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Cautions In Using Insurance For Mental Health Treatment


While insurance is beneficial for medical issues, not so much for mental health…

While there are a very few insurance providers we are on panel with, we are increasingly moving away from accepting insurance on in-network basis. We support a self-pay model where patients pay for each session at the time of service. As a courtesy, we will submit to your insurance on an out- of -network basis where you will be compensated at the maximum allowable amount in accord with your insurance plan’s policy.

There was a time when we were on panel with a multitude of insurance panels, we get calls invariably asking if we participate with their insurance. The simple answer is “no” we do not accept or participate with any private insurance. It is often difficult to explain to these clients why we do not in the brief time we have them on the phone. In that time, we do our best to educate them about the pros and cons of using their insurance for mental health treatment. Some of the individuals who recognize the benefits of NOT using their insurance move forward immediately and schedule an appointment. Those who are only looking to use their insurance often decline and attempt to call other facilities or clinicians who participate with their insurance, only to call back because there is often a several months wait list for providers who are in-network with their insurance.


I have heard stories from new clients at our practice who have utilized their insurance in the past for mental health services. They report shock and dismay to learn that mental health is not covered outright, or only “authorizes” a few sessions and most were completely unaware of their outrageous deductible, co-pay and coinsurance. Just last week a colleague practicing for another office told me about a client who called the office outraged because they received a bill for over $900.00. After reaching out to their insurance company, the clinician explained that they had a $4,000.00 deductible, and the client became very upset and never returned to therapy.


Most patients are surprised to learn that in order to use your health insurance for mental health services, you MUST be diagnosed with a bonafede “mental disorder”. Further what this means is that your mental health condition is negatively affecting your social and occupational functioning on a daily basis.

Now while we certainly treat the whole gamut of mental disorders, many of the reasons people seek our services are for help in managing life difficulties, not necessarily a diagnosable mental illness. In this case, your insurance is not going to cover treatment. In other words, whether a clinician is in-network or not, if you do not have are not diagnosed with a “mental disorder” your insurance is irrelevant. A common reply is, ok diagnose me with something. However, mental health practitioners have a code of ethics to follow and any therapist worth their salt will not simply diagnose you with a mental illness you do not have for the sake of kowtowing to insurance. Unfortunately, there are clinicians out there who will offer up an “adjustment disorder” or an “unspecified” depressive or anxiety disorder. The clinician may justify, this by thinking they are “helping” their client. This is NOT the case, it is unethical to falsely diagnose someone and those who do so are committing insurance fraud. These are signs that the clinician and/or practice is not guided by integrity and is not likely interested in providing the highest quality of care possible to their clientele.

Couples Therapy

Couples therapy is an area that illustrates the issue. Couples therapy proper is generally NOT covered by your insurance whether a provider is in-network or not. Let’s take a closer look at this issue. There is no procedural code explicitly for couples or marital therapy. In fact, the exact code is listed as “family fsychotherapy with patient present.” This means the identified patient is the person whose insurance is being billed, has a diagnosed mental illness, and the understanding is that your partner is present as a support to you in treatment. As you can see, this is NOT couples, therapy that helps each person in the relationship gain insight into their relationship, resolve conflict, build trust and improve relationship satisfaction. Yet, this is exactly what clients in dealing with relationship crisis, infidelity/unfaithfulness, sexual issues, trust, communication and the like reach out. Now while there is a “V-code”, listed as “counseling for marital and partner problems,” this typically rejected by insurance companies for not being “medically necessary”.


The rule of thumb for insurance companies only pay for services that are considered “medically necessary” (more on this below).

A primary goal of the insurance company is to contain costs, and one big way of doing this is by only providing coverage for services that fit into a nebulous matrix they deem what they see as “medically necessary”. This is an important concept as insurance providers will only pay for services determined to be medically necessary and will stop paying as soon as services are no longer medically necessary. An important component of medical necessity is being diagnosed with a “mental disorder”. Without a diagnosis, they will not provide coverage or reimburse for therapy as it is viewed as NOT deemed medically necessary. A significant amount of our clients reach-out seeking therapy out for help coping, managing stress, grief, relationship distress, life coaching, but unfortunately these services are simply not covered.

