themighty logo

Therapists in California Want to Provide Affordable Mental Health Care. Here's What's Stopping Them.

India Gomez, Ph.D., knows all too well how difficult it can be to get insurance to cover mental health care. A clinical psychologist in Oakland, California, she often spends a disproportionate amount of time in her workweek chasing down insurance companies to get paid. From endless phone trees and incomprehensible claims processing to representatives who can’t answer any questions, the bureaucracy cuts into Gomez’s time, energy and her bottom line.

“I’m trying really hard to serve people who really need it and it costs me. That just doesn’t make sense,” Gomez said. “[We’re] at the mercy of this company who’s profiting billions of dollars and that’s just not where the burden should be.”

She’s also had to navigate the system as a consumer. Gomez started seeing a therapist as an adolescent, and still goes to therapy regularly as part of her own growth and healing process. In the midst of the COVID-19 pandemic as daily life stressors increased, Gomez requested her insurance company cover longer therapy sessions. She was denied. Her insurance also denied a follow-up request to increase her number of sessions each week.

Gomez was told she only had two options if she wanted insurance to pay: She could take the number of minutes the insurer allowed or she could check herself into an inpatient psychiatric hospital. “It’s an absolutely outrageous choice,” Gomez said. It’s also the kind of choice that makes Gomez a great advocate for her clients — she’s well aware what they’re up against.

Gomez’s dual experience as a client and therapist exposes a mental health parity issue that doesn’t get much attention: Even driven therapists face major hurdles navigating the fractured U.S. health care system. Their struggle may be invisible, but it interferes with their ability to deliver good mental health care.

“They have to deal with the same imbalance of power and finances and the inherent advantage that the insurance companies have,” Katie J. Spielman, a San Francisco-based attorney with DL Law Group, said. “It’s just a huge administrative burden for both patients and providers alike to try to fight the insurance company and get paid either the fair rate … or in the patient’s case to get their claims approved and paid.”

Mental health parity — or equality — means insurance companies are legally required to offer the same benefits for behavioral health care as they do physical health. A federal mental health parity act passed in 2008 and was expanded in 2010 after the Affordable Care Act named mental health and substance use treatment an essential health benefit. With few exceptions, insurance plans can’t make it more difficult to access mental health care. Parity law covers both consumers and providers.

A Latinx female wearing a red tank top and glasses with her hair pulled back look off to the right

Therapists Want to Provide Affordable Mental Health Care

California has the highest rate of unmet mental health treatment needs in the country. Research indicates it’s hard for clients to find a therapist who accepts their insurance, especially among people who are covered by a private health insurance plan through their job or Covered California. Californians with a private PPO plan were 5.6 times more likely to have a therapist who doesn’t take their insurance compared to their medical doctor.

One major reason? A significant portion of psychotherapists in California don’t take insurance, particularly those who work for themselves in private practice.

Though the number of therapists who accept insurance isn’t tracked by a single organization, one estimate suggests 42% of therapists in California don’t accept insurance at all. Without the financial help of insurance, clients pay an average of $130 out of pocket per session. It can be much higher in major cities.

Many therapists do want to accept insurance. Gomez explored the possibility because it would make her services affordable for more people. When she started applying to accept insurance, however, it became apparent the process wasn’t going to be easy.

California’s lack of available mental health clinicians is well-documented, especially the lack of therapists who take insurance. Insurance industry insiders say this is primarily due to a shortage of providers across the state.

“Regrettably, geographic distribution of mental health providers in California has been particularly challenging, especially for sub-specialties and in very rural areas of the state,” Mary Ellen Grant, vice president of communications for California Association of Health Plans (CAHP), said.

California is facing a mental health worker shortage projected to worsen over the next eight years. Yet many therapists who apply to join an insurance panel (or network) are denied. Insurance companies tell therapists they already have too many providers in the area. This may be true in bigger cities, but it’s definitely not true for those who live in rural areas, need specialists or want culturally competent therapists.

Liberty Wyman, LMFT, who has a private practice in Barstow, California, where she grew up, can count on one hand the other private practice therapists in her area. However, one of the biggest health insurance companies in California denied Wyman’s application to accept insurance. The company claimed there wasn’t a single patient covered by their insurance in all of San Bernardino County — a county with over 2.1 million residents.

After a Spanish-speaking clinician joined Norina Murphy‘s group practice, Murphy wanted to set her up to accept insurance. Murphy’s application for her new therapist was denied because the company claimed it had too many providers on its roster already, despite a well-publicized plea for diverse clinicians. “I really doubt [they] have too many Spanish-speaking therapists,” Murphy, a licensed clinical social worker in San Bernardino County, said.

