbills to the insurance companies and would think everything was fine. But then three months later, I'd get bounce backs and find out that none of the claims went through. I remember the panic setting in and the confusion as I struggled to fill out the forms.”

5. Retention risk because of perceived expense. Before a patient is reimbursed by their insurance company, or even knows they can be reimbursed for a portion of the out of pocket cost of therapy, they may think the cost of out-of-network care is too high and may quit therapy or find a therapist who does work in-network.

Nirvana can help

Nirvana takes all of the hassle of dealing with insurance companies off  therapists’ and clients’ backs at an affordable price. Our unique out-of-network Reimbursement Calculator gives clients transparency around the cost of therapy. As a therapist you can also embed the calculator on your website so clients can check their benefits directly on your website. We are also building a new claims filing product that  your patients can use to submit their Superbills and be reimbursed directly. We will help patients with their claim questions (and any surprising denials) so they can get paid faster.

Nirvana's vision is to make mental health insurance coverage more understandable for patients so therapists can get back to what’s most important: helping clients. Contact our sales team today at sales@meetnirvana.com if you have any questions, or book an intro call to learn more about how we can help you save time and grow your practice.