The second piece of medical necessity entails functional impairment, which means significant impairment in managing our social and occupational responsibilities. As such, without a diagnosable mental disorder and impaired functioning your claims will be denied and services will not be covered. Second, the illness must be causing significant functional impairment. Without these factors present, it is likely the insurance company will deny paying for your services whether a practitioner is “in-network” or not.

FYI: you may not know that you could potentially lose the ability to obtain affordable quality health insurance, or worse any health insurance at all, because you want to use your health insurance to pay for therapy?


Any documented mental health treatment that is filed through your health insurance will go on your permanent medical record. This can have a significant impact on your future ability to obtain any health insurance coverage at all. In the event that you are able to secure insurance with mental health treatment on your record, your insurance premium, deductible, and co-pays are likely to be much higher. This is a serious concern to everyone processing health insurance and is considering utilizing it for mental health treatment.


It is not uncommon for therapists to share the “limits of confidentiality” with their clients at the beginning of treatment. Although there a few limitations (e.g., threat of harm to self or others, etc.), most come away feeling like their data, information and most private personal information is in safe hands. While this is certainly true in the confines of your providers office, it is not so much when the claim is filed… let’s talk more about that.

An often overlooked, but serious concern for those using health insurance to cover mental health treatment is a significant probability of losing confidentiality and privacy. When a practitioner or office bills your insurance, not only do they require a diagnosis, but they gather information about the type of treatment you are receiving and whether your condition has improved or not. Remember, this is significant to them since it is important to them because a primary goal is to stop paying as quickly as possible and pad their profit margins. Back when I participated with insurance, I was being audited at least once a month. Most times they want access to your full record. Intimate details of your life are now known by a significant number of people.
To anyone who experienced this, it is very intrusive and feels very much like you are betraying your clients trust. An audit means that an insurer can access your records at any time, and they have full access to any details your therapist is privy to such as any and all information, including progress notes, which can include very personal and private details about what occurred during the therapy session. Further the average insurance claim passes over 12 people during processing. All of who now have access to information about your treatment including your diagnosis, treatment plans, progress notes, as well as any other information pertinent to them approving your claim. While most believe these details should be private, they are open to anyone with access when you use your health insurance.

Who cares about this you may ask? Those who hold a high security clearance for a job, are seeking a military or federal job, a political position, an aviation position or any other job that requires health-care checks or have other reasons you want your information to remain confidential, this is important to know. Did you know that many organizations are now screening out employees who may be “unstable” or cost too much money in mental health treatment and/or lost work days….

Further, children often have an even more difficult time when given a diagnosis as it follows them for much a much longer period of time, and can impact school, college, and be a barrier to pursuing certain careers. As such if your little one’s condition warrants a diagnosis, you may want to have some say over how that diagnosis functions in their life; you may want to keep all treatment private.

In addition to loss of confidentiality you also lose control of your information, who gets it, and how they use it….


If you are a new patient using an in-network provider through your insurance, it is likely you will have to wait a significant period of time, weeks or even months, before getting in for your first session. This is unacceptable and a serious issue in mental health care today,

We hear from new patients, as well as other professionals in the mental health industry who take insurance, that at times it can be anywhere from two to four months that a person is quoted before able to get in for a first appointment. This is truly unacceptable. The decision to seek therapy is huge…

By the time most reach out, they typically, have already tried to solve the problem in some way on your own. Maybe you have read some self-help articles, sought advice from friends and family, tried to ride it out and allow “time to heal,” but finally realized you need something more.

It happened to me personally some years back when my own my relationship was in distress. I was told that I have to wait another 8-12 weeks before I could be seen. This happens to too many, and is greatly disappointing and potentially harmful as well.

While it is true that “time” is one of the biggest components for healing, in many others cases (particularly with traumatic events) time only leads to more severe symptoms and internal psychological distress and impairment in functioning. As with anything else, the best results and less difficult path to healing comes when problems are caught and treated early on.

(Specialists have advanced training and experience in working with your presenting problem. If you use your medical insurance for mental health treatment, you may not be able to see a specialist)

When a practitioner signs up to participate with an insurance company they sign a lengthy formal contract, (often a hundred pages or more of policy and regulations) and are very much bound by it and lose the ability to truly specialize. The clinician can identify certain areas where they prefer to practice, but they cannot turn away a potential client simply based on the person not being their “ideal client” so long as they have an opening and participate with that individual’s insurance.

