How to Transition From Insurance to Private Pay
Therapists and counselors dealing with insurance companies often spend too much time writing notes and completing documentation to file claims and get reimbursed. In a study representing U.S. physicians, psychiatrists reported spending the most time on administrative tasks. This survey suggested that going into private practice and accepting few or no insurance plans at all can help behavioral health professionals circumvent these burdens.
Therapists and counselors who choose to become out-of-network clinicians can save time and money by eliminating the many complex processes of insurance companies. This transition can be challenging, though, without the right tools and strategies. Here's how to get private pay therapy clients in your business.
Why Some Practitioners Switch From Insurance to Private Pay
If you're wondering how to transition from insurance to private pay as a therapist, the first step is to understand your motivation for doing so. There are many reasons why therapists consider this transition, such as:
- Having less paperwork to complete outside of the session
- Getting the ability to set your own rates
- Eliminating hassles with insurance reimbursement
- Offering more flexibility and privacy to patients without sending notes to an insurance company
Aside from these perks, many private practices are born from a desire to work when you want and with whoever you want. With insurance companies, you have to split the profits and often wait a long time to get reimbursed, resulting in underfunding and overall frustration. You may also experience your claims getting rejected or your notes being under-coded, which means that you're likely still providing treatment to patients without getting paid in the process.
While your clients are getting high-quality therapy, you may be struggling with underpayments and the demands of a large caseload. In this case, you may feel motivated to switch to private pay to make more money per session while reducing the number of clients you see every week. Spending more time with your patients can certainly be an attractive reason to make this transition.
The Best Approach to Switch From Insurance to Private Pay
As a behavioral health professional, you may run into several issues that prompt you to dissolve your insurance contract, such as:
- Failing to be reimbursed
- Spending too much time chasing your reimbursement,
- Excessive administrative requirements
- Your contract is not providing you with a steady flow of clients
While ending an insurance contract can seem like a daunting step, it can be done properly with a little planning. If you're tired of dealing with the issues that come with accepting insurance in private practice, here are some tips to attract cash-paying clients.
1. Name Your Specialty
The first thing to consider when switching from insurance to private pay is what your practice specialty will be. While some enjoy being a generalist, it's easier to set up a fee-for-service practice when your clients come to you with the same main issues. In addition, clients will be willing to pay more for your services if they know you have specialized expertise.
While some professionals feel that identifying a niche can prevent clients outside that need from seeking treatment with them, working within that specialty can make your workload easier. Instead of seeing 30 clients a week who all have very different issues, you can hone in on 15 clients who are all coming to you with similar problems.
Naming your specialty can also help you market who you do and do not want to work with. You can provide referrals for clients who do not fit your specialty and need someone who meets their needs. This can also build your referral base and professional network.
2. Develop a Marketing Strategy
The next step to approaching your transition to private pay is to up your marketing game. Having top-notch marketing is key to building a fee-for-service private practice. Iinsurance-based clients tend to select a behavioral health professional based on who takes their insurance.
With a private pay practice, clients are looking for an expert in a certain field, so your marketing should reflect what they're looking for. If you continue to leave your website and directory listings the same and simply add your cash rate, it's unlikely that any new patients will be able to find you.
Once you've identified your niche in the industry, consider who your ideal client would be, what their pain points are and what strategies you can market to convey that you fit their needs. For instance, if you specialize in working with individuals and family members dealing with a terminal diagnosis, consider connecting with your local hospice to put yourself directly in front of your ideal client.
If you have years of experience working with individuals suffering from addiction, learn if you can advertise your services in a relevant space. Be sure to choose one or two strategies rather than trying to use every marketing method available today, which can be overwhelming rather than effective.
3. Communicate With Clients Ahead of Time
When making any kind of change that can impact your clients, it's essential to give them plenty of notice. Try to let your clients know at least a few months in advance about your plans to transition to a private pay practice as this can reduce their stress and prevent them from feeling rushed. As a best practice, give your patients written and verbal notices about any forms they may need to sign or important letters they need to read.
In your verbal notice, be sure to include the day you will cancel contracts with insurance providers and that you will no longer be billing for their appointments. You should also inform clients of their options, such as Health Savings Account (HSA) or out-of-network benefits. Remember, your current clients will likely have some questions and concerns, so giving them all the information they need about the policy change can help them ease through this transition with you.
If some clients express that the new change will prevent them from being able to afford therapy with you, consider implementing a sliding scale. This means your current clients can continue to undergo treatment with you at a price they can afford.
4. Plan for Client Discharges
Once you've determined your new private pay policies and contacted your clients about these changes, be sure to plan for losing some clients. Even if most of your existing clients stay and use their out-of-network benefits, some may be ready for discharge. While clients can choose to end their treatment at any time, therapists and behavioral health professionals have a legal and ethical duty to provide a referral to another therapist or mental health facility.
Before you can complete termination, you must determine where a referral is necessary and appropriate for each client wishing to leave. By communicating with clients and being transparent far in advance about these changes, you can give them plenty of time to adjust to the new system and fee.
Regardless, it's essential to treat every patient in a clinically appropriate manner, even if they decide to transition to a new therapist. This can prevent you from receiving negative reviews and damaging your reputation as you transition to a private pay specialization.
Benefits of Switching to Private Pay
While the transition can take some time, when you switch from insurance to private pay, you gain many advantages that can make your job easier and less stressful. Here are the top benefits of private pay practices.