Signing on with an insurance company is only the first hurdle for therapists in private practice. Megan Phillips, Psy.D., PMH-C, an Orange County-based therapist, said about 85% of the time filing claims and getting paid goes smoothly. The other 15% can quickly turn into an absolute nightmare for therapists, their clients and even seasoned billers. Major insurance problems can lead to thousands of dollars in lost revenue. Usually, however, the issues are just plain irritating.

In one instance, Gomez spent hours on the phone jockeying claims back and forth between a client’s two insurance companies to get reimbursed for months of unpaid sessions. Instead of working it out among themselves, Gomez got stuck playing referee, time she wasn’t paid for and can never get back.

“There are two insurance companies who have billions of dollars worth of profit. You would think that they can sort it out between the two of them,” Gomez said. “I don’t care how they sort it out, but [these] guys need to sort it.”

Therapists sometimes end up so defeated trying to chase down payment for their work, they just give up. “At some point, my money that is owed is not worth the cost of pursuing it,” Gomez said.

Murphy agreed, saying, “I don’t even know how much money I lose every year. It’s probably a lot. They just want to get away with not paying.”

A female therapist leans over her kitchen counter with a cell phone pressed against her ear

Therapists Can’t Always Afford to Accept Insurance

Low reimbursement rates turn providers away from accepting insurance. What therapists get paid per session varies depending on factors such as location, license type, experience level, and specialty training. Rates can range from $56 per session to $140. In California, the average therapist is paid $80-$85 per session. These rates have been largely stagnant for the last 10 years.

The rates insurance companies pay therapists are also notably lower than what general practitioner doctors earn. Primary care physicians earned nearly 24% more than mental health providers in 2017. The pay gap between medical doctors and mental health professionals has widened since 2015.

When she did the math, Gomez’s personal MDs earned 2.15 times more per minute than the rate she’s paid as a psychologist by her highest-reimbursing insurance company. Gomez is also a doctoral-level health care provider.

“It’s one of the lowest-paid doctoral degrees that you can get,” Phillips said of clinical psychology.

Some of the pay disparities can be attributed to a fee-based model that allows doctors to bill for multiple procedures in the same appointment. Their work is structured so they can provide more services for more time at a higher reimbursement rate. Therapists are generally limited to billing one service per session. But the value of paying for mental health care is clear: Addressing mental health needs lowers the cost of physical health care too.

“You would just think that it’s more valuable in a system where it’s all about the money,” Gomez said of mental health care.

The cost of operating as a small business in private practice quickly becomes untenable when therapists try to balance their operating and living expenses with their income through insurance reimbursement. On paper, a therapist may be earning more than $100,000 a year before expenses. However, the average salary for therapists is $50,000 to $75,000 a year.

Most therapists prefer to see about 20 clients a week so they have enough emotional energy to give their clients the best possible care. Some clinicians who accept insurance see up to 35 clients every week to make ends meet. This time doesn’t include all the unpaid tasks that come with being a therapist.

“I don’t get paid for care coordination, I don’t get paid for billing, I don’t get paid for chasing my money down, I don’t get paid for advocating for clients, I don’t get paid when I write my notes, I don’t get paid if someone wants some paperwork,” Gomez said.

She doesn’t know how much time it takes her each week to do these other tasks. “If I did that calculation, I think I would be so upset by it,” she said. Then come the business expenses.

Gomez, who works in Alameda County, said on average it costs about $2,000 every month to keep her psychology practice up and running. Expenses include everything from office rent, a business license, and malpractice and liability insurance to credit card processing, software, website domain and hosting, and continuing education. She also pays an administrative assistant to help her a few hours each month and must pay an accountant.

Business expenses vary depending on the size of a practice or where a therapist works. Phillips, who runs a group practice, hired a billing service to take care of all her paperwork. She pays her biller 6% of her practice’s total income — and expects to pay 30% to 40% in overhead costs each year. Nearly 30% to 35% of income goes to taxes. Murphy keeps a lawyer on retainer for her group practice, another monthly expense.

None of these business expenses include the cost of benefits an employer typically provides, like health, life or disability insurance, paid time off, or a retirement plan. Gomez pays $638.41 every month for a Blue Shield Gold HMO plan purchased through Covered California. The expenses can be overwhelming.

“I couldn’t qualify for a mortgage. I don’t even know if I can get a car loan if I needed a car,” Gomez said. “That’s the debt-to-income ratio to be a psychologist and try to make it in private practice.”

