Paying for Services

Important information everyone should know

Navigating the world of counseling or other psychological services can be difficult. For those who are simultaneously experiencing emotional or other problems, it can be even more difficult and frustrating. One should be aware that there are advantages and disadvantages of using mental health insurance benefits, depending upon the situation. One of the most frequent obstacles to accessing services is cost. Hourly fees for private practice therapists can be $100 or more. We suggest that you take the time to read the discussion below. It may save a great deal of time and aggravation, as well as money.


What is mental health insurance?

Many people have mental health benefits (sometimes referred to as “behavioral health benefits”) associated with their health insurance policies made available by their employer. These policies usually have at least some benefits that can, at times, be used for paying for counseling or other psychological services. However, there is often confusion about exactly what these benefits will and will not cover. Whether an insurance company will actually pay for a claim submitted by the consumer or his/her mental health provider depends on a number of factors, some of which may not be well explained by the insurance company or behavioral health organization (BHO) that manages the benefits. It is always good to remember that healthcare insurance (including mental/behavioral health insurance) is, by definition, designed to pay for treatment of health problems. It is not designed to pay for problems that do not qualify as a recognized disorder (e.g., relationship problems, learning disabilities).

What are deductibles and copays?

A deductible is the dollar amount of services that must be met before an insurance policy holder’s benefits begin to pay. Deductibles for many mental health insurance policies have risen in recent years. Deductibles of $1000, $2000 or more are now common. If you anticipate that you will only be seeking out-patient services, (i.e., not be hospitalized), your deductible will likely not be met until you have had 10, 20, or more counseling sessions. In many circumstances, this number of sessions is sufficient for the problem being treated. Therefore, you will probably not conclude your last paying-out-of-pocket session until relatively late in the calendar year. At that point, your insurance may then pay for a portion of your fees until the end of the year. However, by that time it may only be a few weeks before the New Year comes around and you would have to start over on a new deductible.

A co-pay (short for “insurance co-payment”) is an out-of-pocket fee that the client pays to the provider after the deductible amount has been reached and insurance has begun to pay. Co-pays are paid at the time of service. The provider will presumably be paid the other portion of the payment by the insurance company after the claim is filed by his/her office. Like deductibles, co-pay amounts are also on the rise. Common co-pays are now in the $25 to $30 range or more. Some policies express the co-pay as a percentage (e.g., 10%, 50%) of the “allowable fee” agreed upon in the contract between the insurance company (or BHO) and all its in-network providers. Policies that require no co-pay are a disappearing breed.

I have been told my insurance covers counseling. Isn't this all I need to determine?

Unfortunately, it is not enough to simply determine that your policy “covers counseling.” Just as medical insurance will not pay for a physician to provide services that are not covered by the policy, mental health insurance will not pay claims for services for problems that do not qualify as mental health (or behavioral health) disorders or for non-covered procedures. For example, if the insured person has a marital relationship problem (and there is no associated mental health disorder) the insurance will not pay for counseling services. Likewise, testing for a learning disability (and other “educational problems”) and counseling for uncomplicated grief/bereavement are not covered by insurance. Insurance only pays if a diagnosis of a disorder is given. In contrast, EAP benefits (which are not truly “insurance” benefits) are not affected by this requirement (see discussion below) but do have other limitations.

But I already have an ‘authorization’ from my insurance company so I know they’ll pay for the services!

Although it may seem misleading, “authorizations” do not guarantee that certain services will be covered or that payment to the provider will be made for these services. Be sure you read the fine print on the authorization letter. It stipulates (sometimes in vague terms) that the insurance company will only pay claims that meet its various criteria. These include the requirement of diagnosis of a mental or behavioral disorder. Again, insurance will not pay counseling for a non-covered problem even if you have an “authorization” in writing from the insurance company. There is usually nothing your provider can do in such cases to get your insurance company to pay the claim.

You mean I have to be diagnosed with a mental or behavioral disorder for my insurance benefits to be of any use?

Yes, basically that’s right. Use of insurance benefits does not apply if the specific condition for which treatment is being sought does not meet the medical necessity criteria of the client’s insurance policy. This means that a diagnosis that is covered by the policy must be assigned by the treating clinician before the medical necessity criteria will be met. Also, it is important to be aware that if you are ever diagnosed with a mental or behavioral disorder (even something that was mild and/or of very brief duration) that diagnosis creates the potential for negative ramifications. Examples could include denial of or increased rates on various types of insurance policies you may apply for in the future or being disqualified from certain employment opportunities (e.g., certain government jobs). Thus, in some cases it may be less expensive in the long-run to pay out of pocket for counseling services if the services can be provided without a diagnosis of a mental or behavioral disorder.

