Thinking of Seeing an Out-of-Network Therapist? Read This Before You Do

There is an important untold story about using out-of-network benefits to pay for therapy. If you are considering seeing an out-of-network therapist, you need to know what to expect regarding what you'll pay and how insurance will (and won't) reimburse you. 

We're here to help. In our work, we've learned about many of the risks of using out-of-network benefits, including hidden risks not everyone knows about. They go from bad to worse, so read on!

Risk #1: You Might Not Even Have Out-of-Network Benefits

It might seem logical to think it's always better to use out-of-network benefits than to pay out of pocket for therapy. However, that's not always true.

It's also not always possible. In the last decade, the number of insurance plans offering any out-of-network benefits has decreased. And if you signed up for an individual plan on the Health Insurance Marketplace (also known as "the exchange"), it's especially unlikely your plan has out-of-network benefits. Here are some of the numbers we found in our research:

• In 2018, only 29 percent of individual plans purchased on the exchange provided any out-of-network benefits (compared to 58 percent in 2015).
• In 2018, only 64 percent of small group plans* provided any out-of-network benefits (compared to 71 percent in 2015).
• In 2018, 73 percent of individual plans purchased on the exchange had narrow networks (limited numbers of in-network providers and limited or no out-of-network coverage).
• In 2018, only 5 percent of employer-based plans at large companies* and 7 percent of employer-based plans at small companies* had narrow networks.

So, before you even explore whether using out-of-network benefits would be worth it for you, make sure you have them in the first place! No matter where your plan is from, you shouldn't assume anything about your coverage without confirming it first. But you should be especially wary if you got your plan on the exchange or work at a company with 50 employees or less.

*According to the Modern Healthcare article we referenced above, a large company is defined as one with more than 200 employees and a small company as one with fewer than 200 employees. On the other hand, a "small group plan" typically refers to a plan purchased by a company that has 50 or fewer employees.

 How to Find Out If You Have Out-of-Network Benefits

There are a few different ways to find out if your plan has out-of-network benefits. One of the easiest is to talk to a customer service representative by calling the number on the back of your insurance card.

But if you're phone-shy, don't want to wait on hold, or want to see for yourself, you can also take a look at your plan documents. 

You may actually have the full plan document, a thick book that explains how your plan works in complete detail. It is written like (because it basically is) a legal contract, so it can be a little hard to decipher. (Insurance companies don't always provide a full plan document to you by default; you often have to request one.)

It's often easier to look at the Summary of Benefits (also known as the summary plan description), which is usually about two pages long. It includes the following important information:

• What your deductible is
• What your out-of-pocket limit is
• What your co-pays and coinsurance amounts are for different health services
• Whether you have any out-of-network benefits and if so, how costs for out-of-network providers compare to costs for in-network providers

You can also find this information before you sign up for a plan (and we recommend that you do). Your employer should provide you with plan summaries to compare to help you choose between plans. On the Health Insurance Marketplace, you can find them by clicking Plan Details > Plan Documents > Summary of Benefits. (You can also see this information when you compare plans.)

Risk #2: You'll Probably Pay More with Out-of-Network Benefits

 Compared to in-network providers, you will pay a higher co-pay and you will probably have a higher deductible for out-of-network providers. This catch is well known and fairly obvious; however, it isn't the only one.

Risk #3: Your Insurance Won't Pay Your Therapist Their Full Rate

 The most important hidden catch of using an out-of-network provider is that your insurance company does not really pay 50 percent of your bill (or whatever other coinsurance amount they might list for out-of-network benefits). In reality, they pay 50 percent of what they consider a "reasonable and customary" rate for a professional of similar qualifications in that area. 

So, if your therapist is charging $150 per hour, but your insurance company considers $66 to be a "reasonable and customary" rate, they will only pay $33. This leaves you covering the remaining balance of $117 when you only expected to pay $75. (When your therapist sends you a bill for the difference between what they charge and what insurance covers, this is called "balance billing"; we'll discuss it further in the next section.)