A good example of this is one of my patients with a family history of dementia who was struggling with memory loss and went to their family physician when they really needed to see a neurologist. Now, his family provider is a medically trained doctor and was able to develop a sense of what was going on and point the patient in the right direction, but they lacked the advanced training, expertise and competencies to appropriately diagnose and treat the precise problem. In the same way, this is an important idea in mental health treatment as well. There are competently trained “general” mental health providers out there, but what if your child is struggling with behavioral and learning issues, or say you are an older client, with significant medical issues, memory loss and depression? Just like you would seek a specialist to get the best care and outcomes for a physical medical concern, it is equally as important to seek a specialist for psychological concerns.

I freely encourage potential clients to ask questions about training, education, experience and scope of practice. Now, this is an ethical concept really, and has nothing to do with a contract between a mental health practitioner and the insurance company. It stands to reason that we want to ensure we get the highest quality for or son, daughter, spouse, family or even ourselves. The fact of the matter is that insurance companies are not concerned with specialties or scope of practice at all. The insurance companies’ position is that any licensed mental health professional is qualified to treat and mental health issues. (while they are, it does not necessarily mean that they have specialized training and experience in a particular area). To the insurance company, if a provider is a licensed mental health professional, they should be able to treat and deal with mental health concerns just as a family medical practitioner should be able to manage common physical health issues. The human mind is infinitely complex, and despite advances in science and research there is still so much we simply do not know. Yet when it comes to the human body and medicine, specialization is the norm. Depending on the severity and complexity of the mental health condition, clients may need more than just to manage, they may need someone who specializes with advanced training and expertise to effectively treat what’s going on…

Rather than getting the optimal treatment to ensure the well being of their subscribers, the insurance companies are focused on the legalities contained within the signed agreement between the clinician and the insurance company, which may state they cannot turn a client away so long as there is an opening. When a mental health clinician signs a contract with an insurance company, they are legally bound by it and must comply with the requirements of that contract. So they may be legally obligated to take a client if there is an opening, whether or not they specialize and focus in the specific area the client has sought out therapy for….


This is somewhat counter intuitive, as we just assume competency and experience in the providers we see through our medical insurance. This is not necessarily the case in mental health treatment. In my old practice in New Jersey, the most experienced and seasoned clinicians simply did not want anything to do with health insurance. Frankly seasoned clinicians have obtained a good reputation and “word or mouth” following, that they do not need to acquire patients from the insurance referral mill.
New patients are referred to these experienced clinicians by other patients, schools, medical providers, attorneys, etc. Many younger more inexperienced private mental health practitioners just starting out will often join up with insurance panels to start to build a case load quickly as they still have to support themselves, their families and sustain their practice. Now this is not to say that all mental health clinicians who participate with health insurance are inexperienced; but it something to be aware of in your search for a qualified mental health professional.


While best practices informs us that treatment needs to be a collaborative venture between the client and therapist relying on input from the client and the practitioners use of the best of what research and science tells us about mental health treatment. Yet, when you see an in-network provider through your insurance, neither you nor the clinician get to decide how you spend your time in treatment. Insurance companies require that a treatment plan be submitted in order to approve the number of sessions and ultimately, they use this to determine how your time in therapy is spent.

The number of sessions is determined ahead of time by the claim’s specialist, a non-mental health professional who knows nothing about you or what you are going through. Any attempt to increase the number of covered sessions, is most often met with resistance and ultimately denied. The insurance company has an algorithm for determining the number of sessions needed to “fix” the problem. The challenge here is that therapy is not at all predictable, due to the complexity of the human mind and new issues can arise that require extending therapy. Back when I used to be paneled with insurance, I remember a case of a woman who I was seeing at an assisted living facility. She had an acute increase in depression due to loneliness and adjusting to life on her own. While insurance did cover enough sessions to treat the initial depressive symptoms, they did not cover further sessions that were needed during a second spike in depression due to the shorter days in the winter, acute sickness combined with chronic health issues. This is because the insurance companies’ version of correcting the problem often means getting you out of crisis or back to a very minimal level of functioning. I call it band-aid therapy.

