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  • Writer's pictureSarah F. O'Brien, LCSW, LCSW-C, CCATP, CTMH

Health Insurance Companies are Big Business...and it's BS!

Updated: Jun 6, 2023

Read on to find out what practices health insurance companies are engaging in to avoid payment for mental health treatment and all the B.S. providers have to deal with just to get paid.

The ins and outs of how health insurance companies manage mental health treatment claims and their conduct towards the contracted mental health providers in their network.

We all know the big names in health insurance...Cigna, Aetna, United Healthcare, Sentara/Optima, Anthem BCBS, Humana, Beacon Health Options (or is it Carelon? Or something else now? The constant merges of different insurance companies and the mess that creates is a whole other blog post). What most probably don't know is how large health insurance companies are nickel-and-diming mental health professionals who provide treatment AND the members that pay into their plan. I'm not sure when it all happened exactly, but health insurance has become big business and where there is capitalism at play, the checks and balances seem to sneak away.

There are some particularly egregious practices health insurance companies are engaging in...and it's likely a main reason mental healthcare is not easily accessible.

Let's start with understanding the key players

First, we have the health insurance company. Next comes the contracted healthcare providers in network with said health insurance company. Finally, there are the constituents, the members whose employer, spouse's employer, or through the marketplace, have acquired health insurance benefits/coverage with the health insurance company.

(Be sure to click highlighted/underlined sections--these are links that take you to more information).

The Health Insurance Company

Healthcare Providers...specifically mental healthcare providers

The constituents, The Members


The Health Insurance Company

Some good and bad changes have occurred with health insurance companies over the last few decades. It seems moving from HMOs to PPOs for commercial insurance was intended to simplify things and increase access for members. But instead, it's created a cluster-F in coverage, in understanding benefits, in getting treatments covered, and I haven't even mentioned the increased cost for monthly premiums (don't worry, it's coming!).

The next thing that seemed to be good, and is in many ways, but in other ways also has caused what certainly has been unforeseen issues. The marketplace, or also known as Obama-care (affordable care act). This opened up the doors to fill the gap for people who did not qualify for Medicaid (state-funded health insurance where income must be at or below poverty line) or Medicare (federally-funded health insurance either for those 65+ or have medical disability benefits). Many people found themselves in jobs with small companies that did not offer health insurance, or working hourly-paid jobs that did not give them the full-time status to access benefits, and also did not qualify for Medicare or Medicaid. This left these folks WITHOUT health insurance and no way of accessing affordable healthcare. In comes the marketplace and for all the good it's done, there also came some not-so-good. The most significant con is that it has become REQUIRED to have health insurance of some kind to FILE YOUR TAXES. Now, if you don't have health insurance for all 12 months of the tax filing year, then there is a penalty.

So let's get real clear here: If you're a single adult, or unmarried adult in domestic partnership, work 30 hours a week at a grocery store or vet clinic, you don't qualify for health insurance benefits to be offered through your employer. You also likely make more than the poverty income threshold, which means you also don't qualify for Medicaid. And since you are actually working, you don't qualify for Medicare because you are not too disabled to work (even if you are unable to work full time due to disability, working any disqualifies you for disability benefits). Before March 2010, you would have had no options to access health insurance. These folks likely used ERs and urgent care centers more frequently. Today, these folks have the OPPORTUNITY to access health insurance through the marketplace (which is great!), however, a law was also passed that then required EVERY PERSON to have health insurance for the entire year to avoid tax penalty.

What does this have to do with health insurance as big business?

Well, if every person in the US is required to have health insurance of some kind then companies have an automatic market of millions of people that need their product. What this has led to is, in many cases, EXTREMELY HIGH monthly premiums BECAUSE we are all required to have insurance. Here's a personal example. I am a small business owner (psychotherapy private practice) who has a spouse and whose spouse's employer offers health insurance to spouses, children, or dependent adults of the employee. As the law is written (verified time and time again by my CPA), I am REQUIRED to accept the health insurance options provided through my spouse's employer. I CANNOT access my own small business health insurance or personal coverage through the marketplace IF I am offered options through spouse's employer. IF I was able to purchase my own plan, I have been informed time and again that I CANNOT write off that expense IF I have another option (i.e. spouse's employer plan).