It's important to know that what an insurance company considers "reasonable and customary" is different from what therapists really charge. It's not unusual to see therapists charging $150 per session in a metropolitan area, while insurance companies claim that $70 is "reasonable and customary" for that area. In fact, it can be almost impossible to find a therapist in your area who actually charges the rate your insurance company calls "reasonable and customary."

Risk #4: Watch Out for "Balance Billing"

 One of the worst things about using out-of-network benefits is balance billing.

Providers who join an insurance company's network agree to accept what the insurance company gives them as payment in full. This means no matter how much they might disagree with the insurance company about what is "reasonable and customary," they won't send you a bill for the difference. They're not allowed to. All they are allowed to collect is the co-pay or coinsurance indicated in your plan documents for the level of care they provide.

On the other hand, out-of-network therapists have no such agreement with your insurance company. This means they can—and often will—seek to settle the difference between what the insurance company covers and what they normally charge by sending you a bill for the balance between those numbers. If your co-pay (or coinsurance) is the same as (or worse, even more than) the difference between the "reasonable and customary" charge your insurance covers and your balance bill, you can end up saving nothing at all.

Risk #5: You Won't Know What Your Insurance Company Will Cover

 There is no way of knowing what "reasonable and customary" rates are ahead of time. Insurance companies simply do not disclose that. The only way to find out is to submit your bill and wait two to six weeks to see how much they reimburse. 

By the time you find out what you are being reimbursed, you will have seen your therapist half a dozen times (or more) and have developed a significant relationship with them. It can be emotionally and therapeutically damaging to switch to an in-network provider simply due to cost at this stage in therapy.

Risk #6: It's Your Responsibility to File Your Own Claims

 Out-of-network benefits also work differently in terms of how they're billed. When you use in-network benefits, you simply pay a co-pay or coinsurance at the time of your appointment. 

On the other hand, to use out-of-network benefits, you nearly always have to submit the claim yourself. (Some therapists are willing to submit it for you as a courtesy, but it is still technically your responsibility.)

This means your insurance company pays nothing upfront. Instead, you will have to pay for the complete cost of each session. Your therapist will then give you a monthly "superbill" which you use to file a claim form to send to your insurance. The reimbursement process takes two to six weeks before you will be paid by your insurance company. 

This adds unneeded complexity and means that you may be paying in full for your out-of-network sessions for six to seven weeks before you receive a cent from your insurance. For a therapist that charges $150 per session, that means being out nearly $1,000 until you (hopefully) get reimbursed by insurance. This can wreak havoc on your finances if you're living on a tight budget.

Risk #7: You're on Your Own If Your Claim Gets Denied

If your insurance company denies your claim, you are responsible for the cost. Since the provider has no relationship with the insurance company, they are far less likely to know how or to be willing to jump through insurance company hoops if there are complications. It's far more likely that you'll be left to navigate the insurance company claims process and still potentially be left holding the bill.

Risk #8: Quality Control Is Less Consistent for Out-of-Network Providers 

 The best therapists often choose not to deal with insurance companies at all, instead accepting only direct out-of-pocket payment from clients. Demand for their services is so high they can simply choose not to deal with underpayment and hassle from insurance companies.

This is the reason a lot of people want to use out-of-network benefits in the first place—to see a therapist who's better (and a better fit) than therapists they can see using in-network benefits. However, there is a tricky hidden catch to using out-of-network benefits that's especially relevant if you're not sure how to choose a therapist.

As annoying and profit-driven as insurance companies are, they also do a pretty decent job of quality control. Before accepting providers into their networks, they screen them. At minimum, they require therapists to be fully licensed, and they also usually require them to have been practicing a certain amount of time. They often have additional ways of checking whether a provider is competent and has a good reputation.

So, your insurance network might not include the best, most experienced therapists in your area, but it will also screen out the worst. You lose this protection when you go out-of-network.

