Stephen Bacon, Ph.D.

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This page should probably be entitled More Than You Ever Wanted to Know About Mental Health Insurance but, unfortunately, the insurance companies have created such a convoluted maze of requirements and exceptions that the assertive consumer needs to be educated in order to utilize their full insurance benefits.  Let’s start with defining some terms.

Explanation of Benefits (EOB) Form:  This is the form the insurance company sends you—hopefully with a check attached—that explains how they are going to reimburse you for the psychotherapy sessions you have just submitted.  They are required to issue an EOB within 30 days of receiving your request for reimbursement.  On the EOB they will show reductions in the session charges due to UCR (see below) as well as special codes “explaining” why they have further reduced your benefits.  You need to keep all EOB’s—especially the first one you receive—and bring it to your next session if you don’t understand it.

Usual and Customary Rates (UCR):  This is one of the insidious ways that insurance companies reduce your benefits without disclosing their intentions before you sign up with them.  For example, one common Blue Cross Plan promises to pay 50% of the cost of your therapy sessions up to 20 sessions/year.  Then, when you get your EOB, they explain that the UCR for one hour of psychotherapy with a clinical psychologist in Santa Barbara is $50/hour.  Of course, in reality, my rate of $180/hour is approximately the average rate charged by most senior clinicians in Santa Barbara but they reimburse based on their made up $50/hour rate.  The California Psychological Association is trying to address this misleading practice via negotiations and a possible law suit, but at the moment  all you can do is accept their reduction and write a complaint letter to the Commissioner of Insurance.

Mental Health Parity Diagnoses:  Mental Health Parity legislation is an attempt to force insurance companies to reimburse mental health clients at a rate similar to medical clients.  In other words, you should have the same reimbursement rate—parity—whether you are being treated for a broken leg or an anxiety disorder.  Five mental health diagnoses have been  specified—the most common of which are depression and anxiety—which are reimbursed at higher rates (parity rates) than other diagnoses.  You can ask me if you merit one of these diagnoses and what impact that may have on your reimbursement rates.  In approximately one year, federal parity legislation will take effect and this may cause mental health reimbursement rates to rise somewhat.

Preferred Provider Organization ( PPO) Insurance:  Most insurance plans are PPO’s where the client gets a financial break if he goes to a preferred provider who has negotiated reduced fees with the insurance companies in exchange for getting a flow of clients.  As a client, you will typically pay your PPO psychologist a copayment of between $35 and $75 per session and then the doctor will take care of submitting the claims to the insurance company for reimbursement.  In general, this is the least expensive, least paper-work-intensive way to receive mental health services.  Unfortunately, there is one frequent problem:  the phantom PPO panel.  A phantom PPO panel is a list of local psychologists and other mental health practitioners who, allegedly, will provide services as PPO doctors to that particular insurance plan.  But when you call them, you discover that they are not accepting new PPO referrals.  In reality many of the senior clinicians in Santa Barbara who are on such panels are staying on them only to provide services to a few long-term clients and will not accept new clients because the reimbursement rates are too low and the paper work burden too onerous.  In some cases, the client can’t find any provider accepting referrals. In other cases only newer therapists, who are just building their practices, take the PPO referrals.  However, there are exceptions, and sometimes a client will find an excellent clinician who is on the panel who can see you right away as a PPO client.     

Many psychologists, such as myself, are not on any PPO panels.  When the client sees these non-PPO psychologists, the client will be reimbursed by the insurance companies at a lower rate.  For new clients that are consulting with me on the phone I am always happy to review your PPO panel list and recommend/refer you to senior clinicians on the list.

Health Maintenance Organizations (HMO) and Medicare:  If you have HMO insurance you will only be reimbursed for your therapy if you see an HMO provider (I am not a provider for any HMO).  Medicare covers all psychologists and their therapy services unless, like me, they have opted out of Medicare.  The reason that some psychologists opt out of Medicare is that the government has reduced the Medicare reimbursement rate so severely that it is less than our reduced fee rate.  Given that I have opted out of Medicare, it is also very unlikely that your Medicare Supplemental Plan will pay anything for receiving services from me. 

Prior Authorization:  It used to be common that a client needed a referral from their Primary Care Physician before they could utilize their Mental Health Benefits and this is still true in a number of HMO Plans.  Most PPO plans, however, no longer require such a referral, at least when you are seeing a clinical psychologist.  Some plans require periodic treatment reports to be completed in order to receive reimbursement and I will be happy to help you with those reports. 

Determining Your Benefits and the Customer Service Representative:  In theory a client should be able to call the Customer Service Representative (CSR) at the insurance plan and determine their level of benefit if the following information is provided:  diagnosis, name and type of provider,  and service provided (length and type of session).  In practice, the CSR usually tells you they can’t give you the information or they will give you the wrong information.  Therefore, until you receive your first EOB, you will be uncertain about the actual rate of reimbursement.  Even after receiving the EOB, you will need to examine it carefully as there are often mistakes. 

Summary and Best Estimate:  As you can see, this area is so complicated and so fraught with insurance company strategies for not reimbursing consumers that it is impossible to determine prior to your first EOB exactly what you will be reimbursed.  In my experience in Santa Barbara, insurance companies typically reimburse  between $25 and $160 per session after your deductable is met. 


351 S. Hitchcock Way B-110, Santa Barbara, CA 93105  •   (805) 563-2820   • 
Clinical Psychologist License Number PSY11968   ©2018 Stephen Bacon, Ph.D.  All rights reserved