How to Navigate Private Pay vs. Insurance for Clients and Patients

Whether clinicians in private practice choose to accept private pay, insurance, or individualized payment plans for clients and patients (who may become out-of-network or lose coverage mid-treatment), it’s important to explain billing practices clearly and in some detail at the onset of treatment or continuing services.

Understanding the differences between private pay vs. insurance options

Imagine this scenario: you’re in an intake with a potential client or patient who is in crisis.

She’s crying, visibly shaken, and wants to share what’s been bothering her. Do you ask her to pause so you can explain your practice policies, including, and especially your payment policies?

The answer is yes, though be sure to interrupt as kindly as you possibly can.

As Gutheil and Gabbard said, “Money is a boundary in the sense of defining the business nature of the therapeutic relationship. This is not love; it’s work.”

Discussing money with anyone can be uncomfortable, but it’s especially so when you’re talking to someone who needs your help. However, charging for services is what initiates the boundaries of a professional client-counselor relationship.

To be seen as a professional, rather than a friend, it’s important to set up clear guidelines and boundaries when it comes to private pay, insurance, and fees or collections.

It’s the same reason why you set a clock on appointments. In your early days, without using a clock, you might’ve let a few sessions go on for hours because you didn’t know how to end them. Oops.

What is private pay?

Private pay is a monetary transaction for counseling services provided that takes place directly between a counselor and her patient.

If you’re accepting private payments in your practice, your prospective clients will want to know the rate you charge for a session. Setting up a fee schedule can be difficult, so it’s important to investigate the going rates of other therapists in your local area.

One benefit of private pay compared to billing insurance is that you’ll be able to set your own rate, which is often higher than what you’d receive from insurance companies. When deciding on the fee, don’t under-or-over sell yourself. Make sure the rate is something you’d feel comfortable paying yourself.

Private payment policies should be indicated clearly in your informed consent paperwork, and it’s worth the effort to include a clause that notes that fee structures are revised yearly, and rates may change, but only at that time. Also, have your clients sign the payment policies, agreeing that they have read the rules, accept the rate of pay, and understand how you bill for treatment.

One of the many reasons why private payment options work well in the private practice setting is because your clients may lose their health insurance after treatment has begun. Similarly, plans often change, and while you may have accepted their primary insurance, any variations in the policy may mean that you become an out-of-network provider.

Receiving private payments allows these clients the option to continue services with you, instead of leaving your practice and finding a new counselor who does take their insurance.

What does billing insurance look like?

While some clients may wish to pay out of pocket, others may come to treatment covered by their medical insurance.

If you choose to accept insurance payments, you’ll likely collect a copayment from your client, and then bill their insurance provider for the remainder of their treatment.

It’s your responsibility to contact the insurance provider to find out the dates of coverage, what exactly is the mental health coverage option on each policy (i.e., how many sessions can you bill for annually), and any information necessary to know about billing.

Quick tip: Make sure to find out if the client’s insurance runs on a calendar year or a plan year. If it’s a plan year, know the dates of coverage so that you aren’t billing for sessions for which the insurance won’t pay.

Using insurance, your clients will receive a receipt for their copayment, but you most likely won’t be sending them a bill in the mail (that is unless you’ve agreed to collect a copayment at a later date or a balance is due). A client may, however, request a statement or a superbill for their records or to submit to their insurance company for possible reimbursement for services.

How SimplePractice streamlines running your practice

SimplePractice is HIPAA-compliant practice management software with everything you need to run your practice built into the platform—from booking and scheduling to insurance and client billing.

If you’ve been considering switching to an EHR system, SimplePractice empowers you to run a fully paperless practice—so you get more time for the things that matter most to you.

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READ NEXT: The Pros and Cons of Accepting Insurance and Joining Insurance Panels