Let me explain how a small business owner can 'write-off' health insurance costs. If a SBO is not married, or their spouse's employer does not extend insurance benefits to spouses, then that SBO can access small business health insurance plans through a broker or choose a plan through the marketplace--and then write off the monthly premium cost pre-tax, just like an employer subtracts the monthly health insurance premium cost from your paycheck before they give you paycheck or direct deposit. The reason for this is that it cuts down on taxes you would owe at year's end on your income because subtracting premiums before paycheck reduces $$ on your paycheck, hence taxed less because income is less.

Okay, now that we're clear on that, on with my personal example. Due to the fact that my spouse's employer OFFERS insurance to me, I am REQUIRED to accept it--NO MATTER HOW MUCH IT COSTS OR WHAT KIND OF COVERAGE IT IS! Allow me to also inform, although my spouse's employer extends health insurance options to me, they do not cover any of the monthly premium cost for spouses (they cover 80% of the monthly cost for employees and 0% for spouses/dependents). Full disclosure: the monthly premium for me (and it goes up every year because I age every year) is nearly $500!!! (mid thirties, non-smoker, mostly healthy) AND I AM NOT ALLOWED TO CHOOSE ANY OTHER PLAN (and be able to subtract the monthly cost pre-tax from anyone's paycheck--which ultimately means I'm paying more in taxes because my health insurance costs would not be able to be subtracted from the income). And let me also say, my coverage is not great and it still costs me copays and deductible amounts when I receive treatment from in-network providers.

To wrap up this section on the health insurance company. With my person example, I am required to have health insurance to avoid tax penalty, if I'm offered health insurance through my spouse's employer, I am required to take it--no matter the cost or coverage, if I choose a different plan than the one offered through my spouse's employer, I can no longer subtract the monthly premium cost before my income is assessed for tax-owing purposes (yielding higher amounts SBO would pay in taxes) AND to top it all off, my monthly premium is nearly $500 and the coverage is not very good. So, as the health insurance company, it seems like a no brainer to make bank. They get to collect $500/month + copays + deductible amounts (ask me why it cost $750 for ADHD testing) AND they don't even have to offer a good product (good coverage) because they are going to make money off of me anyways because I'm required to pay for it, even if it sucks. This does not give health insurance companies any incentive, really, to provide good quality products or coverage because they KNOW people have to buy into a plan regardless. Health insurance companies are making hand over fist with this type of system set up.

Healthcare providers...specifically Mental Healthcare Providers

If you are licensed medical professional (NP, MD, LCSW, LPC etc.) you have some options for employment. You could work in a clinic or hospital system. You could work for an other-owned small medical practice. You could work for your own private medical practice. Many mental healthcare providers choose to go into private practice settings to provide treatment, as this usually offers more freedom, less demand to see more and more clients/patients, and give more control to the provider in choosing specialties and which populations with whom the providers want to work.

If one becomes a private practice clinician (either in their own practice or group practice), they have the option to contract with health insurance companies to become an in-network provider. (This means the clinician accepts your health insurance, will bill (send claim) to your health insurance on your behalf, and collect whatever reimbursement the health insurance company is willing to pay them for that treatment or service they rendered to you). Choosing to apply and become an in-network provider is, first of all, not an easy process. These applications are more involved than any college or graduate school application or any work application I ever had to fill out! If your application is accepted, they will send you a contract to sign (at least they should). In this contract (some hundreds of pages long) are all the items you are required to follow to provide medical treatment to its members. Included in this is a fee schedule. This is a list of medical codes used on claims citing which service or treatment (or assessment) you provide and what the health insurance company is willing to pay you (based on your licensure level, geographical area of practice, and in comparison to rates for other providers in your region) for providing that treatment or service...and as the provider you CANNOT negotiate the terms of the contract or the reimbursement rate, it's either accept all or reject all.

