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The Business of Private Practice
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Private Pay or Insurance Panels: Which Works Best for You?

By Deb Legge, PhD, CRC, LMHC

I’d say it’s about an even split—about half of the clinicians I work with go into private practice so they never again have to work with insurance companies. The other half go into private practice frantic to get on any and every panel that will have them.

Following are some pros and cons to consider when you are making your decision about whether or not to get on insurance panels.

  • Private pay doesn’t necessarily mean your clients can’t utilize their insurance benefit. Many clients have “out of network” benefits. That means they can be reimbursed for your services, and/or you can bill as an “out of network” provider and make more money than you would if you were a member of their insurance panel.
    • However, clients will likely have a deductible to meet and higher co-pays when they use this benefit, leaving them with a greater out-of-pocket expense.
  • There are trade-offs for taking insurance. Consider the time you’ll spend managing insurance billing, payments, authorizations, and collections. Factor that time into your overhead expenses.
    • However, you might do well if you outsource or automate these tasks to maximize your efficiency.
  • A private-pay practice may take a bit longer to fill. The pool from which you get your new clients will be smaller when you don’t take insurance.
    • However, you’ll likely be charging more per session and won’t need as many clients to meet your needs.
  • Taking insurance can make it financially easier for your clients. They will only have to worry about their co-pays when they seek services from you as a network provider.
    • However, with all of the changes we are seeing with the Affordable Care Act, many businesses are cutting costs by providing high-deductible plans for their employees (I’ve seen deductibles as high as $3,000 this year).Clients have to meet their deductibles before they can enjoy the benefits of their plan, so it doesn’t really matter if the provider they choose is in or out of network.

Your decision about whether or not to get on insurance panels does not 

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have to be “all or nothing” and it’s not carved in stone. You may want to do your homework and choose being on the panels of the one or two companies that make the most sense for you and the clients in your town. 

If you go this route, then at the same time, promote your private-pay services as well. Let people know that you are the best choice and let them decide. See how that works and go from there. You may find that as you increase your credibility, private pay is not as big of an issue for your clients as it is for you. Be confident, knowing you provide value to your clients. 

Clients will often take their cues about money issues from you when it comes to their mental health.

Earn CEs From New AMHCA Webinar Series on Practice Management Strategies

Every other month, Business of Private Practice columnist Deb Legge, PhD, CRC, LMHC, will present AMHCA webinars on private practice management strategies in AMHCA’s new webinar serices beginning in May. The first webinar is May 22, on "Compliance and Workflow Strategies: Top Tips to Protect Your Practice and Your License." 

Earn 1 CE for every hour-long webinar. Registration opens May 5.