Key Takeaways

• You can make up for the downsides of going out-of-network by adjusting your business strategy.
• A variety of clients, not just those in higher income brackets, are willing to pay out-of-pocket for therapy.
• Extra support for out-of-network benefits—like Thrizer—is one of the most powerful tools for attracting private pay clients.

There are a lot of myths out there about running a private pay therapy practice. Some of them paint a scary picture: small caseloads, scanty revenue, and complicated admin.

In reality, an out-of-network practice may be just as successful, financially and professionally, as one that accepts insurance. And the administrative burden is significantly less. That could be why, by some estimates, one in four therapists do not accept insurance.

Here are the biggest myths that hold therapists back from going out-of-network and some steps you can take to build a successful cash pay practice.
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MYTH: It’s too difficult for out-of-network therapists to get clients

When you don’t accept insurance:

• Insurance companies won’t refer clients to you.
• Potential clients with insurance may prefer to see in-network therapists because of the lower cost.
• Potential clients may be unable to afford therapy that isn’t covered by their insurance.

So it stands to reason that an out-of-network practice will have a harder time getting clients than it would if it accepted insurance.

That would be true if you didn’t market your practice to clients qualified for out-of-network therapy, including those:

• Who can afford to pay out-of-pocket (possibly with help from their out-of-network benefits) 
• Who are willing to go out-of-network for specialized care

Marketing is key. 

When you free yourself from the administrative burden of filing claims with insurance, you have more time to focus on marketing your practice. You can fine-tune your marketing to reach an audience different from the one you would target if you accepted insurance.

That means marketing that:

• Is directed at higher income individuals
• Highlights specialized and niche services and treatment types
• Indicates your support for out-of-network benefits (e.g. with Thrizer)
• Speaks to individuals who have not been formally diagnosed (meaning they can’t get coverage for therapy through their insurers)

Going out-of-network doesn’t mean sacrificing clients. It means adapting your marketing strategy for the right kind.
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MYTH: You’ll earn less as an out-of-network therapist

Running an out-of-network therapy practice may mean you have a smaller caseload than you would if you accepted insurance, particularly when your practice is just getting off the ground. But that doesn’t automatically translate to lower earnings overall.

When clients pay out-of-pocket, you receive the full amount of your per-session fee, not a reimbursement rate set by an insurance company. Your earnings per session are greater, and that can offset having fewer clients.

Example:

• You charge $120 per session
• An insurance company reimburses at a rate of $90 per session
• For eight sessions billed to insurance, you earn $720 (8 x $90)
• But you can earn $720 with just six cash pay sessions (6 x $120)

In this case, the two hours you save could be spent treating additional clients (increasing your earnings) or marketing your practice (growing your caseload). And don’t forget the time you save on admin (billing the insurance company). 

“Time is money” may be cliché, but when it comes to life as a self-employed therapist, it’s true.
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MYTH: You need to wait to be reimbursed for out-of-network benefits

When you file claims as an in-network therapist, you usually have to wait two to four weeks to be reimbursed by the insurer. Doesn’t the same apply to out-of-network benefits?

No. When a client has out-of-network benefits, they pay 100% of your fee up front. It’s the client themself who is reimbursed, after they submit their superbill to the insurance company.

If you use Thrizer, the client only pays their out-of-pocket cost (after reaching their out-of-network deductible) and Thrizer pays you the rest upfront. Neither you nor your client need to wait.

When your practice is cash pay only, your cash flow is faster and your accounting is less complex. That applies even to out-of-network benefits.
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MYTH: It takes a long time to build an out-of-network practice

When you launch your practice and you belong to insurance panels right off the bat, you can count on getting some referrals from insurance companies. But if you’re out-of-network, you can’t rely on insurance for referrals. How does that affect your growth rate in the early days?

True, it may take you longer to build your client list. But you also have more time in your schedule because you’re not busy applying to panels and billing insurance. It’s time you can spend on networking, developing referral sources, and running your marketing.

Also, your mileage may vary:

• If you’re leaving a group practice to start your own, some clients may follow you. So you have clients on your list from the get-go, plus more sources of referrals (current clients, former colleagues, local contacts).
• If you’re transitioning from accepting insurance to running a cash pay practice, your client list will likely shrink. But you won’t be starting from square one. And you’ll earn more per client session, which helps to make up the loss in revenue.

Finally, because you earn more per session—whether you’re starting from scratch or transitioning to cash pay—each new client has a bigger impact on your recurring revenue than they would if you billed insurance.
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MYTH: You need to set low fees to compete with therapists who accept insurance

You may think that out-of-network therapists need to charge rock-bottom prices to compete with therapists that accept insurance and cost their clients less per session. But that’s just not true.

Slashing fees to compete with in-network therapists is not a sustainable way to run your practice. In-network therapists enjoy referrals from insurance companies, helping them to fill their caseloads and offsetting the loss in revenue due to low reimbursement rates. When you’re out-of network, setting low fees to compete incurs a cost without any benefits.