Therapists are also, as Linda J. Hoffman, Psy.D., a Beverly Hills-based psychologist and adjunct associate professor at the University of Southern California, said, “staring down crushing student loan debt,” a steep cost of entry into the profession.

“Eight years from starting graduate school to licensure and I came out with a house worth of student loans,” Gomez added.

Stressed female therapist works on paperwork on her computer surrounded by piles of books

The Health Care System Leaves Therapists to Struggle

The U.S. health care system prioritizes profit, and bigger companies with a financial stake have found ways to maximize their bottom line. According to the California Health Care Foundation, health insurance companies in California raked in $183.7 billion in 2017, a 13% increase from 2015. One strategy is to shift the burden of new rules to providers instead of taking on the time and cost themselves.

Attestations, or network adequacy verifications, are one example. Insurance companies are required to have enough therapists to meet demand, which is called network adequacy. By law, consumers have a right to find a provider who accepts their insurance near their home in a reasonable amount of time. When patients have a hard time finding a therapist who accepts their insurance, it’s a potential sign an insurer doesn’t have enough therapists.

To help hold insurance companies accountable for network adequacy, the state implemented a new rule in 2016 that health plans must reach out every quarter to providers to verify the company’s directories meet the demand for services. The administrative burden of verifying networks landed on therapists instead of insurance companies. As Murphy described it, “they have decided that the way to increase accessibility is to bug us every 90 days.”

For therapists who don’t comply, Susan Frager, founder of Psych Administrative Partners and a biller with 22 years of experience, said there’s a possibility they’ll be removed from provider directories.

“It’s just putting the burden back on the provider rather than the burden on the insurance payers, which is where it really belongs,” Frager added. 

The added systemic burden and resulting stress make it more difficult for therapists to do their job. In many ways a therapist is the treatment — the key to successful care often comes down to the relationship. Therapists can only show up for clients effectively when they’re emotionally healthy and taking care of their needs.

“The insurance companies act like we’re dialysis machines and we’re just interchangeable and as long as the machine gets tuned up now and again, it can perform optimally over and over and over and over again, no matter how many people you hook up to it,” Hoffman said. “It’s just not true.”

Therapists who want to protest insurance practices that prohibit good care don’t have much recourse. Confidentiality laws limit how much therapists can publicly advocate around specific issues. Providers aren’t allowed to reveal their insurance reimbursement rates to other therapists, which limits their negotiating leverage. And because of antitrust laws in California, it’s illegal for therapists to collectively lobby for better rates as a group.

“What do we do as providers? You really have no rights,” Gomez said.

There isn’t an easy path to fight insurance companies in court either. Despite seeing the same parity issues over and over, attorney Spielman said courts historically don’t look at health insurance issues from a systems perspective. Most mental health parity suits have to be fought on a case by case basis, which again displaces the burden of mental health parity onto therapists, consumers and lawyers.

Gomez opted to go into private practice because even with all its challenges, she has better flexibility to create a schedule that supports her mental and physical health. Yet her desire to accept insurance as a psychologist and use insurance as a consumer puts Gomez in a bind.

“There’s both an emotional and financial impact on both sides,” Gomez said. “The healthier that I am and the more resourced I am, the more I can work, the more I can develop my business.”

Gomez (and providers like her) carry the burden of a broken health care system that puts her wellness at risk and makes it difficult to deliver good care for clients. Sometimes, Gomez said, it feels like too much.

“OK, this is what I love to do, but at what cost? At what cost financially, at what cost emotionally?” she asked. “There’s a certain simplicity to this idea of [what if] I just got a job from one of these tech companies and I had things like disability insurance and PTO and benefits and someone else paid into my retirement.”

A female therapist wearing a blue blazer and taking notes on a clipboard sits across from a Black man on a teal couch in the therapy room

Scaring Away Therapists Can Get Insurers in Trouble

The frustration of dealing with health insurance in a profession that isn’t treated with parity causes private practice therapists to opt out of the system completely. Private practice therapists comprise about half of psychotherapists, so when they do walk away, it contributes to the provider shortage. And if regulators discover insurance company practices are to blame, insurers can face mental health parity violations.

According to JoAnn Volk, research professor at Georgetown University Health Policy Institute’s Center on Health Insurance Reform, state regulators do look at network adequacy, reimbursement rates and contracting terms to assess mental health parity compliance.