As a mental health provider in Virginia, contracted with several health insurance companies, I can tell you, we are underpaid. Compared to other professions requiring the same level of education and licensure (like lawyers, for example), we are grossly underpaid for our level of expertise, the value of the treatment/service we offer the public, and for the taxing nature of providing mental healthcare (providing any healthcare, especially today, is taxing on the provider, the demands are unreasonable and the human beings behind the care are not considered as such--this is a problem). Many mental health clinicians practicing privately have not seen a rate increase in over 4 years from certain big health insurance companies! With the inflated market and prices higher at the grocery store and gas pumps, it could be that your mental health therapist literally makes less income than they did a few years ago and the only way to keep up with a livable income is to see more clients per week. Many of us have done that. Many of us did that during the pandemic crisis because there was a NEED and we often rise to the occasion, because we're compassionate and know we can help. However, this is not a sustainable practice for any healthcare provider or healthcare system--the answer is not for individual providers, either in private practice or other settings, to see more and more clients to 1) address the demanding need or 2) to make a livable income. Yet, that's what we're over here doing because the health insurance companies refuse review and evaluate reimbursement rates and offer timely increases to its contracted in-network providers (like an annual raise you may get at your job).

In addition to not seeing regular increases from these big companies, often when a small practice asks for a rate increase we are required to "make a good case for it," as was told to me by an insurance provider representative when I laid out all this information to him and noted I had not seen an increase in over 4 years from this particular company. In addition to 'making a case' (I wrote and submitted a 4 page letter outlining all of my additional experience, training, and other facts and figures about what I offer in my area and why I deserved a higher rate, as well as outlined explicitly the higher rate I wanted to get PER CODE--remember that list of codes? Yes, I made a table with the current rate and desired new rate for every single code--this was how I was 'making a good case'). And more times than not, they refuse to increase your rate, or they may give a few dollars per code, which is usually less than 3-5% of your current rate.

If that information alone doesn't alarm anyone. Read on. We're just getting to the juicy stuff.

Okay, quick recap. The health insurance company is making bank in a system that requires citizens to carry healthy insurance, despite premium cost or coverage offered (and despite your income, you are required to pay large premiums for health insurance coverage despite how much money you make and if you can really afford what is offered). They are also making bank when they require high deductibles to be met before paying for any treatments to current members paying their regular monthly premiums. They are also making bank due to underpaying licensed healthcare providers in their network. Meanwhile, healthcare providers have to accept contract terms without negotiating anything, accept reimbursement rates as is, and likely cannot convince these big companies to increase their rate without a lot of work and a lot of 'evidence its deserved' to which it may still be denied.

Now, what happens when you, the healthcare provider, have followed all the terms to a T. You submit the claim for the code(s) (of the service or treatment you provided), you submit it within the timely filing frame, you don't make any mistakes on the claim form, you only collected the proper co-pay or deductible amount and now you wait to be reimbursed the remainder of the allowable rate. But weeks go by, months go by, and you never get paid. You try to look up the claim in the electronic system the health insurance company uses for the provider to do this, and you find it's been rejected, or denied. What's the reason? You can't understand because you have followed everything to a T, as outlined by this health insurance company in the contract they provided to you so you could be considered in-network. However, it says right there in the system, "claim denied due to provider being out of network." WHAT? I mean, WTF?!?! Seriously? How can this be? This is what crosses your mind, as the provider, that has no negotiating power or recourse option for when the health insurance company FAILS TO UPHOLD THEIR PART OF THE CONTRACT-- payment to the provider for legitimate services rendered and filed correctly. After what is usually hours and hours of time, and typically for weeks, or even months, of trying to get in contact with someone at the health insurance company to either explain or fix the problem FROM THEIR END, the provider may or MAY NOT end up getting paid for that, or any other claim, that was left unpaid due to health insurance company error. And guess what guys? THIS HAPPENS CONSTANTLY FOR MENTAL HEALTH PROVIDERS AND CLAIMS! CONSTANTLY! SBO, small medical practices, group practices, solo providers do not have the capital, the presence, or legal-backing to FIGHT the health insurance company for failing to do their job, for failing to uphold their end of a contract they created, and often this ends with the provider NEVER getting paid, continuing to offer treatment to clients DESPITE NOT GETTING REIMBURSED BY INSURANCE (because it isn't the client's fault, and we like to help, remember?), and sometimes left having to close practices and filing for bankruptcy BECAUSE THE BIG BAD HEALTH INSURANCE COMPANY WAS ABLE TO DODGE RESPONSIBILTY and not held accountable to their mistakes, or for THEIR breach in contract.