Your fees aren’t your main competitive edge. It’s specialized care that differentiates you from in-network therapists. If a client truly believes you’re the right fit for them, they’ll pay the extra cost to go out-of-network. You can help them along with marketing that clearly demonstrates your value as a therapist.
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MYTH: Only wealthy clients can afford out-of-network therapy

Since it’s more expensive than therapy covered by insurance, is out-of-network therapy only affordable for wealthy clients?

Not necessarily. It’s true that higher-income individuals are more likely to use therapy overall, and sessions paid out-of-pocket may be unaffordable for those in the lowest income brackets. 

But a Verywell Mind study found that 62% of respondents in therapy had covered at least some costs out-of-pocket. And a different study by the National Alliance on Mental Illness (NAMI) found that 28% of respondents had chosen to pay for out-of-network therapy rather than see therapists covered by their insurance.

Meanwhile, according to the Pew Research Center, 19% of Americans are upper-income, 51% middle-income, and 30% lower-income. Even if 100% of upper-income clients chose to see out-of-network therapists, it seems a significant number from other income brackets would do the same. And most clients, across all brackets, pay out-of-pocket for at least some of their care.

Middle-income clients may choose to go out-of-network:

• To get specialized care not covered by their insurance
• Because they lack a formal diagnosis necessary to receive coverage 
• On the strength of strong word-of-mouth referrals from friends and family
• Because the quality of a particular therapist’s marketing convinces them that they’re the professional to address their needs

Whatever the case, income is not a hard and fast rule for determining which clients will choose to go out-of-network. And by running an out-of-network practice, you aren’t limiting your client list only to wealthy individuals.
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MYTH: Superbills are too complicated for clients

In order to use their out-of-network benefits, clients need to submit a superbill to their insurer. Besides information about the client and the provider, each superbill includes:

• The client’s full name, date of birth, and address
• The therapist’s full name, credentials, NPI number, practice number, and contact info
• The length, cost, and relevant CPT codes for each session
• Telehealth modifiers (if necessary)
• Diagnosis codes (ICD-10)

A superbill must be submitted to the insurer within a specified time frame—for instance, 90 days—in order for the client to be reimbursed.

Given the amount of information included and the limited time frame, you might think that superbills would be too complicated for many clients to manage, and that most would prefer to see an in-network therapist rather than go through the process of submitting one. 

In fact, a typical superbill is:

• A fairly straightforward document (rarely longer than one double-sided page)
• Usually easy to submit electronically (by uploading a PDF via the insurance company’s app or a benefits portal)
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Here’s an example superbill:

For clients motivated to get out-of-network therapy, dealing with superbills is not a major blocker. And you can help by explaining to them the format and purpose of superbills so they’re less intimidating.

When you use Thrizer, your clients are automatically reimbursed and do not need to submit superbills.
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MYTH: You need an online presence to go out-of-network

If you follow major therapy influencers, you may believe you need thousands of followers and a top-ranking website to bring in new clients. That’s particularly the case when you can’t rely on insurance networks to send you referrals.

But therapist micro-celebrities are the exception, not the rule. Many successful therapists, including those with out-of-network practices, have full caseloads and long waitlists.

Their secret? Referrals. Being referred by health professionals and others in your community, or getting word-of-mouth referrals from satisfied clients, may be (almost) all the marketing you need.

From r/Therapists: 

When I first started in PP, AT LEAST once a month I would drop by places that I knew would be potential referral sources and drop off cards or brochures or a dozen donuts or a plant (at the holidays) ….even if it was a three minute interaction… repetition was key getting them familiarized with me/my practice being friendly, being consistent, being clear about my ideal client referral….after a few months of that, referrals started rolling in, and it has continued to be my most effective marketing strategy. (Reddit)

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Befriending other therapists works too! I have seen things like book clubs, consultation groups, and purely social gatherings for providers in our area. (Reddit)

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Facebook groups for counselors in the local area. Good for getting your name out there, there's a ton of people looking to refer out for a lot of reasons and a good place to ask questions/get resources. It's the only reason I haven't gotten rid of all social media. (Reddit)

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in person networking, attending every possible open house in your area, joining the small business association and chamber of commerce–all of those will get you in front of so many people and different types of individuals. The SBA and Chamber will introduce you to other business owners and gov't programs, attending facility open houses not only gets you to that facility but gets you mingling with other providers (2 for 1 right there!). (Reddit)

It’s important to cover the essentials, like a professional website and directory listings. But you may find that doing the extra legwork to build a referral network is the best investment you make in your marketing.

MYTH: Being an out-of-network therapist is unethical

The argument looks like this:

• It’s your ethical duty as a therapist to help people
• By running an out-of-network practice, you prevent some individuals from becoming your clients (those who can’t afford to pay out-of-pocket for therapy)
• Since you exclude those people from your care, you’re failing in your ethical duty

It’s a tricky argument with plenty of gray areas. 