To determine this, regulators compare how insurers treat mental health providers compared to medical and surgical providers. Insurance company practices should be no more difficult to navigate for mental health providers than doctors. Reimbursement rates must be calculated using the same method (and insurers must have a lawful reason if there’s a difference). These factors affect network adequacy but aren’t easy to measure or enforce.

“Just because you’ve met network adequacy on paper does not necessarily mean that on the backend when patients are trying to get care from in-network providers that there is equal treatment for those providers,” Volk said. “There’s just some complications in comparing mental health services and treatments to medical/surgical.”

Grant, of the California Association of Health Plans, said insurance companies are working to make sure they have enough available providers and meet all the requirements of mental health parity law. Their focus is on attracting providers, though Grant didn’t go into specifics.

“Health plans work diligently to ensure they have robust networks that meet the health care needs of their members,” Grant said. “That is why we continue to incentivize providers through the contracting process to join our network so that all patients have access to care.”

In a September 2020 report authored with the California Health Care Foundation, however, Volk highlighted provider concerns about the process of joining insurance networks. Network adequacy was also one of the areas Volk flagged for further state investigation and regulation.

“Given how hard it is to get paid for services rendered, provider representatives say there is a lack of incentive to join plan and insurer networks,” the report said. “One provider representative stated that health plans and insurers will repeatedly change their credentialing rules, requiring providers to go through the process multiple times.”

New State Policies Target Mental Health Parity

California legislators and regulators continue to look for solutions to address the systemic issues faced by mental health providers and their clients. Senate Bill 855 (SB 855) is one example of recent efforts to strengthen California’s existing Mental Health Parity Act.

The bill expands California’s mental health parity protections to people with any type of mental illness and aims to standardize how insurance companies make medical necessity decisions about mental health treatments. Introduced by state Sen. Scott Wiener (D), SB 855 cleared the California Senate and Assembly at the end of August and awaits California Governor Gavin Newsom’s signature.

“There are insurance companies who do the right thing and provide people with the coverage they need, but unfortunately not all of them,” Sen. Wiener said. “It’s all too often we hear about problems and that’s what we’re trying to fix.”

The California Association of Health Plans (CAHP) disputes that SB 855 will improve parity in California. Grant said an independent analysis projected consumers would pay $3.1 million more in premiums in the first year. According to the California Health Benefits Review Program analysis Grant referenced, about $1.06 million of that increase will cover “administrative expenses” to train insurance company employees on new guidelines. In other words, insurers will shift the financial burden of SB 855 onto patients.

CAHP advocates for a different approach to address mental health parity that includes input from all stakeholders. Grant highlighted Newsom’s Behavioral Health Task Force along with the state’s $110 million investment in mental health workforce development in 2019. “Ensuring our state has tools and the people needed to deliver on that promise is a significant challenge and a shared responsibility,” Grant said of mental health parity.

The Department of Managed Health Care (DMHC), which oversees a majority of health plans in California, will also step up its mental health parity enforcement efforts. During a Sept. 3 Town Hall with National Alliance on Mental Illness (NAMI) California, Dan Southard, DMHC deputy director, office of plan monitoring, shared that its 2020–21 budget allocates resources for in-depth mental health parity investigations.

Southard said DMHC will follow patients from start to finish on their mental health journey to better understand the issues people face and identify potential solutions. The investigations — five each year for the next five years — will also include providers. “The Department is continuing work to better identify and understand what those barriers are to determine whether systemic changes can be made to improve the delivery of care,” a DMHC representative shared via email.

The Takeaway

Volk highlighted that California has one the strongest commitments to mental health parity in the nation. For all its progress, however, equitable access to mental health care remains elusive. The need for parity has perhaps never been greater in the wake of the COVID-19 pandemic’s dramatic impact on people’s mental well-being.

Therapists like Gomez want to provide quality, affordable care. To do so, they must be set up for success. Addressing the barriers therapists face in the health care system — many of which are invisible — can get us closer to mental health parity. And for all the complexity of reaching parity, at least one step is basic: Make sure therapists get paid.

“I don’t know how much choice I have over what I feel really passionate about and called to do, the kinds of populations that I connect with and the people who show up and ask for help. I know that I didn’t sign up for the easiest way of being a psychologist,” Gomez said, adding:

“And I need to get paid. Can you just pay the damn bill?”

This article was produced as a project for the USC Center for Health Journalism’s 2020 California Fellowship. The Center’s Engagement Editor, Danielle Fox, contributed to this story. Catherine Stifter and Jordan Davidson provided additional editorial support.

Illustrations by Ben Fabian