network utilization infographic

(Updated 2022) Why pay cash for mental health? About a third of psychologists in the U.S. do not participate in private insurance plans, according to the American Psychological Association. And many therapists who do take insurance accept a limited number of plans, to avoid the aggravation of haggling with insurance companies. The majority of their patients pay out of pocket and, if they are insured, they then may submit claims to their insurance companies.

In spite of mental health parity laws, this trend shows no sign of slowing down. With U.S.-based therapy costs ranging on average from $60 to $300 per session, why would anyone with mental health coverage choose to self-pay, rather than use their insurance?

Many might not have much of a choice, as a vast number of therapists are not in-network, opting out of insurance plan participation.  A 2017 report by Milliman found that 32% of behavioral outpatient care was conducted out of network, compared to only 6% for medical or surgical care.

Yet even if a patient can find an in-network provider, the therapist might not have the level of experience or availability he or she is seeking. Faced with limited options or long wait periods, many patients opt to pay out of pocket for psychotherapy.

What are the Advantages to not Taking Insurance?

“The goal for most therapists is to get to the point when you stop taking insurance,” said Dr. John Grohol, founder of PsychCentral, the internet mental health site, and its spinoff, MySupportForums, an online support group network. “When you stop taking insurance you stop having to deal with someone questioning your treatment decisions, and you can stop doing all the paperwork.”

That paperwork dealing with insurance companies is no small expense – especially for the individual or small group practices in which most mental health professionals operate.  According to a study from MedScape (registration required), over 40 percent of psychiatrists spend 10-14 or more hours on paperwork. Another study found that American doctors spent more than $80,000 per year per physician dealing with multiple health plans.

“Being in network is challenging,” says Ann Becker-Schutte, a Kansas City psychologist in private practice. She accepts Medicare, but is an out-of-network provider for her other patients, all of whom are dealing with serious physical conditions. “On the one hand it makes the services more accessible to more people, and I am behind that. But it also is way more work for my staff for way less reimbursement. Most therapists I know are trying to flee the scene.”

Yet while avoiding insurance companies appears to be in the interest of the service provider, therapists also claim that in some cases paying out of pocket can benefit the patient as well.


What are the Advantages to Paying Out-of-Pocket?

1)     Choice: Patients who wish to stay in network may not always find a provider with whom they are comfortable, or who has experience dealing with the types of issues the patient wishes to address in therapy. In some areas of the country, in-network access to therapy is extremely restricted, requiring patients to travel as much as two hours to see someone.

2)     Flexibility: While the 2008 Mental Health Parity and Addiction Equity Act prohibits insurance companies from imposing obvious disparities in mental versus physical health treatment, consumers find that certain restrictions remain. Many experts observe that the focus of insurance companies tends to be on stabilizing patients, rather than committing to long-term psychotherapy. Paying out of pocket allows patients to bypass these restrictions, opting for the number of sessions they feel necessary. Self-pay patients may also opt for longer sessions, if the need arises, whereas patients covered by insurance must stay within the negotiated time slots.

3)     Privacy: When patients use insurance, therapists must attach a diagnosis to release insurance benefits. This diagnosis then becomes part of the patient’s permanent medical record. For patients who wish to maintain their privacy, and are uncomfortable with the number of people who have access to their medical record, they may opt to pay. Paying out of pocket means that therapists are not required to assign a mental health diagnosis or share medical information with anyone.

4)     Timeliness: Particularly in overstretched networks, patients may have to wait long periods of time to schedule therapy with a provider who accepts their insurance. If they are paying out of pocket, they may find availability much sooner.

5)     Convenience: Paying out of pocket not only allows the patient to see someone more quickly, but self-pay patients are often given the option of arranging more flexible session times, such as weekends or evenings.

This is the third piece in our mental health series. The series, in its entirety, is outlined here.

  1. How much does mental health care cost? Part 1 of 5
  2. Find affordable psychotherapy: Our mental health series
  3. Why pay cash for mental health? Our mental health series
  4. Affording psychiatric meds: Our mental health series
  5. Online psychotherapy: Our mental health series