Overview
I would like to offer a candid, behind-the-scenes look at the way therapists get paid. As a marriage and family therapist who transitioned from a solo private practice to a group practice, I will highlight the unique challenges we face in getting paid and provide insight into the myths and limitations of our earnings. Like other professionals, therapists in private practice are compensated for their work, but only for the time spent with a client: our livelihood is directly tied to clients attending sessions. If a client cancels or doesn’t show up, we are not paid for that time, including the time we took to prepare for the session. Most private practitioners are not salaried, and the financial stability of a practice, whether solo or group, relies on insurance reimbursements. Insurance rates are fixed and vary in pay.
When we consider the fact that time is a precious commodity, it becomes clear that how we utilize it directly affects our quality of life. For therapists, everything depends on filling and completing a client hour, and our time loses value when a client does not attend their appointment. Late cancellations and no-shows have a significant financial impact on us. Consider a scenario where a client requests a 5:00 p.m. appointment on Friday and fails to attend without good cause. Here is what happens … the therapist waits 10-15 minutes for the client before reaching out to check if the client is on their way. When the client doesn’t respond, the therapist continues to be concerned about the client’s well-being and loses an hour of pay because you cannot bill insurance for a missed appointment. Now, the therapist is in the difficult position of charging the client for their missed appointment—a practice that the client often misunderstands, potentially creating tension in the therapeutic relationship.
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For therapists who rely on insurance, the payment process is not as straightforward as it may seem. We are paid per time increments of 30, 45, and 60 minutes, but we are only fully paid once we receive reimbursement from the insurance and the client. When clients fail to pay their co-payment or co-insurance at the time it is due, the therapist is left with dents in their cash flow. It also creates a situation where they make less money for their time, which increases the effort needed to collect the funds. The more hours therapists spend collecting from clients, the less they make per hour. In fact, the terms and conditions of most insurance contracts include an obligation to collect the co-pay and/or co-insurance payment from the client. The same is true of those who have a deductible. The deductible must be paid to the provider (us) because the amount is applied toward the client’s benefits. When someone refrains from paying the deductible, they are receiving free therapy while getting money added toward their deductible.
Debunking myths about therapist’s pay
“Therapists get paid their full fee”
It is easy to see why one might think therapy is too expensive. After all, the therapist’s website says they charge $150 per hour of treatment, which adds up to $600 per month. Who can afford that? However, digging deeper, you will find that most therapists are not paid what they charge. The difference between the clinician fee and what insurance pays is significant! For those paneled with insurance companies, their pay is dictated by the insurance companies they are paneled with. Each contract is nuanced and has set reimbursement rates for various sessions. For example, one insurance company might pay $100 per session while another pays $75 for the same session. Clinicians set fees higher than reimbursement rates to ensure they receive the full reimbursement. Broken down, it goes like this—If your fee is $90 and the insurance pay rate is $100, you will only be paid up to the $90. Even though the contracted rate is $100, you will only be paid the full rate if your rate is equal to or higher than theirs. The therapist needs to set a higher fee than the top reimbursement rate if they want to be paid the total contracted rate.
“Therapists get paid twice as much for couples work”
While it may be hard to believe, insurance pays less for a couple or family session, which is often more work and stress for the clinician than for an individual session. Couple and family therapy requires a unique skill set not reflected in the reimbursement rates. Therapists can only bill under one person in the couple or family, and the rate for that is, on average, $10 an hour lower than that of an individual hour. While our set fee may appear high, a paneled clinician receives far less than their fee-for-service rate because they want clients to have the ability to access care through their insurance companies. But we have no control over their fixed rates and rarely get a meaningful increase. And when we do, it is a matter of dollars and cents.
“Late fees equal co-pays”
Most clients do not realize how their absence impacts a therapist’s livelihood. Some believe the late cancelation fee is the same as their co-payment, which ranges from zero to $40. However, as therapists, the hour is lost. The insurance protocol is clear. We only get paid for time spent with clients, which relies on them showing up on time for appointments. When a client cancels late or does not show up, the therapist loses their reimbursement for the time they planned and showed up for.
Most practitioners struggle with setting a cancellation fee for late cancellations and missed appointments. Our service agreement has a policy asking for 24-hour notice so we can plan our time efficiently and not be in a position to charge for the appointment. The fee we set for this policy must make business sense, and a small co-pay does not do that. Think about it. If insurance pays $100 for a session and you charge a co-pay fee of $25 for late cancelations, you lose 75% of your income. I don’t think many other professionals can offer to be this generous.
Remember that ethical billing practices are predicated on time and ensuring we bill each unit of time correctly. When a client is 10-15 minutes late for a session, we have to bill for the appropriate time, lowering our hourly pay. We have a cancelation policy to ensure clients understand that we need advanced notice to plan for the missed hour properly. It is time that can be filled with another client, and a therapist may say no to someone asking for a particular timeframe because it is already filled.
“You didn’t go into it for the money”
“Hard work equals being well paid”
Our time and expertise
Workload and hours
Overhead costs
Skill and compassion
Cost of living
