Ethical Considerations Involved in Accepting Health Insurance

The fees we charge for psychotherapy, as discussed in the last two posts, also link to some ethical considerations that arise when psychotherapists accept health insurance for payment.  I’d like to discuss my experience in this area and invite my colleagues to share theirs.  I’d also like to hear how other readers who’ve been in treatment feel about these issues.

It’s been quite a while since I’ve accepted insurance, so this first issue may now be moot.  Earlier in my career, when insurance carriers offered more generous mental health benefits, it wasn’t unusual for a policy to pay 80% of the provider’s fee up to a fairly high limit.  Thus if my fee were $100 per session, it would pay $80 and the client would pay $20 out-of-pocket.  The maximum coverage used to be higher than what I actually charged.  On several occasions, I had clients ask if I would provide them with a bill that over-stated my charges so that the insurance company would reimburse me for the full amount of my actual fee; the client would pay nothing out-of-pocket.

I never agreed to do so because the practice constitutes insurance fraud.  In 1996 when Congress passed the Health Insurance Portability and Accountability Act (HIPPA), it made health insurance fraud a criminal offense that carries financial penalties and may involve time in prison.  I do understand that even the co-pay may be difficult for some clients; I also know that many people — psychotherapists and clients alike — believe defrauding the insurance company represents some higher type of social justice, and I’ve heard many justifications for doing so.  “If we lived in a truly just society …” or “the insurance companies are making money hand-over-fist; they can afford it.”  My own opinion is that when people defraud insurance companies, we all suffer in the form of higher premiums, but I don’t expect everyone to agree with me.  The fact remains that over-stating your actual fee to an insurance carrier is a criminal offense.

Early in my career, before my own ideas on the subject were settled, a client asked me to give her an inflated bill and I told her I would think about it.  During our next session, she told me the following dream:  she came for her usual appointment but my office was in a different place, a disreputable part of town.  I was late for her session and when she went to look for me, she found me in the alley with a group of seedy characters, smoking a cigar.  Her associations linked the men to the mafia and organized crime.  To me, the dream expressed her anxiety that I might be “corrupt” and actually give her a fraudulent bill.  While consciously she wanted me to help her defraud the insurance company, on another level, she’d question my integrity if I were to do so.  The fact that I said I’d even consider her request made me suspect.  This dream — along with the guidance of my own therapist (I was still in treatment myself at the time) — helped me settle my views on the

As managed care came increasingly to influence insurance carriers, another problem arose for me.  In the good old days, a psychotherapist only needed to supply a minor diagnosis such as Generalized Anxiety Disorder and the carrier would pay his or her bill.  As outlined in this earlier post, I see little value in psychological diagnosis but I’d made peace with the fact that I had to provide one for my clients to receive reimbursement.   When carriers began to require treatment plans and psychotherapy goals, however, I really struggled.  While therapists who practice cognitive-behavioral therapy would have no such problem, I found that I had to falsify myself entirely to complete the insurance forms.

If you practice psychodynamic therapy the way I do, the actual goal of therapy is to listen to the client’s material in a state of patient waiting, without struggling to understand it, until the unconscious material becomes clear enough for you to make an interpretation.  Can you imagine writing that on an insurance form?!  As I have to write something for the client to benefit from coverage, however, I found myself lying.  I’d invent a treatment plan that had nothing to do with our work together and establish goals I didn’t believe in.   I had to lie about the nature of progress in treatment.   After all, I couldn’t write:  “Client has begun to regress in the context of the transference, with early dependency issues and infantile omnipotence coming to the fore.”

Some of you may think I’m being overly fastidious, though I really did feel uncomfortable when completing those forms.  Even so,  I probably would have gone on misrepresenting myself and my work, but it eventually came too feel too burdensome.  I understand that insurance carriers need to control costs and ensure quality, but I’m irked by the idea of some medical claims evaluator with no experience in psychotherapy reviewing my work to determine if a claim should be paid.  I’m sure opinions on the subject will vary widely, but for me, the answer was to reduce my fee to a more affordable range and decline to accept insurance.   I find that the reduction in income is off-balanced by the benefit of escaping those time demands and ethical conflicts involved (for me) in completing insurance forms.

Feel free to chime in.

By Joseph Burgo

Joe is the author and the owner of, one of the leading online mental health resources on the internet. Be sure to connect with him on Google+ and Linkedin.