1. Prevent Burnout
In-network therapists may end up seeing anywhere from 25 to 30 or more clients a week to satisfy insurance expectations. This type of model can quickly cause you to feel burnt out and even diminish the quality of your sessions if you're feeling overworked. If your schedule is constantly booked with too many clients paying through insurance, it means you work more for less money.
In addition, the more clients you see, the more documentation you have to complete for your session notes, treatment plans and insurance reimbursement claims. Switching to private pay is an effective way to avoid burnout because it allows you to see the clients you want to see at your own rate and on your own schedule.
2. Spend Less Time on Paperwork
As mentioned above, the more clients you see, the more paperwork you need to fill out. From new patient intake to progress notes to insurance filing, spending more time on administrative work and less time with your patients can become tiring. When you switch to private pay, you can eliminate these complex insurance forms and have more time to devote to more important things.
3. Make More Money
When you become an out-of-network clinician, you put the revenue back in your hands. You get the freedom to decide how much to charge for each client and each session without having to go by the insurance company's standards. Likewise, you don't have to keep providing weekly treatment to clients when you haven't received any reimbursement from the insurance company. As your reputation grows, your client base will value you and the work you do and buy into your new payment model.
4. Manage Clients With Fewer Restrictions
Transitioning current clients to private pay means you can provide services on your own terms. When working with insurance companies, both you and your clients can feel restricted due to the insurance agency's rules. The insurance company determines what therapy services they will pay for and how many sessions your client is allowed to have, which can harm your cash flow and your client.
5. Clients Can Choose You Based on Their Needs
While there are plenty of benefits for you, as a therapist, to switch to private pay, you also extend some benefits to your clients. With private pay, your clients can choose the therapist best suited to their needs rather than getting a limited pool of who they can see through their insurance company.
This expansion of behavioral health providers helps patients find therapists that specialize in the services they need, which means you can access a new pool of potential patients. Clients are also guaranteed privacy and confidentiality because you will not be required to send insurance companies their mental health diagnoses or treatment information.
How to Transition Clients to Private Pay
Ending a contract with an insurance company and transitioning to private pay can be a stressful idea for some clinicians. Some fear that they will lose their current clients and not attract enough new ones to maintain a steady cash flow. Others may think that their new fee will be seen as an overcharge and turn clients away. While these are valid issues to consider — and while this transition won't happen overnight — it can bring about a world of difference to you and your practice.
To make this transition easier, it's important to thoroughly explain all the payment options your clients have to afford your services. Discuss the benefits of paying out-of-pocket with them so they can see the new change from a different perspective. If some clients decide that the benefits of private pay are worth the fee, be sure to guide them through the next steps.
Whether they want to seek a new, in-network therapist or end their treatment altogether, you can help them through this process. As we mentioned above, you can also incorporate a sliding-scale option for your clients, which allows for a range of payment levels for those in various financial situations.
Let's recap what your transition plan should look like to make the switch as smooth as possible for you and your clients:
- Set a date for when you will begin seeing private pay clients only
- Give yourself enough time to attract new clients
- Determine your new private pay rate
As an alternative, you can also wait until you have more private pay clients on your roster before leaving your insurance panels. The transition strategy you use, however, is entirely up to you and what you believe works best for you and your clients.
FAQs About Switching to Private Pay
Here are some common questions therapists might have about making the switch from insurance to private pay.
1. What Are the Challenges of Switching to Private Pay?
When you transition to private pay, you may worry about appearing selfish or greedy, and as a result, undervaluing your services. One of the most significant benefits of switching to private pay is that it allows therapists like you to get the pay you deserve. You can value your work at a higher rate than what you usually collect from insurance companies.
It's important to recognize that you've worked through years of education and training to get where you are today, and that means the work you do is valuable. When transitioning from a traditional insurance-based model to private pay, it's normal to lose a few patients. However, you should expect to gain many more clients as you dive into your specialty and build your practice around it.
Additionally, your clients will receive higher quality care as you will be less burnt out and less overloaded with patients who have a limited network due to their insurance. So, while it can be challenging to make the transition initially, both you and your clients will benefit.
2. How Much Should I Charge Per Session?
When deciding your private pay rate, be sure to calculate your current expenses and any other streams of income. Do some research on the average therapy fee in your city or state and consider your specialty and years of experience before settling on a number. For instance, if you want to charge $175 per session, but are relatively new to your field and don't have a large client base or network, you might want to start at a smaller rate.
Sticking to a rate that's relatively similar to what your clients paid on an insurance basis can also help you retain your existing clients. However, if you have years of experience and are an expert in a highly specialized field, charging $175 in your area may be worth it to your clients. Keep in mind that you are worth every dollar. Researching local rates can help you determine what clients may be willing to pay to see you.
Request a Free Trial of ICANotes EHR Software
Dealing with insurance companies and waiting on reimbursement can be frustrating and time-consuming, leading you to spend more time on documentation than with your patients. Switching to private pay can eliminate these hassles and help you get paid faster. Implementing electronic health record (EHR) software with note-writing templates can also reduce your documentation burden and speed up payments.
With ICANotes, you gain access to comprehensive, pre-configured templates for notes and treatment plans that improve the content and legibility of your clinical documentation. If insurance companies are under-coding your notes and rejecting your claims, ICANotes has everything you need to help you make the switch to private pay while maintaining compliance. Contact us today to learn more about our features or request a free trial online.
