To take insurance or Not: the perpetual private practice question
As a private practice clinician, one of the most important business decisions you'll make is whether to accept insurance or operate on a private pay model. Both options come with unique benefits and challenges, and the right choice depends on your clinical goals, financial needs, and the population you serve.
In this post, we’ll walk through the key considerations to help you make an informed decision for your practice.
What Does It Mean to Accept Insurance as a Therapist?
Accepting insurance means you become an in-network provider with one or more insurance companies. You bill the insurance company directly for services rendered and are reimbursed according to the insurer’s fee schedule. Your clients may have a copay or co-insurance due at the end of session, depending on their benefits. You are responsible for submitting claims to insurance, which can often be done via your electronic health record program.
Benefits of Accepting Insurance
1. Increased Access and Client Volume
Many clients search for therapists who accept their insurance. Being in-network can make your services more accessible and increase client referrals.
2. Reliable Stream of Referrals
Insurance panels often lead clients directly to your practice through provider directories, which can be especially helpful for new clinicians building a caseload.
3. Greater Clinical Reach
If your mission includes serving diverse or underserved populations, accepting insurance can reduce financial barriers for clients who wouldn’t otherwise be able to afford therapy.
Challenges of Taking Insurance
1. Lower Reimbursement Rates
Insurance typically reimburses less than your full session fee, sometimes significantly. This can impact your earning potential unless you see a high volume of clients.
2. Administrative Burden
Billing, dealing with denied claims, and following insurance protocols can be time-consuming and require additional systems or staff support.
3. Diagnostic Requirements
Insurance companies usually require a diagnosis and medical necessity for coverage, which may limit the flexibility of treatment approaches and client confidentiality.
What Is Private Pay?
Private pay, or self-pay, means clients pay you directly, without involving insurance. You set your own rates and policies.
Benefits of Private Pay
1. Full Control Over Your Rates and Schedule
You can set session fees that reflect your training and experience, and you’re not bound by insurance session limits or reimbursement policies.
2. Less Administrative Hassle
No need to deal with claim forms, billing software, or insurance denials. You have more time to focus on clinical work.
3. Greater Clinical Freedom and Privacy
You’re not required to provide a diagnosis, and treatment decisions remain strictly between you and your client. Note that if you are providing superbills to your clients for out of network insurance coverage, you will still need to abide by documentation standards for billing to insurance. I always recommend you do this anyway - there are other entities, such as licensing boards, that may need to review your records at some point.
Challenges of Private Pay
1. Marketing and Client Acquisition
Without insurance directories sending clients your way, you’ll need a strong marketing strategy and online presence to attract private pay clients.
2. Potentially Smaller Client Pool
Not everyone can afford out-of-pocket therapy fees, which may narrow your target market unless you offer sliding scale options.
3. Client Retention Considerations
Clients paying out-of-pocket may attend fewer sessions or be more sensitive to fee increases compared to those using insurance benefits.
How to Decide: Key Questions to Ask Yourself
Do I want to serve a broader population, or a niche group who can afford private pay?
Am I willing to handle (or outsource) the administrative tasks required for insurance billing?
Do my clinical values align with providing diagnosis-driven treatment?
Can I create a marketing strategy to attract private pay clients?
A Hybrid Approach: Best of Both Worlds?
Some clinicians opt for a hybrid model—accepting insurance for certain clients while keeping a portion of their practice private pay. This can offer both financial stability and professional flexibility.
The Decision
There’s no one-size-fits-all answer. Whether you choose to accept insurance, offer private pay, or do a bit of both, the best decision is one that aligns with your practice goals, values, and lifestyle.
Want help setting up your practice systems or navigating insurance credentialing? Reach out today to get tailored support for building a sustainable, values-driven private practice.