  1. Insurance payment is still payment. If you can’t justify what you are doing on a form, then what are you doing? You have not addressed what the product you are selling is, so to speak, but as witnessed in the past two posts, you certainly demand full payment for it. You love the compliant responses from those who say, “of course I would pay the fee.”

    1. The point I was trying to make — and I can see now I didn’t make it very clear — is that if I were to tell the truth and describe the way I really work on the insurance form, the claim would be denied and my client wouldn’t get reimbursement. If I were still accepting insurance, I’d probably do what was necessary to make sure my client got the benefit of his or her insurance. But it does feel “wrong” somehow that I’d have to lie about what I do … a by-product of this terrible system we have in our country.

      1. I think you made yourself very clear ,as well as your struggle to do what’s fair when the labels the insurance companies require often have nothing to do with the real work of therapy. I do understand that their forms and restrictions are a bureaucratic attempt to monitor dishonesty among some patients (and/or practitioners). But the tail now wags the dog. I continue to respect your honesty and integrity in these posts. Thank you.

        1. Thanks for your comment. I’ve felt a bit in the cross-hairs today. I received a couple of comments so hostile that I didn’t post them.

  2. I wish more people took the option you did Joseph. Maybe then we’d get less of the dominance of bean counters and managerialism and we’d know more about what therapy is really about.

    The interest of a company (saving money) is quite different to the interests of a client. I don’t see why the company’s interest should prevail!

  3. I think that your patients asked you to do this , just because they were forced to by I do not know – lack of money or problems with money! Otherwise no one will try to cheat , if he can afford (at least I think so)!

  4. I tried to find your earlier post regarding the whole issue of declaring a “diagnosis” and have been unable to locate it . Please advise as I would love to read it.
    The whole conundrum of being required to fill out forms for insurance , and then have them rejected or approved by a staffer who has no training in psychotherapy is indeed outdated and unhelpful to both patient and therapist . When I completed my training as a Marriage and Family Therapist 16 years ago , insurance companies had just begun to accept claims from MFT’s. But we were told that we must choose one member of the couple being seen, and to figure out a diagnosis for that person, which would then allow that couple to be reimbursed by insurance. It was and continues to be a very slippery slope and as in your case, the diagnosis had little relationship to what was really happening in the therapy room.
    Just as the DSM struggles to identify all sorts of mental health issues under one medical model umbrella , the insurance companies follow that model and so the absurdity continues. Not sure what the solution is other than to completely rework the various types of mental health approaches into a new paradigm that could more easily be categorized for use by insurance companies.
    Again , it’s a real conundrum . Reminds me of the battle in DC right now concerning the debt. It has gotten so far out of hand that we’ve learned to live with tremendous debt as though it were “normal.”. Stretching the truth to assist our clients in getting insurance reimbursement has become “normal.” What kind of system is that!?

    1. Penny, I made an error when I put in the url for that prior post. I’ve fixed it now, but you can also find it here.

      I agree that the current system is a mess and your assessment seems accurate. It’s a terrible arrangement but I’m not sure what would be a better one. While on the one hand, I think inexperienced bureaucrats shouldn’t have the power to decide what your client needs; on the other hand, I think it’s unreasonable to expect an the insurance company to pay unlimited amounts with nebulous results. Anyone have a solution?

  5. Dr. Burgo,
    I completely understand your situation. I somewhat understand your stance from a therapeutic perspective, as I am a lowely first year grad student in Psychology. However, I also have worked in insurance, as an agent, to get me through school. I completely agree with your view, and understand why you do not even bother with insurance claims anymore (if the client is lucky enough to have mental health benefits on their plan). Insurance companies want a concrete plan of action to treat the problem, yet that is impossible with the nature of effective psychotherapy. Thanks for your posts, I learn a lot from them.

    1. Thanks for the insider’s view. I can understand the desire of the insurance companies for something concrete and measurable. After all, when a physician orders a lab test or schedules an operation, there are fixed and time-limited charges for the O.R., anesthesiologist, etc. But I’m not sure how psychotherapists can comply. The truth is, while we’re compared to other medical specialties by the DSM and insurance carriers, we’re not really a part of medicine.

      1. Not really a good analogy; perhaps the better analogy in the medical world would be the management of a chronic condition like diabetes, the progress of which is not entirely predictable.

