The Insurance Version of “Don’t Ask, Don’t Tell:” The Perils of Private-Pay
After paying your full fee out-of-pocket for three months, a client surprises you by mentioning that she has insurance, and asks you to bill her health plan for past sessions. You are a provider for her plan. Must you bill the plan, and give the client a refund?
This question seems to be coming up more frequently. Therapists call in a panic, anxious to find out if they have to refund hundreds of dollars to clients who didn’t tell them about their coverage.
It’s a kind of “don’t ask, don’t tell.” When a client doesn’t mention insurance at the start of treatment, you may understandably assume that she isn’t covered. But there are many reasons she may not tell you about insurance. She may be so distressed she forgets to mention it. She may have planned to come for only a few sessions, but as treatment costs mount she may look for ways to finance therapy. Or she may not have realized that her medical insurance covers therapy.
And maybe YOU didn’t ask because, let’s face it, we are glad when clients are willing and able to pay privately. After all, if she doesn’t bring it up, why should you?
Is it really our responsibility to find out if clients have insurance? “We can’t grab their wallets out of their hands and look for an insurance card, and you’d like to think that they would let us know about coverage, but we need to ask,” says Susan Frager, insurance billing coach, and owner of PsychBillingCoach.com. “The bottom line is that it can blow up in your face if you don’t ask up front.”
And blow up it does. It breaks my heart how many panicked providers I have to tell the bad news: Yes, if you are a plan provider you agreed in your contract to charge all plan members only their copayment and any deductibles, and to bill the plan directly on the client’s behalf.
The only time you are relieved of this obligation is when a client has specifically asked you not to bill her insurance. “From the standpoint of the insurance company, if a client wants to use their insurance, contracted providers need to accept it,” says Frager.
Jeffrey Olson, a Network Manager at UBH/OptumHealth of California, agrees. “Any agreement entered into with a member that is in conflict with the provider agreement (as in this case) is considered not valid, and a member would need to be reimbursed if they later stated they have coverage,” he says. “This is one of our member protection provisions.”
So what do you do now? If you had never signed an insurance plan contract, so that you are an out-of-network clinician, you could just give your client an invoice/superbill for past sessions, and the client can seek reimbursement for these sessions.
However, since you are a network provider, file the claims for past sessions as quickly as possible. Then when these are processed, figure out what the client should have paid for these sessions, and refund her the difference. You cannot negotiate some kind of settlement – you are limited to the terms of their coverage and your contract.
What if your claims are denied, due to lack of preauthorization, or because you missed the filing deadline? It is possible that the plan may deny your claim due to “lack of authorization” or “lack of timely filing.” If this happens, file an appeal, explaining the situation, and ask the plan to reconsider their denial.
And if the plan doesn’t pay? You may have to consider this a lesson learned, as contracts typically forbid billing the client if the plan doesn’t pay.
The good news? This sticky situation can be avoided with a few steps:
- No more “don’t ask, don’t tell.” At first contact, ask ALL clients – even self-pay clients – if they have ANY medical insurance.
- Add a few lines in your informed consent, stating that it is the client’s responsibility to tell you about ALL their insurance and secondary insurance, and that if they don’t, they are responsible for any services not covered by their insurance plan due to their non-disclosure.
- Have all self-pay clients sign a Self-Pay Agreement, where the client attests that s/he:
- does not have insurance coverage, or
- has insurance coverage but chooses not to use it, and understands that in doing so s/he is waiving any right to reimbursement, or
- has insurance coverage, but understands that your services are not covered by the plan.
The agreement should be signed by both client and provider, and should indicate the actual fee being paid by the member (I have a sample Self-Pay Agreement in my Practice Forms Packet, available for purchase here).
4. If you are a network provider with ANY health plan, contact the plan to check coverage, even if your client seems to be out-of-network with plans you are affiliated with. This may seem like overkill. But network affiliations can be complicated, so you may be a plan provider when you think you are not. Get a copy of the front and back of the insurance card, but don’t trust that the information on it is complete.
What if she actually told you initially she didn’t want to bill insurance, and then changed her mind? If you got the client to sign the Self-Pay Agreement up front, this would protect you from the need to go back and retroactively bill the health plan on the client’s behalf. Otherwise, “if the client complains to the insurance plan, the plan will take the client’s side, because the client is their customer, and the therapist isn’t,” says Frager.
And here’s a twist that surprises most providers: Even though members may choose to waive their insurance, “providers can’t charge more than their contracted rate,” says Kevin Petersen, California Network Consultant at Anthem Blue Cross. “They’re still covered members. Some providers feel they can bill their out of network fee. This isn’t permitted.”
What if you told the client up front you only had private-pay slots available? Health plan contracts do not allow you to say “I’m not taking insurance clients right now” unless you have notified the plan to hold referrals. Even if you do this, it is a breach of contract to tell a member that you only can see her as a private-pay client. You are only free to do this if the client has told you (without prompting on your part) that she does not want to use her coverage. Again in this case, get a self-pay agreement.
One last tip: Get consultation. Besides ethics or licensing agency complaints, there can also be serious consequences from the plan when you don’t stick to your contract. “All it takes is one pissed off client complaining about you to the plan and the plan will come down on you like a ton of bricks,” says Frager.
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Barbara Griswold, LMFT, is the author of Navigating the Insurance Maze: The Therapist’s Complete Guide to Working with Insurance – And Whether You Should. To purchase the book or other resources for therapists, click here.