This is healthcare today, folks. This is what the big business of health insurance is doing to the public, and to providers. They are making bank, and nickel-and-diming everyone else. Because in this scenario (and this is only ONE completely ridiculous reason a claim might not get paid properly as it should, I have many) the only way for the provider to continue making a livable income is to charge out-of-pocket the fee that SHOULD HAVE been paid by the insurance company to the client directly, and pass the buck to the client to contact their insurance company to start fighting for reimbursement because as a member you are owed coverage for which coverage you are now paying out of pocket because your insurance company made a mistake with not paying the provider directly. When this happens, sometimes the claim gets paid to the member directly, in other cases, they are not, which just leaves the member responsible for paying for more healthcare costs that SHOULD BE COVERED already because the member is regularly PAYING THE MONTHLY PREMIUM. What happens more times than not, is the provider just doesn't collect this from the client/member and just goes without the reimbursement. So this is even LESS MONEY coming to the healthcare provider after we're ALREADY UNDERPAID FOR SERVICES/TREATMENT RENDERED.

I'm really on the soapbox now. Can you tell? Starting to capitalize more words is the indicator!

The constituents, The members

We've already seen one member example (my personal one above) where high cost does not necessarily equal stellar coverage and that only benefits the health insurance company. Here's another. Member struggles with substance addiction. They've completed inpatient treatment (covered per plan details by insurance company). They've completed IOP (intensive outpatient) as step-down from in-patient treatment (covered per plan details by insurance company). Now, they're doing well in recovery and attend weekly OP (outpatient) therapy to prevent relapse and maintain current status as clean and sober--insurance stops covering the treatment. Why? Because it's no longer a crisis, acute situation (a.k.a. inpatient and IOP, which are considered higher levels of care for more acute symptoms of a mental health issue). The health insurance company refuses to pay for maintenance or preventative mental health or substance use disorder treatment.

What? Really? The health insurance company ONLY wants to cover crisis intervention. They only want to cover the most expensive treatment a person needs when they are in the worst possible place? This is like choosing to cover a foot amputation instead of covering insulin and diabetic supplies. This is asking members to forego preventative care (because it's not covered and weekly psychotherapy that isn't covered by insurance is costly), forego maintenance care (following up with your provider, for instance, after you started the insulin you pay for yourself to make sure it's actually helping your diabetes symptoms, as cross example to mental health/substance use disorder treatment), and only go to a medical provider when THINGS ARE SO BAD YOU NEED TO BE HOSPITALIZED TO GET WELL, and then they'll cover it. And then guess what? The fact that you're "so sick" with your diabetes or substance use disorder could prevent you from getting healthcare in the future due to having a severe pre-existing condition that cost your last health insurance company a lot of money because you needed hospitalization, and amputation, or inpatient treatment for addiction. Effed up right? Just straight up backwards in the way things should be and what makes the most sense for people to be healthy versions of themselves. I couldn't agree more!

So you're probably thinking "I pay $500/month for health insurance because that is my only option. The coverage isn't great because they won't pay for preventative or maintenance care and/or copays & deductibles are high per office visit. I can't get what I need in terms of treatment for my mental health or substance use disorder unless I'm in crisis or functioning so poorly I need to be in the hospital. Then I wind up in said more intensive kind of treatment (which, let's be realistic, also likely comes with a high bill later) and in the future I have trouble getting adequate health insurance coverage or it's even more expensive due to my severe pre-existing condition that likely would not have been or even gotten severe if I could have accessed preventative or maintenance care. WTF?" Yep. Maybe this is how I feel (It is! It is how I feel! This is ridiculous!). But this should be crossing everyone else's mind, too. Because this scenario happened. Happened over and over and over again with a big health insurance company in California several years ago and they got reamed in the class action lawsuit brought on by more than 50,000 members who were denied coverage. Has this stopped this egregious practice and wielding of capitalist power by big health insurance companies? Certainly not. And there are even worse cases of the health insurance companies failing to address electronic system issues that were/are incorrectly denying legitimate claims, denying claims for no apparent reason, and making it incredibly difficult or impossible for providers (and members, too, at times) to access a human being at the health insurance company to help them resolve the issue, even though each health insurance company assigns provider representatives to all contracted in-network clinicians for a certain region (providers have found these reps rarely, if at all, respond to our outreach for assistance--if they don't respond to us, what exactly is their job? And how are they doing it if they never interface with the providers that are seeking them out for assistance? Total side rant.)