Fortunately, I ultimately saw her pro bono until her symptoms abated and she returned to an optimal level of functioning. Effective therapy, that involves the development of insight and brings about genuine change, growth and the development of new healthy coping strategies takes time and insurance companies NEVER cover this type of treatment.

Rather than giving you the care that best meets your needs, which in therapy may mean sometimes means straying from the treatment plan, and discussing an acute loss or stressor, the therapist is responsible to carry out your treatment in the amount of sessions they deemed appropriate. You see an in-network psychotherapist does not work for you; they work for the insurance company and they are bound by the contract they signed. Additionally, in-network therapists often have to chase reimbursement from the insurance company and can result in interruptions in treatment until these logistics are cleared up.


Just like when you visit a physician, your therapist is required to keep treatment records. For those patients with a diagnosable mental illness, it makes sense that the therapist would document their “diagnosis”, presenting issues, assessment of symptoms, treatment provided, response to that treatment and perhaps even more personal information. Now if you are not using your health insurance to pay for mental health treatment; no worries, your information remains private. However, when you do utilize your insurance your mental illness diagnosis, as well as your treatment, becomes part of your permanent medical record. You do not have the ability to take this information out once treatment is completed or ever for that matter.

What you may not be aware of this can make applying for new health insurance, life insurance, or a new job more challenging as they can require an authorization to release information to view your entire medical record. With recent political changes and the Affordable Care Act, it is quite possible that people may potentially be denied coverage based on a preexisting condition which includes mental health diagnoses. If you do secure coverage, companies can charge significantly higher premiums because of having ever been treated for a mental illness diagnosis. If you are someone who is self-employed or is unfortunately, unemployed or need to purchase your own benefits, a mental health diagnosis can make the difference between preferred coverage or none at all. This is often one of the most significant reasons that insured patients often opt NOT to use their medical insurance for mental health treatment.


Back when we did accept insurance, we would encourage our patients to be sure to verify their insurance coverage prior to their visit. They would call us back somewhat puzzled and inform us that their insurance company told them, “…a quote for benefits does not guarantee payment…” This means that despite being told that a particular service is covered and even being given an authorization number, you can still be denied once they review the diagnosis and other clinical information. What does this mean for you? If you attend therapy sessions under the notion you are using health insurance to cover your visit, and the therapist receives a denial of the claim from your insurance, you are still responsible for the FULL payment to your therapist.

Sure, you can attempt to appeal the claim with your insurance company, but be prepared to call and speak to an automated system, wait on hold just to go through several levels of appeals, which can take weeks to months – all while your treatment is on hold. If that is not enough, you may have a deductible that needs to be met or a particularly high copay as discussed above.


Back when we accepted insurance, I remember getting calls from potential patients that were unable to find an in-network therapist that didn’t have a 6-month wait list. Wanting to meet this need, I attempted to try and join, let’s just call them “X” insurance company who informed me their network was closed in my area because they had an “adequate” number of providers with my specialty. Often times, therapists often are unable to get paneled on insurance plans due to long waiting periods, multi-year waiting lists, and even after repeatedly going through the process of reapplying only to get declined due to full panels. Unfortunately, paneling with insurance companies is NOT as simple as “just applying.” Often times, the process involves repeated denials, multi-year waiting periods, and incredibly low reimbursement rates. Unfortunately, the dilemma is whether or not to practice without taking insurance and being able to help some folks, accept the conditions discussed above or not practice at all. Given all the factors discussed above, it is clear why not accepting insurance is the best way to go.


It is important to make informed decisions regarding your health care and consider all your options… Until there is serious reform, medical insurance often becomes a hindrance to obtaining timely and effective mental health treatment. Until we have a complete overhaul to health insurance with respect to mental health, the best option we have is to pay out-of-pocket.

We got into this business to help people and that is why our office works on a sliding scale and offers pro-bono services in dire circumstances. We also work with patients on an out-of-network basis, which means you pay the therapist directly at the time of service but as a courtesy we submit to your insurance for direct reimbursement. With this option, the billing invoice we submit

must contain a mental illness diagnosis and the type of therapy provided, and length of session so there is still the issue surrounding confidentiality and medical record but still allows more control than an in-network provider may otherwise.

Contact me today to request a consultation.

I can help you attain the personal growth you truly desire.


“Our wounds are often the openings into the best and most beautiful part of us.”

-David Richo