The Pros and Cons of Being an Out-of-Network Therapist

Key Takeaways

• The pros of being an out-of-network therapist include higher revenue per session, less admin, more control over your practice, and greater flexibility.
• The cons of being an out-of-network therapist include a slower influx of new clients, more variable revenue, and extra time spent getting your new practice off the ground.
• Carefully weigh the pros and cons before deciding whether an out-of-network therapy practice is right for you.

Whether you’re just starting your therapy practice or whether it’s already established and you’re looking to grow, you have an important question to answer: Should you take insurance?

Increasingly, private practice therapists are choosing to go out-of-network. Working out-of-network has the potential to increase your revenue while streamlining admin, but it also comes with drawbacks. You need to take both into account before making a decision.
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The pros of being an out-of-network therapist 

Besides higher revenue and less paperwork, choosing to go out-of-network gives you more freedom running your practice and treating clients.
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Higher fees and more control over revenue

When you bill insurance, your revenue is partly controlled by insurance companies. That means:

• Low reimbursement rates. The amount you receive for each session is a portion of what you would earn from cash pay clients.
• Slower cash flow. After billing insurance, you can expect to wait two to four weeks before being reimbursed. You need to take that lag time into account when planning how and when to cover your operating expenses.
• Variable reimbursement rates. Different insurers offer different levels of reimbursement. That can make projecting your revenue tricky: until you know what type of insurance a new client has, you can’t calculate how treating them will impact your earnings.
• Limits on sliding scale fees. Most contracts with insurance companies require you to charge a fixed rate per session. That can prevent you from offering financial relief in the form of sliding scale fees.

When you’re paid in cash by your clients, these limits are taken away. Not only do you earn more revenue per session, but you have more control over how you bill clients.
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Practice autonomy

Insurance companies put limits on which services and which types of clients you can file claims for. That in turn limits how you run your practice.

But when you operate 100% out-of-network, there are no:

• Required diagnoses. You can treat clients at your discretion whether or not they have been diagnosed with a specific condition.
• Session limits. You’re free to determine the length and frequency of treatment in collaboration with your client, without limits imposed by an insurer.
• Audits. There’s no threat of an insurance company auditing your practice, which means less stringent coding requirements and no need to prove medical necessity.
• Limits on treatment type. With no insurance contract to sign, there’s no need to stick to a limited range of treatment types or modalities. 
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Less admin

Practicing as an out-of-network therapist significantly reduces your administrative burden. You’re not required to:

• Apply to multiple insurance panels, a complex and time-consuming task that can be particularly burdensome if your practice is just getting started.
• Request prior authorization, except for when you are providing out-of-network benefits. Thrizer removes the need for this.
• File insurance claims, an administrative task that many therapists who accept insurance spend significant time on.
• Deal with denied claims, which can slow down your cash flow, create stress, and eat up hours of your schedule.
• Keep insurance details on file, meaning you have less paperwork to deal with overall and fewer records to keep up to date.
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Simpler finances

Billing insurance introduces complexities that are simply not a factor when you operate as an out-of-network therapist.

When you take insurance claims out of the equation:

• Your bookkeeping is more straightforward. There are fewer ledger entries to make and your Accounts Receivable (AR) cycle is simpler. Your financial statements may also be less complicated.
• You’re paid immediately. You don’t need to factor in the delay between filing and reimbursement when planning your cash flow. That also means faster cash flow and an easier time covering operating expenses.
• You can track and forecast revenue more easily. With one flat session fee, without differing reimbursement rates among insurers, revenue tracking and financial projections are more straightforward.
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Good marketing opportunities

When you run an out-of-network therapy practice, new marketing opportunities present themselves:

• Specialized care. One of the main reasons clients with coverage turn to out-of-network therapists is to receive specialized care not available with in-network therapists. Highlighting cutting-edge modalities or treatment for emerging conditions in your marketing helps to attract new clients.
• Premium service. As an out-of-network therapist, a significant portion of your potential clients are individuals who can afford to pay for therapy out of pocket. You can appeal to that segment—while setting relatively high fees—by positioning yourself as a “premium” therapist offering niche-specific treatment options.
• High-quality referral sources. When you market yourself as offering premium, highly specialized care, your referral network changes. Think: Psychiatrists rather than doctors, business coaches rather than community support groups. Establishing these connections can keep new, high-paying clients coming to your practice.
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Support for clients with out-of-network benefits

Even if you don’t belong to any insurance panels, you can help clients whose plans include out-of-network benefits. 

Typically, a client pays you the full amount for treatment, and you prepare a superbill for them. Then they submit the superbill to their insurer and receive partial reimbursement for the cost.

That makes therapy affordable for clients who have coverage, while guaranteeing you earn your full per-session fee.

But Thrizer makes support for out-of-network benefits even easier:

1. You bill your client through Thrizer, and receive the full fee upfront without the need to prepare a superbill. 
2. The client, once they’ve met their deductible, only covers their out-of-pocket cost. 
3. Thrizer then collects a reimbursement for the full amount from the insurer.