First, a definition of terms. To put it simply, without launching into a philosophical dissertation:

• Ethics are a code of behavior you follow. Therapists follow a code of ethics laid out by their licensing board, plus any other professional associations they belong to.
• Morals are your personal code that you follow. These extend beyond therapy to every other part of your life, and they’re not dictated by an outside authority.

If your licensing board or professional association has a code of ethics that says it’s your professional duty to make therapy as accessible as possible, which requires accepting insurance, then the answer is clear cut. In order to comply, you can’t go out-of-network.

On the other hand, if there’s no code of ethics requiring you to make therapy as accessible as possible, your own personal morals will guide your decision.

A few points to keep in mind:

• Working out-of-network gives you control over how you make therapy accessible. Contracts with insurance companies often limit therapists in their ability to offer sliding scale fees and pro bono sessions. When you’re out-of-network, you can use these tools to make therapy more accessible—putting the power in your hands, not the hands of a large insurance company.
• Out-of-network therapy helps clients lacking a formal diagnosis. In many cases, insured clients can’t get coverage for therapy sessions unless they have been formally diagnosed. But people with diagnosed mental health conditions are not the only ones who can benefit from therapy. When you’re out-of-network, you can specialize in helping them.
• Extra support for out-of-network benefits helps to mitigate accessibility problems. Many clients with insurance have benefits that reimburse some of the cost of out-of-network treatment. When you use Thrizer, those clients don’t need to wait for reimbursement—after meeting their deductible, they pay coinsurance upfront, and Thrizer covers the rest. That makes therapy more accessible while allowing you to remain out-of-network.

In any case, it’s ultimately up to you to follow your own moral compass and decide whether running an out-of-network practice is the right move.

MYTH: Out-of-network deductibles are too high to make benefits worthwhile to clients

If your clients need to meet high deductibles before benefits kick in, doesn’t that make out-of-network benefits effectively useless?

First things first: Deductibles for out-of-network benefits almost always apply to out-of-network treatment across the board, not just therapy. So if a client is seeing an out-of-network physiotherapist, nutritionist, and chiropractor, they may already be paying down their deductible.

Now for some hard numbers. For individual coverage, the median deductible for out-of-network benefits is $12,000. For about 30 percent of individual market plans, the deductible is $20,000 or higher. That may be a significant barrier for clients with individual insurance benefits. 

The story changes when it comes to small group coverage. Individuals with coverage through their workplace or other group plans have a median out-of-network deductible of $6,000, and virtually none of them have deductibles above $20,000.

While these deductibles may seem high, they’re not insurmountable—especially for individuals who see multiple out-of-network providers. And by directing your marketing at individuals with group coverage, you can target those who are most likely to have deductibles at the lower end of the scale.
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MYTH: Most clients don’t have out-of-network benefits

Out-of-network benefits are almost exclusively available to insured individuals with open-network plans (PPOs and POS plans).

The good news is, many people with employer-sponsored insurance have plans that fall into those categories.

According to recent data, about 55% of covered employees have PPO and POS plans, which include out-of-network benefits. With about 165 million Americans carrying health insurance through their employers, that represents a large number of potential clients.
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MYTH: You don’t need an NPI if you’re out-of-network

If you plan to go out-of-network, one thing to keep in mind: You will still need a National Provider Identifier (NPI) even if you don’t plan to bill insurance directly.

A National Provider Identifier (NPI) is a 10-digit number assigned to your practice under HIPAA. It allows insurers to identify your practice for the sake of claims-filing and reimbursement.

Even if you don’t join insurance panels, your practice needs an NPI. Under HIPAA, any therapists who transmit client information electronically require it. That includes therapists preparing superbills for clients’ OON benefits.

Once you have an NPI, it stays with you for life. You don’t need to renew it, but you do need to update it if your information changes—for instance, if you move locations or change your name.

You can get a free NPI from the NPPES NPI Registry. 
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Summary

• While your caseload may be smaller or slower to grow when your practice is out-of-network, higher revenue per session helps to make up the difference.
• With or without out-of-network benefits, cash pay clients pay you directly—there’s no need to wait for reimbursement from insurance companies.
• Targeting higher income individuals with out-of-network benefits with your marketing efforts can help bring new clients through the door.
• It’s specialized services and client-therapist fit—and not necessarily competitive fees—that attract clients to out-of-network therapy.
• More than half of individuals with employer-sponsored health insurance have plans with some degree of out-of-network coverage.
• Deductibles for out-of-network coverage apply to all services, not just therapy, and their amounts vary.
• Even if you don’t plan to file claims with insurance, you need an NPI in order to prepare superbills for clients.
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Learn more about how to build a successful out-of-network practice.

‍‍‍This blog post is provided for informational purposes only and is not intended as legal, business, medical, or insurance advice. Laws relating to health insurance and coverage are complex, and their application can vary widely depending on individual circumstances and state laws. Similarly, decisions regarding mental health care should be made with the guidance of qualified health care providers. We strongly recommend consulting with a qualified attorney or legal advisor, insurance representative, and/or medical professional to discuss your specific situation and how the laws apply to you or your situation.