Using Insurance for Therapy (Part One)

I try to offer full disclosure to clients about administrative matters. In that spirit, I would like to share the pros and cons about using insurance to pay for counseling/therapy.

There are pros and cons to everything in life, and this applies to using insurance to help pay for therapy. If you use private pay (paying out of pocket), you would have to pay all of the costs of therapy. However, by paying for therapy yourself, you would be granted much more confidentiality than using insurance.

It is important to realize that when you use insurance to help pay for therapy, you waive your rights to confidentiality with the insurance company. The insurance company becomes a sort of “stakeholder” in the therapy process. A lot of consumers of therapy don’t realize this.

At the very minimum, insurance companies require that therapists provide a psychiatric diagnosis and dates of service in order to pay for a claim. Some insurance companies also “case manage.” What that means is that they will call the provider and require a case review by phone. The case manager will ask detailed questions about the therapy, for instance, the client’s presenting problems, issues discussed, goals, and any other question that the case manager deems necessary. The insurance company, via the case manager, then decides whether the therapist can continue seeing the client through insurance and how often.

In addition, insurance companies can audit therapist records. This means that therapists are required to make a copy of the case record, including their progress notes, and send this to the insurance company. Therapists are mandated by law to keep progress notes of the sessions. Such notes would describe details of the session, for instance, topics discussed or any risk factors. Please note that insurance companies are, by law, required to keep these records confidential.

My suggestion to consumers of therapy is to consider the positives and negatives of using insurance versus private pay. Some people are more concerned about confidentiality than others. If you do use insurance, I advise you to go into it with your eyes open. One of the worst therapy situations is when the insurance company makes itself known, either through a case review or an audit or refusing to pay a claim, and the client has a strong, upset reaction.