How To Decide Between Taking Insurance & Private Pay - 5 min

The purpose of this article is to shine some light on the differences between the two models and its pros versus its cons.

If you’re thinking about switching between the two or if you’re just starting out and haven't given this a thought yet then this article is for you.

At the very heart of your practice is the results of your clients. reaching them & helping them.

Your practice is also a business and without income there will be no helping people.

So giving a serious thought about how you want to get that income is a major decision.

It’s quite common to just default into thinking of course I’m going to accept insurance because everyone does. That’s far from being the case, but furthermore your practice is YOUR business and it’s a good idea to have considered the different business models.

Typically when starting out there are others you might know or have had your eyes on to model and they will typically be accepting insurances so to many it seams like this natural step which is part of the process to open a practice to get credentialed and accepted by insurance companies.

Taking Insurance

For this to be an option in the first place you must follow the process leading up to being accepted as a service provider for the insurance companies.

This doesn't happen overnight.

This process is basically a two step rocket. First of you will need to follow the process of becoming credentialed with the insurance companies. This is a time consuming process. 

A popular alternative is to go for the CAQH database given that they are one of the biggest credentialing clearinghouses.

Once you get your account there or in a similar place you go hunting insurance companies, looking for those who are taking in new providers. 

The entire process ends with coming to an agreement about what rates you will be allowed to patients from their network and then signing of this contract.

And so this is a time consuming process but once everything is in place patients come to you with their insurance cards and pay the “co-pay”. To collect the money from the insurance company from the session you file a claim. Within a 45 day period the insurance company will act on it.

So if we boil down insurance pay it’s a time consuming process to get started and once in place the majority of your cash will be collected up to 45 days after the actual session was held.

You are not allowed to charge rates outside of the agreed rates from the contract with the insurance company. 

Basicly the insurance company are your employer.

So why should one go for this model?

Insurance pay - Pros and cons 

Pros

• Get quick referrals that are generated by the insurance carriers
• Some people are not ready to invest personal money into therapy
• Use of health insurance is the norm for receiving mental health care nationally
• Good options for practices in rural communities
• A greater diversity of clients
• Gives the practice some credibility in that the insurance company has credentialed you
• Lower cost for the client
• Other professionals (doctors) will refer to others in their same networks
• Gives lower income clients an opportunity to use your services

Cons

• Credentialing process is tedious and time consuming
• Filing claims is an extra burden and time consuming
• You’re stuck with insurance companies as your employer
• Rejected claims stop you from being paid in a timely manner
• Ultimately requires having to have other software and systems in place
• You are “stuck” with having the insurance companies determining your reimbursement rate for their patients
• Might require having a medical billing or other auxiliary staff to handle filing claims

There are some points on both sides worth considering when you decide on what fits you, your vision and your goals.

Private Pay

This might seem like a “scary” option for some because you don’t have a designated stream of clients like an insurance company would be for you.

The other side of this coin is all the freedom it provides.

You are in charge of your own rates.

You are in charge of who you accept as a client.

When I started working with couples I decided right away that private pay would be the model because I wanted my rates to represent the complexity of the problem I solve.

Ultimately I felt that I wanted my work to fully express my vision and not anyone else's.

I also wanted the freedom of qualifying my clients to determine who are really ready to go now and to do the work to get the results while understanding that they need to have some financial “skin in the game”.

Private Pay - Pros and cons

Pros

• You can charge what is fair in relation to the complexity of the problem you solve, with higher average rates per session
• No delays in getting paid for services
• A lot less admin work
• Will be more appealing to clients of higher economic standing

Cons

• Requires that you educate clients on not using insurance
• Might lose clients that are searching for a therapist that will take their insurance
• Potentially smaller referral source pool
• Rural and lower socioeconomic communities will have limited access to services (IF they are not at all working online)
• Limits taking on many low income or people that depend on insurance coverage
• Smaller diversity of clients

As you can see there are some compelling points on all different sides and the question is what resonates with you and are inline with what you want to achieve with your practice.

Important to note though is that there are no right or wrong way to go, the are simply different.

Some want to start of with a sure stream of clients from insurance and some want to start with more freedom.

Also important to note is that for some it will make perfect sense to make a switch from an existing insurance pay model into private pay. Because right now you might be looking to grow but know that more clients is not the way forward, but rather who you work with and at what rates.

If you’re right now thinking that you want to move towards a private pay model but are not sure about how to market & sell your service then I would encourage you to watch the training video I’ve put together.

Click the link below to learn more now:

https://undisputedprnrecovery.com/case-study