Payment Methods for Therapy Besides Health Insurance

Health insurance networks can be a great way for therapists and clinicians to connect with potential clients and build their practices. 

Additionally, health insurance plans enable many patients and clients who may otherwise not be able to afford therapy and mental health treatment to get the care they need at a more accessible and affordable cost. (And, did you know that SimplePractice can help simplify insurance claims for therapists?)

All that said, insurance isn’t always the best option for everyone. Depending on the circumstances, there can be a number of drawbacks to the insurance model, both for therapists and for clients. Unfortunately, these drawbacks can be potential deterrents or roadblocks to Americans getting therapy and the mental health services and support they need.

The good news is, insurance isn’t the only way to pay for therapy. 

There are a variety of payment methods for therapy besides health insurance—many of which can be a better option, both for the therapist and the client.

But, what, exactly, are the potential downsides of paying for therapy with insurance? 

And, if you do decide not to choose the insurance route, what other payment options are available?

The downsides to health insurance for therapy

Again, in certain situations, insurance networks can be a great resource for facilitating therapy. But going through insurance can have potential downsides—both for behavioral health therapists and for clients.

Some of the drawbacks of therapy practices accepting insurance include:

Treatment limitations

When therapists accept insurance, they’re approved to provide specific services—and are limited strictly to those services. So, if they practice a different modality or type of therapy that might benefit a patient, when they’re going through the insurance networks, they wouldn’t be able to provide that service.

Low reimbursement rates

The rate at which insurance companies compensate therapists can be extremely low—which means the therapist isn’t generating as much income per session as they would if they were using other payments. This can cause providers relying on insurance billing to pursue quantity—and seeing a higher volume of patients—over quality of care.

Extra time

The process to get approved for an insurers’ preferred provider panel can be a long one. Plus, once you’re approved, actually filing insurance claims can also be lengthy and tedious. And sometimes, those claims get rejected, which requires more time and effort to navigate—all of which create more work for the therapist.

Payment delays

When therapists accept insurance, they have to wait until a claim is approved to get reimbursed—which can take anywhere from 30 to 45 days (or more). If the therapist opts to provide out of network coverage, then the client will need to submit a superbill to their insurance company and get reimbursed for their care—which can also be a time-consuming process.

Required reporting of diagnoses

If a therapist accepts insurance, they’re required to submit documentation to the insurance companies—including any diagnoses, which then officially become part of a client’s medical record. For clients concerned with privacy, this can be a major drawback.

Little to no cost savings

In some situations, insurance can make therapy more affordable for patients. But that’s certainly not true in all situations—and in fact, self-pay can actually be a cheaper option for patients in certain situations. (Self-pay can also provide a higher reimbursement rate for providers—making it a win-win for both parties.)

Clearly, insurance isn’t always an ideal solution for covering the cost of therapy. The good news is, there are plenty of other options—options that can help therapy providers customize their treatment and, ultimately, better serve their clients.

So what, exactly, are those options?

Alternative payment methods for therapy

Beyond health insurance, there are a variety of payment methods for therapy. 

As a mental health clinician, psychologist, or therapist, you may consider offering these alternative payment methods to your patients. 

And, if you’re a client, you may consider asking providers about those payment methods when seeking treatment.

Private pay

With private pay, therapists set a rate for their services (for example, $160 per session)—and then clients pay that rate out of pocket, either by cash, check, credit card, or a digital payment method (like PayPal, Square, Stripe, or Venmo). 

Generally, payment is due at either the beginning or the end of each individual session. However, some therapists may invoice for multiple sessions at one time.

There are a number of benefits to private pay, both for providers and clients, including:

• Simplicity. Private pay is an extremely simple payment therapy method. The therapist sets the rate, and the client pays that rate—without any time spent waiting for reimbursement or navigating insurance claim paperwork. 
• Continuation of care. If someone is using insurance to pay for therapy—and then, later they lose that insurance, perhaps due to an unexpected job layoff—it’s possible they may no longer be able to see their therapist. With private pay, the client can continue working with their provider at their agreed upon rate—regardless of their insurance situation. 
• More freedom. When therapists aren’t bound by insurance networks’ rules, it gives them flexibility to customize treatment plans to best suit their clients’ needs (for example, by incorporating different modalities or increasing the number of sessions when a person is in crisis.)
• Privacy. With private pay, therapists aren’t obligated to report diagnoses or other information to the insurance companies. This can keep sensitive information out of a client’s medical records. (It should be noted that therapists accepting private pay are still obligated to break client confidentiality to report certain situations, such as if a client is a danger to themselves or others.)