But without using my insurance I can’t afford to pay for counseling sessions. What can I do?

There are several things you may be able to do. First, check to see if your chosen provider (psychologist, counselor, or therapist) offers a sliding scale that adjusts the fee according to one’s income or other factors. A sliding scale fee may be very close (even lower in some cases) than your co-pay would be if you were using your insurance.

Second, check to see if your employee benefits include an Employee Assistance Plan (EAP). Often similar counseling services to what you would receive when using your insurance is available using your EAP benefits. However, EAP benefits are limited, usually to about six sessions. Sometimes, after these sessions are used one can then access his/her mental health insurance coverage (but remember, a diagnosis of a mental or behavioral disorder would also then be necessary). Also, be careful to select an EAP provider at the outset who is also on your mental health insurance provider panel so that you will not have to switch to a different provider after the limits of your EAP benefits are reached.

Third, see if any interns, graduate practicum students, or others of trainee status are available. These trainees are usually master’s or doctoral program students doing supervised training required to obtain their degree and may already have significant skills and experience. In some cases, trainees have already acquired their graduate degree and are working on additional counseling experience as part of the licensing process required by the State. Depending upon your individual situation, such counselors may be available at a reduced or negotiable cost. All such trainees should be individually supervised by experienced licensed mental health providers. Be sure that you understand the specifics of this arrangement before you agree to see an intern or other trainee.

Fourth, ask to see if payment for the services can be spread out over time. Many agencies and practices will work with you; some will not. However, it does not hurt to ask. If you want to do this be sure that you ask about it at the beginning of the process when setting up counseling.

What about the privacy of my records?

There are strict state and professional regulations about privacy of health records. Additionally, almost every agency, practice, or institution must meet the federal HIPAA requirements for privacy. If you are dealing with a solo provider or small group practice you should ask them if they are HIPAA-compliant as there is a possibility that they consider themselves exempt. Also, when a consumer elects to use his/her mental health benefits he/she agrees to allow the provider to transmit “protected health information” (“PHI” in HIPAA terminology) to the insurance company, behavioral health organization or any of its “business associates.” “Business Associates” include private billing agencies or other entities. Once the information is there, the provider has no control over how the information is handled. Always be sure to get a copy of the privacy policies wherever you go.

What else do I need to know?

Always read your insurance policy carefully. This is especially important at the beginning of a new year when your benefits may have changed. If you still have questions, make a list and call your insurance company to speak with a customer care representative. Be patient, persistent and take notes. Be sure to record her/his name and the time/date of the call. Also be aware that customer services representatives often know very little about the issues such as the filing and paying of claims. Typically, they are reading a scripted response from a computer screen that they believe to be the answer to your question. Compare the answers you get with information from the provider’s office before you go for your first appointment.

Finally, understanding and remembering all this information can be daunting and discouraging. Consider the amount of time and emotional energy you may expend in accessing insurance benefits and add this to your list of real costs. In any event, if you feel that you are not able to navigate these waters on your own, enlist a friend or relative to assist you.

Glossary of mental healthcare terms

BHO — Behavioral Health Organization. A BHO is a managed care organization (MCO; see definition below) that manages behavioral health/mental health benefits offered by insurance companies such as Blue Cross/Blue Shield, Cigna, or Aetna. Examples of BHOs include companies such as Magellan, United Behavioral Health, and Value Options. Note that larger insurance companies sometimes elect to manage such benefits on their own, thus eliminating the need for a BHO.

Business Associate – A HIPAA term referring to individuals, companies, or organizations that provide some aspect of a provider’s (or other “covered entity’s”) operation. Examples include an agency that handles a hospital’s patient billing or an individual who handles the patient records for various heatlh-care private practices.

Client – A less medical-sounding alternative for “patient.” Since “patient” usually implies the presence of an illness, many counselors prefer to use “client” instead.

Clinician – This is another term for an individual provider and includes any healthcare professional who provides direct services to a client/patient.

Co-pay (or insurance co-payment) — The out-of-pocket fee that the client pays to the provider after the deductible amount has been reached and insurance has begun to pay for services.