        As a client of several years’ duration, it was disconcerting to discover how much the cost of my sessions dropped when I asked to have the claims submitted through insurance rather than paying for each session on the spot. That was not a direct negotiation between my and my therapist, it was a negotiation between my therapist and the insurance company of which I then had the benefit, but the price was a potential reduction in confidentiality. My insurance company, however, does not put limits on the number of sessions per year and therefore does not appear to be particularly interested in the “management” of my treatment plan (such as it is).

        It has been interesting for me as a client when my therapist changed office locations last year. This led to a snafu whereby my insurance carrier now believes he has left their network, and my sessions showed up as costing the higher rate again. I brought this to his attention and asked point-blank whether that was his intent; while I understand why any provider, really, would want to jettison my particular insurance carrier, I hadn’t received any notice of this, and if he was, in fact, still in my network I did want the benefit of the contracted rate. We’ve both been appropriately businesslike about this but it felt like we related to one another differently in this conversation.

  6. Joe,
    I appreciate what you are saying here. It seems to me that HMOs aren’t in the business of ensuring people have adequate access to mental healthcare. And they have little understanding of the context to our complicated work. I worry that all reimbersements will eventually be reduced to short-term, evidenced-based practices, leaving out a wide array of viable, possibly new, treatment options. To me, HMOs are primarily focused on protecting their bottom line, so they create barriers and excuses for why folks cannot be reimbersed for the care they receive or provide. As a therapist just starting private practice, I am choosing to take only out-of-pocket pay clients for now. Even if I wanted to accept insurance, many of the panels are currently closed.

    Neither therapists nor clients are ethically correct to lie to insurance companies; however, we aren’t the individuals with the power. The insurance companies lie through their teeth on a regular basis to avoid paying legitimate claims (I’ve experienced this first hand). They also have lobbyists and people in D.C. looking out for their profit margins. Who in D.C. is looking out for consumers’ and therapists’ interests that are as powerful as the HMO lobbyists? I know the American Counseling Association has lobbyists, but we aren’t a billion dollar organization.

    In any case, I think healthcare is generally screwed up in the US, so I don’t blame therapists for avoiding insurance. Most of us hate paperwork anyway, and we’d rather be spending that time doing almost anything else.

    1. That’s so demoralizing but true. It makes me feel a little naive and Pollyanna-ish, to care about my ethical standards when the “other side” doesn’t have any.

  7. Here’s how I’ve done insurance in Washington state; it works almost exactly like the old plans used to, except that if I’m a “preferred provider,” I am contractually bound to bill insurance directly and get paid directly by them for their percentage (as opposed to having a client go after reimbursement). I do this by submitting a HCFA form (or I could do this online), which includes a diagnosis, and procedure codes, the client’s insurance i.d. no., and that’s about it. Insurers then reduce my rate by some contractually agreed upon “maximum” amount ($100 session suddenly becomes an $83 session) and then pay me some percentage or another of that amount. The client pays the “copay” or “coinsurance,” which is often some annoying amount like $21.17, because his deductible had only been partially met, e.g.. It becomes complicated, so I now use a secretary to do my billing, which further decreases my profit.

    I think with modern insurance, you have to do a lot more for a lot less money. Then when somebody pays “cash,” (doesn’t use insurance), they’re paying more to you for a session than insurance companies pay, which always irks me because it’s so much easier to bill a cash-paying client, etc. I feel like those who pay “cash” are being penalized with a higher fee. What do I do? Lower my fee for them? It’s a race to the bottom then.

    I don’t work with any managed care or HMO’s, nor do I work with any companies that require big treatment plans, but one company “First Choice Health” oversees many smaller companies that occasionally require a treatment plan. I’ve probably had to fill out 4 treatment plans in my entire career. When I fill out those rare treatment plans, I do it honestly but cleverly and sometimes have a bit of fun in trying to sound very “professional” and “technical” while being completely vague and psychobabbly. I say things under “Treatment Plan” like “continued psychodynamic therapy at 1x (or 2x) weekly is recommended in order to help her individuate from her husband and work through underlying dysthymic feelings leading to work-related problems.” Again, I only write what I think is true, even it’s a fraction of the truth, or is preposterously over-simplistic and over-diagnostic, compared with how I really work. I try very hard to do everything in a way which feels like accepting the imperfect world without compromising my self-respect. Sometimes I wonder though.