As a therapist, if you decide to move forward with private pay, it’s important to explain your payment and billing practices to your clients from the get-go—that way, they understand their financial responsibility prior to starting treatment.

Individualized payment plans

With private pay, therapists set a standard rate for their services. But not every client may be able to afford a therapist’s standard rate, and, in order to serve those clients, some therapists offer individualized payment plans.

Individualized payment plans adjust the cost of a session based on a client’s income and/or ability to pay for treatment.

There are a few different ways to structure payment plans, including:

• Using a sliding fee system. A sliding fee (or sliding scale) plan is a fee structure that discounts treatment based on a client’s income and dependents. With a sliding scale structure, therapists set a standard fee—and then use a formula to calculate how much to reduce treatment costs based on the client’s financial situation. (Generally, the therapist will ask to see documentation to confirm the client’s financial status before approving them for a sliding fee payment plan.)
• A “pay what you can” plan. A pay what you can plan is significantly less formal than a sliding scale. With this individualized payment plan, therapists set a standard rate. Clients that can afford that rate pay that rate—and clients that can’t afford the standard rate pay what they can for treatment. With this model, the reduced rate is generally agreed upon by the therapist and the client—with the therapist trusting the client is, indeed, paying as much as they can afford for their services.
  

As a therapist, when you offer individualized payment plans, it’s important to recognize that your clients may be dealing with some financial challenges. As such, you’ll want to offer them as many payment options as possible (for example, paying with a credit card—in which case, you’d need to have a credit card processing system for therapists in place for billing.)

Membership plans

Another payment option for therapy? Membership (or subscription) plans.

With a membership model, clients pay a monthly fee to access specific provider services. 

Some providers may offer a tiered subscription model, where clients access different services based on how much (or how little) they pay each month. For example, one membership level might include four sessions per month. While a more expensive membership level might include eight sessions with the provider per month.

While this model isn’t the right fit for all providers, it does work extremely well for certain types of treatment—for example, physical therapy or regular nutrition work with a dietitian.

If you’re a behavioral health therapist considering including memberships, make sure to research any potential legal implications that may come along with a subscription model. For instance, if you do work with insurance companies, you could run into issues with package pricing.

Healthshare plans

Healthshare plans are plans offered by medical cost-sharing organizations. These organizations (which are typically faith-based) allow members to pay a monthly membership fee, and that money is deposited into a shared account. Then, when the member needs care—for example, therapy—they are then reimbursed from that shared account to cover their expense.

Healthshare plans are often cheaper than traditional insurance. So, if you’re a therapist looking for a low-cost way to provide treatment to your clients, this could be an option to explore.

Promotional discounts

If you’re looking to build your therapy practice, offering a promotional discount—such as 15% or 20% off your session fee for a new client’s first two sessions—can be a great way to get new clients in the door. 

From a client’s perspective, getting a discount on therapy may even incentivize them to seek treatment in order not to miss out on the savings. 

There is one thing for practitioners to keep in mind about promotional discounts: If a client starts treatment with the discounted session price, they could get “sticker shock” once your promotion ends, so make sure to talk to them about how and when rates will increase to ensure they’re prepared.

Make billing easy with SimplePractice

No matter what payment methods you decide to offer your clients, as a therapist, you want to make billing as simple as possible. SimplePractice can help.

Over 160,000 private practice clinicians use SimplePractice as their HIPAA-compliant practice management software to effectively run their practices—with everything including billing, insurance, scheduling, and a client portal—in one easy-to-use platform.

SimplePractice can help you simplify your private practice—and create more time for you to spend doing the things you want to do. Try a free 30-day trial–no credit card required.

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