Why Many of my Clients Prefer Not to Use Insurance for Therapy

I appreciated your incredibly honest review of how patient privacy works. Instead of blanket statements, you explained the intricacies of the law as it affected you and your patients, and documented the steps you took to protect it. I found it quite refreshing to see somebody who is passionate about privacy.“

Insurance companies won’t pay for your therapy unless you are diagnosed as having a mental health disorder. Understandably, this doesn’t sit well with many people. Worse, this can create complications down the road. To avoid this, I offer private pay as an alternative. Here are some of the most common reasons many of my clients prefer to not use insurance for therapy.

Concern #1: Being Labeled

In order for your insurance to pay, you will need to be diagnosed has having a mental illness. The reason for this revolves around a mysterious insurance term called Medical Necessity. Insurance won’t pay for anything that they don’t consider worthwhile to treat. More specifically, they don’t want to pay for anything that they call a “convenience,” which is a fancy way of saying that if it’s not a bona-fide mental disorder, it doesn’t count.

For example, if you were having Panic Attacks, your insurance would most likely pay for your treatment. If you wanted to be seen for self-esteem, marital therapy or personal growth, they won’t pay. The unspoken incentive is for a therapist to diagnose patients as having a mental illness in order to bill their insurance. It’s unethical, potentially damaging to the patient being labeled, and puts everyone but the insurance company in a potentially sticky situation. Concerns that having controversial labels such as Panic, Bipolar or Generalized Anxiety Disorder may impact your future choices and options.

Concern #2: Confidentiality & Privacy

Talking with a therapist is a very personal and sometimes vulnerable experience. Counselors strive very hard to keep what is said in session confidential. Unless required by law, your private information is not released without your permission. In reality, it’s a little more complicated than that. Here’s a copy of an actual letter that I recently received from an insurance company requesting a copy of one of my patient’s records:

"In reviewing your claim for [patient name] we noticed it may have been billed with inaccurate information such as incorrect diagnosis codes, modifiers, units or place of service. We realize mistakes can occur in billing, so we're asking you to send us medical records to help clarify this information before we process your claim. Please send us the following patient treatment records: Presenting symptoms and complaints, treatment plan/goals, test information and results, medical management notes, medication records, length of counseling sessions."

What you talk about with your therapist ends up being coded and is ends up being available to marketers, advertisers and researchers, but not you. Some of this is done for honest and worthy reasons, such as helping researchers understand and improve mental health disorders. Some of the information is used to help pharmaceutical companies develop more effective marketing strategies. And the concern is that having the insurers developing specific profile about each individual, this information may be, someday, used against us.

Unfortunately, some of this data will be used for reasons we don’t know, a type of underground information black market. Why is this? The reality is that no one is talking about what is being done behind the scenes with this information and we have no legal rights to request these details. This mysterious battle for the possession of your intimate information is happening behind the scenes without our knowledge.

Concern #3: Pre-existing Conditions

Once you are labeled has having a mental illness, it is part of your permanent medical record with both your therapist and your insurance company. If the Affordable Care Act (ACA) is repealed, pre-existing conditions will no longer be covered, and this includes mental health.

How anonymous is your information? Most people have heard about HIPAA (Health Insurance Portability and Accountability Act) in regards to patient privacy. And to be fair, it is protecting you to a certain degree: Your information cannot be shared without your consent if your name is included. The dilemma is that once your name is removed, your consent is no longer needed. And from this anonymous information, very specific patterns that identify you can be formed.

In today’s day and age, your name is no longer as uniquely identifying of who you are as is your details. Reverse-engineering and cross-referencing anonymous data in research studies have shown that privacy is, at best, an illusion. As anonymous patient data grows more extensive, it is indeed likely to figure out who is who. And from that, we are categorized and labeled, just by showing up.

Concern #4: Theft of Personal Information

Theft of your personal information from your insurance by hackers is a real concern. So far, we’ve been lucky (or simply misinformed). In the past five years, more than 41 million people have been affected by illegal U.S. health record theft and hacking attempts. In early 2015, Anthem Health revealed that 80 million patients had their information stolen… back in 2014.

If your financial information is hacked, you can change your passwords and have the protection offered by FDIC insured banks; there is no equivalent protection offered for restoring your privacy. Perhaps the practice of anonymizing and sharing patient data is ultimately helpful. The big questions that we deserve answers to are how is our private information being anonymized, who is buying and selling our information, and what protections are being given to us to prevent the theft or sale of our data? Until we are given a vote in the matter, we really are out of the loop.

Concern #5: Life, Disability or Long-Term Care Insurance

This one has surprised me; the concern expressed to me here is in being disqualified or limited due to a pre-existing mental health disorder. For example, being denied in an application for Long Term Disability insurance simply because you were depressed after your divorce and decided to get some help.

Concern #6: Not Wanting Your Personal Information Bought and Sold

Personally, I don’t think this is a critical issue. Anonymous information is being used to identify and track us, regardless of whether we participate or not. However, it’s true that there are still some valid concerns here.

How these companies make use of their records on your mental health disorder is something they keep secret. Many routinely sell this data to commercial data collection companies (“aggregators”). If you ask, they will either decline to comment or give you a boilerplate generic answer such as, “We do not sell any information as we value our customers’ privacy” which is both vague and as suspicious-sounding as, “Your call is important to us, please continue to hold.”

A good example is Google: If you search for left handed monkey wrenches, your location will be identified as someone who is left-handed and is likely dealing with some kind of plumbing scenario. If you’re signed in to Google, they’ll actually add that to your invisible profile as well. This data is what is so valuable to advertisers, marketers, and researchers, and is how Google makes their money. Insurance companies, unfortunately, are in the same game.

The bottom line: Information is valuable, and most companies sell the information they gather to other companies to be collected, identified and analyzed.

My Personal Recommendations

So what to do? Here are my thoughts and suggestions when working with a therapist given these concerns.

Rule Number One: If you need to see a therapist or counselor, you should still go! When your marriage is falling apart, depression is wrecking your life, or anxiety is ruining your career, concerns about privacy should not be placed above your health and well being.

Rule Number Two: If you are concerned about using insurance, request a non-mental health diagnosis and use pay out of pocket. These are many generic labels (thus not covered by insurance) and considered by many to be “safe”. They include diagnosis codes such as:

• “Relationship Distress with Spouse or Intimate Partner” (Z63.0)
• “Phase of Life Problem” (Z60.0)
• “Other Counseling or Consultation” (Z71.9, my favorite one for privacy)

Regardless of your choice, remember that in the end, the goal is to get help and to get it effectively. Don’t avoid therapy just for privacy concerns (solving one problem) if this means you will still be struggling in life (avoiding a bigger problem).