The leading practice resource for behavioral health providers — since 1974

Volume 38, No. 1, Issue 453
January, 2012

PRACTICE BASICS:  Should you encourage clients to bypass managed care benefits?

For therapists, the advantages of minimizing managed care work are obvious: less paperwork, fewer headaches, and more money.  But there are advantages for the patient as well--and pointing them out is a strategy some clinicians use to wean clients off managed care.

Several clinicians we know make a conversation about the problems inherent in managed care a standard part of their intake procedures.  (See the box on the next page for details on that.)

This is a simple matter if you’re not a participating provider with a client’s health plan--the client can work with you or not, as they choose.  But recently, a reader posed a question that complicates the issue.  What about MCOs that you are active with?  Can you, in effect, play it both ways--accepting the managed care fee from clients who choose to use their benefits, while taking cash from others who choose to bypass those benefits?

Discussing that question over the years with a variety of experts--managed care execs, lawyers, professional billers, and ethics experts--we’ve heard opinions on all sides of the issue.  But overall, the answer is yes: Many therapists do it, and while there are legal and ethical caveats, it is very doable.

Magellan, for instance, has a rather noncommittal policy in this area, saying simply but ambiguously that the best interest of the patient is what matters.  What does that mean?  Essentially, it means you can go ahead--but you should document carefully that the patient has chosen to waive benefits.

The fact is, when a client bypasses benefits, the managed care company saves money.  Officials from other companies have reacted with bemusement when we asked if they minded this kind of activity.  “Why would we mind?” has been the general reaction.

“The reality is that it’s the patient’s choice--period.” we’re told by Susan Frager, who runs a billing service, Psych Administrative Partners, in Lacey, WA.  “I don’t want to be told that I have to use my insurance if I’m concerned about confidentiality and want to pay out of pocket.“

Frager, a former MCO case manager--says the practice is “very common” and adds, “I think a majority of therapists do it.  And my sense is that they’re coming from an ethical position.  I’ve been told we have to sternly warn our patients about the limits of confidentiality that insurance imposes.”

Another professional biller we contacted, Jean Thoensen, agrees:  “There are a lot of reasons why people might not want to use their benefits these days.  Especially people in the military.”

To be safe, it’s probably wise to go on a company-by-company basis.  Check your managed care provider agreements to see if the practice is specifically prohibited.

Contacts: 1) Susan Frager, Lacey, WA, (360)628-8612,; 2) Jean Thoensen, Centreville, VA, (703)266-8612,

The pitch: Benefits of the cash option

You get what you pay for. That’s what many clinicians try to tell their new patients in an effort to reduce their managed care burden.

The bottom line, they say, is that cash buys confidentiality, while managed care compromises it.

That message, presented at intake along with the standard information about your fees and office policies, seems to work well. A Connecticut clinician we know includes the follow language in her standard intake form:

“If your mental health insurance benefit is managed by a managed care company, we will discuss payment procedures as they are determined by your plan. Please be aware that all managed care plans involve direct clinical management by the company. This makes it necessary for us to work together with your company to determine the nature of your treatment and, therefore, does have some impact on confidentiality.”

A California therapist we spoke to recently puts it even more bluntly: “I tell them straight out, ‘If you pay me

directly, everything’s between us. If you use managed care, there’s just no confidentiality. Anyone might have access to what goes on during our therapy.’ I feel like I have a responsibility to tell them that.“

Ginger Blume, another Connecticut therapist, is even more aggressive. She’s trained her office assistant to brief potential patients about managed care pitfalls at first contact.

If the prospective client still wants to use the MCO benefit, Blume calls back to speak to them personally.

By then, 60% of them decide they’d rather pay out-of-pocket. The rest are referred out—period.

“Therapists don’t believe it when I say that,” Blume says. “They don’t have confidence. I point out that people are paying $60 or $80 out of pocket for a massage. They should be willing to pay for therapy.”

And because Blume doesn’t work at all with most managed care companies, the contractual issues discussed in the accompanying article aren’t relevant.