Counseling – Although there can be some technical differences, this term is commonly used interchangeably with “therapy,” “psychotherapy,” or “talk therapy.” Most individual, couple, or family sessions are 45 to 50 minute “hours.” Group counseling or group therapy sessions tend to be longer, often 90 minutes or more.

Covered Entity – A HIPAA term for any provider, business, organization, or institution that is required to follow HIPAA requirements.

Deductible — A deductible is the dollar amount of services that must be met before an insurance policy holder benefits begin paying for services.

Diagnosis – The official descriptive label as determined by a qualified health provider for a patient’s problematic condition for which counseling or other types of treatment is being sought. Most formal diagnoses are, by definition, considered to be disorders or illnesses. The term “clinical” is often used to describe them. A few conditions/labels (e.g., bereavement, relationship problem) may be the focus of counseling but are not considered disorders or illnesses. These conditions are considered to be non-clinical.

EAP — Employee Assistance Plan. Employers believe that early intervention can help avoid more severe problems later on. An EAP is employer-provided benefit that can provide a limited amount of counseling services without the need for a diagnosis of a mental health disorder. These benefits are an especially good fit for non-clinical issues such as bereavement or relationship problems. There is usually no deductible or co-pay for these services. Unfortunately, the fact that some EAP benefits are managed by BHOs (the same companies that manage mental health insurance benefits) can be confusing for those not familiar with the differences.

HIPAA — Health Insurance Portability and Accountability Act. HIPAA standards affect how a provider, BHO/MCO, insurance company, or other “covered entities” involved in health care handle patients’/clients’ Protected Health Information (PHI). HIPAA standards also affect other aspects of how providers operate.

In-network provider – A provider who belongs to an insurance company’s or BHO’s established list of those who accept insurance benefits managed by that company.

Intern – An intern is an advanced graduate student in a master’s or doctoral program in counseling, psychology, or similar area, who is engaged in a formalized placement at an agency or institution. The intern provides services (e.g., counseling, psychological testing) to gain experience while under close professional supervision. Counseling sessions are sometimes audio or video taped for the supervisor’s review. An internship occurs after all practicum experiences have been completed (see “practicum student” definition below) and is usually one of the last portions of training before a graduate student receives his/her degree.

MCO – Managed Care Organization. A company that manages the medical, and in some cases, behavioral/mental health benefits of an insurance policy.

Out-of-network benefits – Benefits that some insurance policies offer if a policy holder elects to use a provider who is not on the company’s provider panel. These benefits are usually reduced but are occasionally as good as the in-network benefits. The insured person should specifically ask about out-of-network benefits, because information about them is not always automatically offered when an inquiry is made about general policy benefits.

Practicum Student – This is usually a mid-level master’s or doctoral student in counseling, psychology, or similar area of study who is engaged in a formalized placement at an agency or institution. During this placement, the student provides services such as counseling or psychological testing to gain experience. The student is closely supervised, sometimes utilizing audio or video taping of the student’s work with clients, as part of the process.

Provider – Individual providers include any psychiatrist, counselor, psychologist, therapist, clinic, or institution that provides services to a client/patient. See the descriptive list of different types of counselors and mental health providers elsewhere in AGAPE’s website. Institutional or group providers include entities such as hospitals or clinics.

Provider Panel – A group of providers who have been credentialed through an insurance company or BHO to provide services to its policy holders. These providers have contracted to provide counseling or other services for a pre-determined fee and have agreed to other procedures and conditions set by the insurance company or BHO.

Psychiatry – A medical specialty field (like pediatrics, orthopedics, or family practice) that deals with mental, emotional, and behavioral disorders. Physicians who specialize in this field are called psychiatrists.

Psychological services – In the context of the discussion above, this refers to a variety of other services provided by psychologists and other mental health professionals that are not adequately described by the term “counseling.” Examples are behavioral therapy, psychological and psycho-educational testing, relaxation training, etc.

Psychotherapy – Although there can be some technical differences, this term is often used interchangeably with “counseling.” Most individual, couple, or family sessions are 45 to 50 minute “hours.” There are various types of group counseling or group therapy. These sessions tend to be longer, often 90 minutes or more.

Sliding Scale – A system for establishing a discounted client fee. This is usually based upon the client’s household income, number of persons in the home, and/or other factors. This is most often found in non-profit organizations.