This is happening right now, as you read, right here in Richmond, Virginia, to small and large mental health private practices, and it's outrageous. Health insurance as big business is bullshit! Competitive capitalistic markets should drive consumer costs down, allowing for better quality products, better quality care, for affordable and competitive rates, to increase access to consumers- not this cluster-F it has all become. Members' health is suffering because they can't get the care they need. Providers' health is suffering for see #1 and because we can hardly make a livable wage if we choose to be in-network providers for insurance companies, and we all live in fear these big insurance companies will just have a computer glitch, knock us out of network, and then refuse to fix the issue or pay us appropriately, even though the error is not ours (because this has already happened over and over again, and most egregiously for mental health and substance use treatment and for providers of these disorders). And living in fear that you won't be paid what you're owed and you may not have enough money to cover expenses for your business, let alone make enough money to care for your family. This is the terrain for many, many mental health clinicians in today's world. We are struggling to make ends meet, while the health insurance company does what? That's right, make bank.

This post highlights some of the main, current, reasons mental healthcare and mental healthcare providers are hard to come by. And if you do find one with capacity and availability to take on more clients, they may or may not be in-network with your insurance plan, and if they're not, 9 times of out 10 a person will not be able to commit to treatment or psychotherapy due to cost. The overall landscape here, the system in which all this functions, is so messed up and misguided, mental health professionals are either choosing to end all of their in-network insurance contracts and moving to self-pay only in their practice (livable wage, guys, we need it too), or stepping out of providing any mental health care altogether and moving into different professions or roles due to burnout from holding the fabric of the human population together (especially during the height of the COVID-19 pandemic) and the burnout from fighting big health insurance companies to pay us what is rightfully owed to us for services already rendered to their members. How can we keep expecting human beings to provide mental health care if as human beings we are not cared for in the ways we need?

What can you do?

1) Well, be clear on your insurance benefits, know what is covered and what isn't. If something should be covered and your provider tells you that your insurance didn't pay, get on the phone with your insurance and complain. Go up the ladder in your complaints, if needed. Hold your insurance company to what they agreed to cover and make a big stink about what they don't, and while you're at it, make a big stink about the overall monthly cost, the additional copay/deductible costs, too.

2) Advocate, advocate, advocate. Advocate for yourself with your health insurance company. If a provider tells you there's a treatment you need, or could improve your symptoms, and your insurance doesn't want to cover it, advocate that they do. You can ask for a single-case agreement, complete a pre-authorization, write a letter about other treatments that did not work.

3) If you have an employer-sponsored plan (health insurance through your employer or spouse's employer), and you continue to have issues with coverage, cost, or customer service with your insurance provider, go to the HR department that manages health insurance benefits for employees and complain and advocate for better plan options.

4) If health procedures and treatments continue to be denied or not covered as they should, you can gather together and file a class action suit, if that's what is required. You can do you part as a member because, let me tell you, they don't care if we, providers, complain because we're only taking money from them and not giving any to them. Members paying into plans have the leverage. Well a little leverage. More than we do as providers, not as much as the big business they are.

And, be grateful for everything your mental healthcare provider has gone through and continues to go through to be able to provide the care and the treatment you need to THRIVE & SHINE in your own life.

If you are a mental health provider, add your comments below. Or if you've had a particularly egregious experience with health insurance companies as a provider, let me know! I will add information about you and your situation, with a link to your practice, to this blog.

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