How Mental Health Prices are Set
There is not a standard for how cash prices are set. Many clinicians set their cash price at the same price that the highest paying insurance company will pay. Some clinicians use the average price in their area. There is a lot of talk among clinicians that therapists should set their price at, “what they think they are worth.” Everyone has a different idea of, “what they are worth.”
Training and experience are not a good indicator of cost. A new therapist, who is still being supervised, will commonly charge the same price for service as a seasoned therapist who has spent several hundred hours and dollars on post graduate specialized training. Some therapists argue that training and experience are not a good indicator of expertise and therefore such things should not dictate cost. It is difficult to say if this is right or wrong. The only thing that dictates if a person is not worth their price, is that people are not willing to pay the money. The consumer dictates the market.
Negotiated Insurance Price
Each insurance company negotiates a discounted price. If the provider is in-network, the provider cannot charge more than the contracted rate. When your explanation of benefits arrives in the mail, it will say, “you may owe….”. This is how much your contracted rate is.
If the provider charges more than your contracted rate, it is called “balance billing,” which is usually a break of the contract that the provider has with the insurance company.
Differences in Negotiated Prices
The highest paying insurance companies, in my area, for mental health, are Blue Cross Blue Shield, Ambetter, and Qual Choice. The lowest paying insurance companies are Aetna and Cigna. The lowest paying companies pay providers about 1/3rd of what the higher paying providers are willing to pay.
The positive about having a plan with the higher paying companies is that there are many providers who are in-network with those companies. This makes it easier to find a provider. The downside to the higher paying companies is that you will have to pay at a higher negotiated rate, until your deductible is met.
The negative about having a plan with the lower paying companies is that there are many providers who are not in-network with those companies. If a provider refuses to sign a contract with the company, the provider can charge whatever price he/she chooses. Many providers choose to be out-of-network for that reason. The positive side about having a plan with those companies is that you will be paying a small negotiated rate with in-network providers.