Risk #9: You Might Pay Significantly More

 Looking at how co-pays and coinsurance compare between in-network and out-of-network providers doesn't give you the whole story. Nor is it enough to know what your insurance plan considers to be "reasonable and customary" and to expect to have to pay a balance bill.

No, it gets even worse than that. Insurance companies also tend to treat out-of-network claims differently when it comes to deductibles and out-of-pocket maximums. Often, they set a different deductible for out-of-network claims. That deductible can be as high as $12,000 to $20,000. 

This means you'll have to spend that much on therapy (or other out-of-network services) before your insurance company contributes anything at all. (For comparison, if therapy costs $100 per session, and you have an appointment once a week, you'll "only" spend $5200 on therapy a year.)

Oh, but it gets worse. Some insurance plans also set different, much higher out-of-pocket maximums for out-of-network benefits. Some don't even set an out-of-pocket limit for out-of-network benefits at all. 

When you reach your plan's out-of-pocket limit, insurance covers 100 percent of your expenses after that. So, no matter what your coinsurance or co-pays are, you won't have to pay them any more after hitting that limit. This prevents you from having potentially endless, unmanageable healthcare expenses.

However, there is no limit to how much you might be responsible for paying if you're regularly using out-of-network benefits that have no out-of-pocket maximum.

What Can You Do?

 The easiest option is to choose an in-network therapist. But if you really have your mind set on seeing an out-of-network provider, make sure to carefully research the risks ahead of time and make your decision based upon the specific provisions of your plan. If it still seems worth seeing a particular provider given these potential costs, have a conversation with them. 

Often, you can discuss your concerns with your therapist ahead of time. Many therapists will understand the lack of certainty around reimbursement and will work with you to help. Try saying something like, "I want to see you, but I am worried about how much my insurance will cover. If it turns out that they cover only a small amount, will you be able to lower your cost to make therapy affordable for me?"

Honestly, trying to negotiate with a therapist to get a lower rate is often the better, easier option than trying to use out-of-network benefits. You may be able to get a therapist to agree to accept the amount an insurance company would deem "reasonable and customary," especially if it's roughly the same amount you'd be assessed on a sliding scale. 

If you want to negotiate, you'll have more success if you look for a therapist who advertises sliding scale rates and if you negotiate at the beginning instead of the middle of therapy. (Read our article on negotiating therapy rates for more tips.)

On the other hand, the therapist may be willing to help you figure out how to get the most out of your insurance benefits and talk you through the process that they use with other clients who use out-of-network benefits. 

Note that it is possible to negotiate a lower rate with a therapist, then file an out-of-network claim for that rate. Just remember that you have to file a claim based on what you're actually paying, not the therapist's standard rate (that would be insurance fraud). You should then expect to receive insurance compensation that is a fraction of that. (Note that not all therapists will be willing to both offer a sliding scale rate and submit out-of-network insurance claims).

So, Is It Worth It?

The decision to use an out-of-network versus an in-network provider depends on how important it is for you to have absolute choice over who you see. If you choose an in-network provider, your choice of therapist is going to be limited. However, it is likely to be substantially cheaper and less complicated. If you choose an out-of-network provider, you have the benefit of choice, but you take a big gamble financially and emotionally. Go in with your eyes open and remember to consider all of the risks before proceeding.

Posted on 11/17/2021 by Stephanie Hairston, MSW

Stephanie Hairston is a freelance mental health writer who spent several years in the field of adult mental health before transitioning to professional writing and editing. As a masters-level clinical social worker, she provided group and individual therapy, crisis intervention services, and psychological assessments. She has also worked as a technical writer for a medical software company and as an editor for a company that appeals denials of insurance coverage for behavioral health treatment. As a writer, she is motivated by the same desire to help others that brought her into the field of social work and believes that knowledge is one of the most essential recovery tools. She strongly believes in the mission of OpenCounseling and in making therapy accessible for everyone.