Why So Many Therapists Don’t Take Insurance Anymore — Especially in Massachusetts

In this article, we’ll go over the top reasons therapists don’t take insurance. 

Administrative Burden 

Insurance is hard for patients and providers to use.  For patients, it can be hard to understand if their therapist is in-network with the specific insurance plan they have.  Then they need to understand their deductible, co-pay, and out-of-pocket maximum.  Even if a patient is paying several hundred dollars a month for their insurance, and they have a low co-pay for office visits ($20 or $30) they might be paying upwards of $100 a session until they meet their deductible. 

For therapists, they need to set up contracts with each insurance plan.  The applications are arduous and take time to process to such an extent that there are credentialing professionals that specialize in helping therapists complete these applications.  Credentialing professionals charge money that may be unaffordable for therapists who are new to private practice.  Therapists also have very little ability to negotiate their rates with insurance companies. 

Each insurance company has their own system for requesting reimbursement, and the time it takes the therapist to submit the claim is not time the insurance company pays for.  Larger agencies will often staff a full-time billing provider to manage the claims submission and claims revision process, but this is not feasible for someone in solo private practice. 

Low Reimbursement Rates 

The reimbursement rates for therapists are low and increases have not kept pace with inflation.  This means therapists need to see a larger number of patients a week in order to afford a living wage.  When I worked in a community mental health clinic and saw patients with all different insurance types, I was required to see 40 patients a week in order to stay benefit eligible.  This did not account for the time I spent outside of sessions writing progress notes and treatment plans or talking to patients and their family members on the phone.  This meant I was working 50-60 hours a week, but only being paid for 40 hours. 

A study led by Dr. Carina Vocisano which collected data on therapist and patient outcomes from 1996 to 2014 found that therapists who saw fewer than 25 patients a week had better clinical outcomes than therapists who saw more than 25 patients a week. Therapists who saw more than 25 patients a week were also at a greater risk for burnout and emotional exhaustion. 

In writing this article, it was difficult to find validated examples of what the reimbursement rates for different insurance plans actually is.  Insurance companies do not publish this information, and they prevent therapists that have contracts with them from disclosing this information, under risk of losing their contract. 

Delayed Payments and “Clawbacks” 

Insurance companies do not pay claims in a timely fashion, with some plans taking up to 90 days to pay the therapist for work completed.  This is not a realistic financial model for self-employed therapists, especially those that are the financial head of their household. There are some companies, like Alma or headway, that act as an intermediary between therapists and the insurance company.  The therapist documents the work they have performed, and the platform submits the claim on their behalf, and pays the therapist directly once the therapist completes their portion of the work.  In exchange, the platform charges a monthly fee and keeps a portion of the claim.  These platforms don’t disclose what portion of the claim they are keeping, but they can be a good option for therapists who want to take insurance but want to reduce the administrative burden, but it does involve accepting a lowered rate.

“Clawbacks” refer to a practice where the insurance company has already paid the claim, and then months or even years later conducted an audit and determined that the therapist violated the contract (usually in some very minor way) and then “claws back” all of the money they paid.  This means a therapist might suddenly lose $30k.  The most common reason for a “clawback” is the insurance company saying that the patient was not mentally ill enough for therapy to be justified. For example, if a patient starts going to therapy because they are depressed, and therapy helps improve their depression, and they stay in therapy in order to maintain their progress, their insurance company might say this doesn’t meet their “medical necessity” criteria. 

Diagnostic Requirements 

Insurance companies require therapists to provide a mental health diagnosis in order to say that a patient meets what they call “medical necessity” criteria.  As a sex therapist, this can be challenging, because someone might be coming to talk about their sexual health, but might not meet the criteria for a specific mental illness. For example, let’s say I’m doing relationship therapy with a married couple who want to talk about revitalizing their sex life after having children.  They’re struggling with a very normal developmental milestone, there’s no “mental illness” that means “we haven’t had sex in a while because we’ve been busy raising our family”. 

Limits on Sessions 

Insurance companies may set caps on how long a session can be, or how many sessions a year a patient is able to access. This might vary based on diagnosis, but this is information that can be hard for patients and providers to access, which means that they can suddenly be notified that their benefits have run out and they need to stop seeing their therapist until the limit re-sets the next calendar year. 

Documentation Requirements 

Therapists who take insurance have lots of different rules they have to follow regarding how they document sessions and a patient’s progress in treatment.  These rules are cumbersome and may include documenting things that the patient and therapist do not find helpful.  For example, a therapist might find it helpful to write down the new things they learned about the patient’s history, but the insurance company would rather see specific examples of how the therapist is measuring the severity of the patient’s symptoms and what specific coping skills they are teaching for treatment. 

Privacy Concerns 

In the contract patients sign with their insurance company when they sign up for a particular insurance plan, they give their insurance permission to communicate with and request records from their healthcare providers.  This means representatives from your insurance company can read the very personal notes your therapist keeps about the details of what you talk about in therapy. These records can be used to review whether or not your sessions meet medical necessity criteria, but they are not necessarily going to be reviewed by someone with a similar level of education and expertise as your therapist. 

Though privacy laws prevent this, patients are still apprehensive about their private medical information being shared with their employer, especially if their employer is subsidizing their health insurance plan.  And certain jobs (like those with certain types of security clearance) might have legal options for accessing medical records. 

Having Insurance Doesn’t (Necessarily) Make Therapy Affordable

As plans with high deductibles become more common, patients may be stuck paying the max allowable visit charge for most of the calendar year.  The “max allowable visit charge” refers to the insurance company’s definition of how expensive they think a session should be.  It will usually be slightly lower than the therapist’s self-pay rate, and it will be much higher than the co-pay the patient was expecting to pay.  We know of an example where a patient had a $30 co-pay for office visits and $60 co-pay for specialist visits.  The insurance company said that any visit that took place over telemedicine was automatically a “specialist” visit, so the patient was already bracing for a co-pay twice as high as they first expected.  Then they were told they actually had to pay $134 a session (their plan’s “max allowable”) until their deductible was met. In practice, this meant paying $134 a week for twenty-two weeks out of the year. 

What Does This Mean for Patients in Massachusetts? 

As more therapists opt out of taking insurance, it can be harder to find a therapist who is in-network with your plan.  Insurance companies have also been criticized for maintaining what is colloquially called a “ghost network” which refers to the practice of maintaining lists of providers that they know are out of date, in order to save money. 

Many therapists (myself included) believe that the therapist and patient should direct the course of treatment, not insurance companies.  We believe we are able to offer better quality services when we spend more of our time on our patients, our continuing education, and our own mental wellbeing.  We believe opting out of insurance helps us protect patient privacy and run a more sustainable business that ensures we can be available to our patients long-term. 

We hope this article helps you understand why many therapists, including us at The Pomegranate Institute, choose not to take insurance. If you're looking for a sex therapist in Massachusetts, click here to book a consultation.