    Here’s my philosophy in accepting insurance: I need to stay in “The Game” in order to have a practice, so I’ve decided to play The Game. However, I play The Game by the rules and without cheating. If I don’t win, i.e., a claim isn’t paid, too bad (for the client); they’ll have to pony up or get a different therapist. That’s as far as I go. I sometimes fantasize about charging $75 a session and dropping all insurance companies, but I feel like I’d fall off the grid if I did that.

    In recent years, I’ve found new referrals increasingly less willing to pay out-of-pocket if I’m not on their plan. However, established clients have a stronger sense of the value of our specific therapeutic relationship and will usually continue on, even if their insurance benefits don’t cover things. If I didn’t accept insurance though, they’d have never come in in the first place.

    1. Thanks for the excellent and thoughtful reply. You’ve found a way to deal with the current reality of insurance reimbursement without compromising your values.

  8. There is a time when the therapist enables a patient to rebuild self-esteem. This may require some restoration of belief in certain commonly held ethical values and worldly practicies. Surely the therapist needs to also be seen to hold to these values and practices in all the therapist’s dealings with the patient? Going through the mill to claim the legally agreed proportion of health insurance is part of this? It seems that you’re an excellent therapist as far as this is concerned. Sorry for the clumsy expression.

    1. I agree that the therapist needs to embody “commonly held ethical values,” as you put it. It seems to me it’s complicated when it comes to insurance forms, however — what if undertaking the normal “worldly practice” violates an ethical value such as lying? I think Stephanie’s approach in the comment above illustrates an approach to resolving that conflict that also demonstrates ethical integrity.

  9. I won’t worry if this comment isn’t posted as it’s quite tangential, but I believe in expressing solidarity where I can. I work as a refugee caseworker in Europe, and our work is funded by a governmental legal aid body. You have to request extensions for time spent on a client’s file as you go along. Because refugees are often traumatized, I hold the ethical belief that you just cannot rush taking their statement upon which their case will usually rest. I benefited from excellent training when I was qualifying as a lawyer and learnt this then, it’s only been confirmed by my work with survivors of torture, rape etc. The least I can do to try to avoid potentially re-traumatizing them is not to rush them. Why I mention this is because the funding body prefers/ is actually pushing out of business all those who don’t get ‘the job done in the quickest time possible’. Thankfully we have the NHS here so it’s not the same for medical treatment (though I have been waiting nearly a year now for referral to a Clinical Psychologist, and no sign of one yet, having been referred in the ‘most urgent’ stream! ) But I wanted to note my experience as a refugee caseworker because the same moral dilemmas inevitably arise; you have to lie on the extension forms usually about why taking a statement (listening) is taking so long, and I know quite a few caseworkers who have stopped doing publicly funded work because of the constraining nature of the funding.

    1. It’s a very interesting analogy and I don’t think it’s tangential. It actually raises the issue to another level, though the same cost issues are involved, the same question of who is to “pay” when resources are limited.

  10. Thank you for your perspective. I just now came across this post. However, I would like to point out that almost the entire post, and the subsequent discussion in the comments, focuses on how this issue makes the therapist feel, and how it affects the therapist’s life. Obviously that’s a valid and significant concern for professional practitioners. But what about the effect on patients? It’s a recession; people are struggling to make ends meet and are dealing with difficult issues at the same time. A fee of $100+ per session is laughably out of reach for most people I know. A competent therapist who accepts insurance, despite the hassle, allows patients to get the care they need. It seems like more and more practitioners are ditching insurers, which leaves patients with very limited (if any) options for accessible therapy.

  11. Probably not relevant to most of the people reading this, but here’s a view from across the border.

    I live in Canada so the way insurance works is a little different. I pay 120$ for a 50 minute session with my psychologist, then fill out an online claim form providing the amount, name of psychologist, his/her professional license number, clinic name and physical address. I keep all receipts in case they ask for them. In less than a week they send me a cheque for a refund of between 80%-100%, up to a calendar year maximum of 500$, depending on your insurance provider and the terms (that’s only 5 sessions for me). I pay the rest out of pocket or else I simply don’t go. The psychologist never has to provide any paperwork to my insurance company at all, in fact he does not have any contact at all with them. It works this way for all other para-medical services (occupational therapy, physiotherapy, massage therapy, etc) here. I pay my health insurance premiums through my employer (it’s mandatory), in addition to general Medicare I get “for free” which I technically cover via my through-the-roof taxes here in Canada.

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