Offering extra out-of-network support with Thrizer can help attract new clients, filling up your client list as an out-of-network therapist.
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The cons of being an out-of-network therapist

There are drawbacks to practising as an out-of-network therapist. Otherwise, no therapists would ever join insurance panels. Before deciding how you’re going to run your practice, take time to carefully consider these caveats.
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Fewer potential clients

When you don’t take insurance, your pool of potential clients shrinks. Not every individual with health insurance can afford to pay out of pocket for therapy, and even those who can may be hesitant to see a therapist outside their network.

Some numbers to keep in mind:

• 92% of Americans have some form of health insurance. Of those, 66.5% have private coverage and 33.5% have public insurance.
• The percentage of plans with out-of-network coverage is in decline, with a current prevalence of 64% in small group markets and 29% in individual markets.
• The median deductible for out-of-network coverage in small group markets is $6,000.

Keep in mind, however, that revenue from out-of-pocket payments is usually significantly higher than that from comparable reimbursement rates. It’s possible to earn as much from a small client list of cash pay clients as you would from a full list with insured clients.
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More marketing work

As well as giving you a smaller pool of potential clients, running an out-of-network practice means you don’t receive new clients based on insurers’ recommendations.

For instance, when an individual with Blue Cross Blue Shield (BCBS) coverage decides to look for a therapist, they won’t necessarily turn to Google. Instead, they’ll use the BCBS “Find a Provider” tool. If you’re not credentialed with BCBS, they won’t find your practice.

Plan to spend more time—and potentially more money—on marketing your out-of-network practice. That could mean:

• Building a website optimized for search results and AI search responses
• Running up-to-date social media accounts and interacting with followers
• Buying paid ads on Google and social networks
• Putting in the legwork to build a reliable referral network

For some therapists, marketing an out-of-network practice is an opportunity to target new segments and build a highly specialized, premium service. For others, the work involved is less appealing.
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Revenue ups and downs

You may see fewer new clients coming in the door of your out-of-network practice than you would if you worked in-network. The result? Less steady (and predictable) revenue.

All else being equal, uneven revenue is not necessarily a bad thing. It just means you need to take extra steps to stabilize your cash flow and make sure you can cover operating expenses.

Some key strategies:

• Emergency savings. Setting up emergency funds keeps you covered in case of sudden dips in revenue.
• A line of credit. In a pinch, a low interest line of credit account can make up shortfalls in working capital.
• Multiple revenue streams. By diversifying into different revenue streams, you’re protected in case one of them takes a hit.
• Up-to-date bookkeeping and financial reports. Keeping financial records current and accurate helps you detect revenue changes and project different scenarios.
• Added out-of-network support. Thrizer makes your practice more attractive to clients with out-of-network benefits, so it’s easier to keep a full client list.
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Accessibility concerns

If one of your priorities as a professional is to make therapy more accessible to more people, deciding not to accept insurance may run counter to your goal.

After all, many people rely on their insurance coverage in order to afford therapy. You may be excluding them from your services by choosing to run an out-of-network practice.

Your own conscience will ultimately be the deciding factor here. But the issue is far from clear cut. A few points to keep in mind:

• Out-of-network could make your practice sustainable. A smaller caseload with higher earnings per client could be what it takes to prevent professional burnout while building a successful practice. Your practice and your work life need to be sustainable in order to serve clients.
• Going out-of-network may help you reach underserved clients. Not all clients in need of therapy are able to get a diagnosis their insurance recognizes. And some may need highly-specialized care that insurance won’t cover. You’re better able to help these individuals if your practice is out-of-network.
• There are other ways besides insurance to make therapy accessible. By treating clients out-of-network, you’re free to provide sliding scale fees and pro bono sessions. Insurance contracts often limit your ability to offer these options. That puts the power to make therapy more accessible in your hands, not in the hands of a large insurance company.
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Longer start-up phase

If you’re starting your out-of-network therapy practice from scratch, you should expect to spend longer getting it off the ground and filling your client list than you would if you accepted insurance. 

That’s because:

• Your pool of potential clients is smaller, so it could take longer to fill your list
• Marketing channels like social media, SEO, and referral networks take time to get established
• You may need to invest more in your practice initially to cover operating expenses while your client list fills, and saving up for that extra investment could take time

The good news is that, as you land your first clients, you’ll see a bigger impact on your revenue than you would if you accepted insurance. Per-session earnings are higher. 

For instance, five cash pay clients could earn you as much per month as you would with eight clients using insurance—while leaving you more time in your schedule to keep building your practice and growing your client list. 
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Summary

• Out-of-network therapists earn more revenue per session, have more control over their earnings, and carry a lighter administrative burden.
• They also benefit from greater autonomy when it comes to how they treat clients and what types of services they offer.
• Niche-targeted marketing and services like Thrizer help to draw in new clients without the need to accept insurance.
• Be prepared for an out-of-network practice to have fewer potential clients and more revenue variability, with a greater need for effective marketing.
• Out-of-network therapy allows you to make therapy more accessible by offering sliding scale fees and pro bono sessions.
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Learn more about how to start a private pay 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.