“ There are several reasons why many therapists are not on insurance panels. Here are some of them. ”

Insurance and Psychotherapy

Why some therapists are not on insurance panels
As a subscriber, you might expect to be able to use your insurance to offset, if not cover, your health care, including mental health care. When a therapist you want to see is not on your insurance company panel, it may be puzzling. There are several reasons why many therapists are not on insurance panels. Here are some of them:

  • Intrusion into the therapy - In order for an insurance company to pay for your treatment, the therapist must document medical necessity, which includes describing your symptoms, history, and treatment objectives. The insurance company then decides whether to limit or deny coverage as a result. More >
  • Privacy/Confidentiality - Your diagnosis becomes part of your medical record. Once information goes into your record, your confidentiality cannot be assured. More >
  • Fee reimbursement - With steadily decreasing reimbursement rates, many therapists prefer to be out-of-network providers. This gives providers the flexibility to give lower fees to clients who do not have the resource of insurance. More >
  • Closed panel - Many qualified therapists, who would like to join insurance panels are excluded because the insurance companies limit the number of providers on their panels; the panels are "closed." More >

Recent History
Thanks to the 1996 passage of the federal Mental Health Parity Act, most insurance companies now include some coverage for mental health care, and are prohibited from requiring separate deductibles or different standards of care for mental health services. This was a positive step, which allows people to use their benefits without onerous limitations. With the implementation of the 2010 Affordable Care Act (ACA), we are entering another new era in health care and insurance. Some necessary changes are coming. During the transition, however, many mental health care providers feel the burden of cost-savings is coming more out of providers' income than out of hospital and insurance industry revenues.

What you can do
We can help shape this unfolding health care discussion by writing to our legislators, voicing our concerns to our insurers and employers' HR departments, supporting the efforts of the Coalition of Mental Health Professionals and Consumers, and generally bringing out these issues for discussion.

Here are some useful resources for keeping up to date on the discussion:
Affordable Care Act: http://www.healthcare.gov/law
The Washington State Coalition of Mental Health Professionals and Consumers: http://www.wacoalition.org

Definitions

  • 'On panel' or 'in-network provider' or 'preferred provider': the therapist has a contract with the insurance company and agrees to accept a lower reimbursement set by the company. Therapists are not permitted to accept payment from patients over the set co-pay or co-insurance set by the insurance company. While all licensed providers are eligible legally to be paid by insurance companies, the insurance companies limit the number of providers on their panels.
  • 'Allowable' or 'usual and customary': the set amount determined by the insurance company to reimburse a provider for treatment. In Seattle, several of the local major insurance companies have set this amount at 30-40% below local going market rates.
  • 'Off-panel' or 'out-of-network provider': the therapist doesn't have a contract with an insurance company. The patient is responsible for the difference between the allowable amount and the therapist's full fee, a greater out-of-pocket cost.
  • Medical necessity: criteria by which the insurance company determines eligibility for reimbursed treatment, usually based on a diagnostic code.
  • 'Closed' panel: when an insurance company is no longer accepting additional therapists on to its list of contracted providers, its panel is considered closed.

Additional Details on Insurance and Psychotherapy

Intrusion into the therapy
In order for an insurance company to pay for your treatment it must establish that treatment is medically necessary. Necessity is established based on your symptoms, general functioning, and a diagnosis determined by your therapist. Sometimes a treatment plan is also required. Increasingly insurance companies are weighing in on what they believe should be an adequate number of sessions for particular symptoms and circumstances. Sessions in excess of their determination may be denied, and an appeal is necessary to challenge this. Further, one large local insurer is tagging therapists who deviate from their standard as "high utilizers." The long-term consequence of this new practice is not yet clear.

For such reasons, therapists feel pressure from insurers to be specific and treatment-goal focused. This can contribute to some difficult circumstances, including having conflicting interests as a result of this pressure. A therapist might overly direct the conversation to stay "on task," foreclosing or limiting the space to let as yet undefined issues come into the conversation, or she or he might consider whether to nudge a client out of therapy because of concern about his or her reputation with the insurer, rather than allowing the client's needs to guide the therapy and termination process.

Privacy/Confidentiality
Your diagnosis becomes part of your medical record. Although insurance companies must protect your information both because of ethical practice and the Federal HIPAA law, there are circumstances under which various entities have access to your record. For example, when you apply for life or disability insurance, you are required to give a blanket release for all medical records. You may then be considered ineligible for such insurance because of the diagnosis that was used to describe your need for therapy. Many forms we sign in a variety of situations included blanket releases we may not question or even remember.

For some therapists this is one of several reasons to avoid insurance panels.

Fee reimbursement
Insurance reimbursement to many providers, including psychotherapists, has been going down steadily in recent years.

If a therapist is on an insurance company panel, this means she has agreed to accept a significantly reduced "allowable" fee for the subscribers of that insurance. The savings to the patient is achieved by lowering payment to the provider.

This reimbursement issue impacts therapists' capacity to lower fees for low income or uninsured patients, as therapist income is already reduced dramatically. Ironically patients who have the resource of insurance ARE our low fee clients, even though some of our insurance clients may actually be relatively or very wealthy.

Closed panel
One advantage of seeing an 'out of network' therapist is that you're not limited to a relatively small pool of providers. You're able to choose a therapist from a much larger pool, based on a good clinical fit, location, and other considerations. In these situations, the therapist is allowed to charge her full fee, so your out-of-pocket expense will be greater than if you saw an in-network provider, but still less than if you had no insurance.

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