8 questions to ask when choosing between insurance and private pay

Choosing how to get paid is one of the biggest decisions you’ll make as a therapist. Should you take insurance, stick with private pay, or mix both? Your payment model affects your income, paperwork, clientele, schedule, and even your stress levels. This blog post asks seven questions that will help you make the best choice for your practice. 

This blog post draws from our recent webinar, “Credentialing vs. Private Pay: Choosing the Right Revenue Model for Your Solo Practice.” If you prefer watching, you can catch the full recording on-demand for free. 

Insurance vs. private pay

Accepting insurance means you become an “in-network” provider for one or more insurance companies. Many clients look for therapists who accept their insurance. Private pay means clients pay you directly, out-of-pocket, with no insurance involved. 

Neither option is better for everyone. What matters most is what fits your needs, your clients’ needs, and the vision for your practice.

How much can you earn per session?

When you accept insurance, you typically find that the amount you’re paid per session is lower than what you might charge as a private pay therapist. However, being an in-network provider can often lead to a more consistent stream of clients, as many people prefer to use their insurance benefits. 

With a private pay model, you set your own session rates. These rates are usually higher than what insurance companies will pay, even when you factor in a client’s copay. The trade-off, however, might be that you have fewer clients overall, as they are paying out-of-pocket for your services. 

Can you negotiate contract rates with insurance companies? 

This is a great question, and the answer is: it depends. Some insurance companies simply won’t budge on their rates. Your ability to negotiate often depends on your specialty; if it’s rarer or in high demand, you might have more leverage.  

For government payers like Medicaid and Medicare, negotiating rates is usually very difficult because they are bound by specific fee schedules. However, with individual commercial plans (like PPOs), you might be able to negotiate a slightly higher rate, especially if you offer a service that’s not widely available in their network. It’s often helpful to talk directly with the network management or provider relations representative from the insurer. They can sometimes offer insights or tactics to help you secure a better rate for your contract.   

What about taxes?  

Generally, there isn’t a significant difference in how taxes are structured for private pay or sliding scale income versus insurance reimbursements. All are considered income. However, tax laws can vary by state. For example, in some states like Minnesota, there might be specific programs funded by a tax deducted directly from your reimbursements from commercial or government payers. Always consult with a tax professional in your state to understand any specific tax implications for your practice.  

Are there any red flags to watch out for when signing insurance contracts?

For the most part, insurance contracts are fairly standard, and there aren’t many major red flags. However, it’s wise to communicate with your peers if you know other credentialed therapists. You might want to compare the rates they’ve been offered versus what’s in your contract. Most commercial payers will post their fee schedules publicly somewhere, though you might need to be a bit resourceful to find them. Medicaid and Medicare almost always publish their fee schedules on government websites. Always look for these published schedules to compare them with what’s in your contract.  

How much paperwork is involved with each model?

Ah, the paperwork! When you accept insurance, you’ll need to follow specific rules to get paid. First, you’ll need to get credentialed. We cover the credentialing process in depth in our blog post “Breaking down credentialing: What every therapist needs to know”. Once you’re credentialed, getting paid will involve taking time to provide detailed information and then often waiting to receive reimbursement. You may get audited or be required to provide more information as claims get scrutinized.  

With private pay, you manage payments directly. Clients typically pay you at the time of service, so you receive payment right away. You’ll usually need a credit card payment service, and many therapists also use popular options like Venmo, PayPal, or Zelle, as clients often request these for convenience. That doesn’t mean you should skimp on documentation, but you can focus on what you need for your own records as opposed to insurance requirements.  

These two factors – what you earn per session and the time and effort involved in managing payments – are incredibly important to consider when making your decision.  

How does each model impact how to market your practice?

A significant advantage of accepting insurance is that you become part of their provider database. Clients can easily search for you and confirm that you’re in their network. This acts as a built-in marketing tool, bringing potential clients directly to you.  

If you choose to be a private pay practice, you’ll manage all your marketing efforts yourself. This could mean paying to be listed on a clinician directory, handing out business cards at local doctor’s offices to build referral networks, or engaging on social media. All these activities take time and effort to help clients find your practice. 

Should you switch models or use both?

This decision often comes down to whether you have the client base you want to feel successful. You might also be seeking a different type of client. For example, if you start out as private pay and you’re struggling to attract enough clients, that’s a strong sign to consider getting credentialed with insurance. Being in their database offers much wider visibility, making it easier for clients to find you and narrow their search by location or therapy modality.  

Like many things, it truly depends on you and your practice’s needs. If you’re genuinely struggling to build a client base with one model, incorporating the other can help you grow and serve more people. Likewise, if you’re overwhelmed with paperwork or want fewer admin headaches, consider moving to private pay, or taking only select insurance plans. 

Considering the time commitment overall, accepting insurance generally involves more effort upfront for applying, qualifying, and meeting reimbursement rules. However, it can help you build your client base faster due to increased visibility.   

Ask yourself these key questions:  

• What matters most to you: more autonomy or consistent client flow?  

• Are your clients more likely to prioritize convenience (billing through insurance) or flexibility (direct payment on demand)?  

• How much time and effort are you prepared to invest in administrative tasks versus marketing?  

There’s no one-size-fits-all answer, and you don’t have to choose just one! Many therapists start with one model and shift or blend as their needs evolve. If you want to learn more about the hybrid model, we recommend reading our blog post “Cash pay or insurance? Finding the right payment model for your practice”.

What billing tools are must-haves for either model?

Whether you choose insurance, private pay, or a blend, a good electronic health record (EHR) is essential. Look for one that includes scheduling, documentation, and a billing module, all in one platform (like Ensora Mental Health). This creates a connected system where you can tie your time spent with clients from the calendar, document your sessions while staying compliant, and then easily push that information to the billing queue. This means if you sign off on a progress note for a 60-minute individual therapy session, that information flows directly into the billing system. Managing separate systems for each of these tasks can quickly become a nightmare, so having everything in one platform simplifies your workflow. Look for systems that also offer dynamic form building, allowing you to create your own preferred note types or templates. 

Achieve harmony in your billing with Ensora Mental Health 

Billing shouldn’t eat up your time or stress you out. Ensora Mental Health can help, whether you take insurance, private pay, or both. Our platform automates the tedious stuff (like claim submissions and denial prevention) so you get paid faster, with fewer headaches. Experience a platform that works with you, not against you. Start your free 21-day trial today. 

We hope this guide helped you choose whether to take insurance, private pay, or both. Your practice is unique, so choose the model that best fits your and your clients’ needs. Whatever you choose, we’ve got your back.