The Benefits of Private Pay

When you opt to not use your insurance for mental health benefits and pay privately, your information is confidential and protected, without the need to be reported to and owned by your insurance company.

When you choose to use your insurance for mental health services, please be aware of the following: 

(1) Your mental health information is placed at risk. 

Insurance companies can stockpile client's confidential information, catalog it, and use it in potentially harmful ways (such as to direct future healthcare decisions and to limit care). 

If I were part of an insurance panel, and accepted your insurance to pay for your sessions, then I would have to give the insurance the following information: 

  •  a psychiatric diagnosis for your case (this is required in order for insurance to cover treatment)
  • the planned course of treatment 
  • updates on your progress during treatment
  • updates on how you are doing in various areas of your life (at work, with your family, daily living activities)

This information would then become part of your insurance company's records and parts of it may become part of your permanent medical record at the Medical Information Bureau--which is a national data bank closed to the public. 

his information then becomes available to be examined as part of your future applications for life insurance, employment, credit loan, security clearances, etc. 

Here is an interesting excerpt from The Myth of Confidentiality


"...Managed care companies demand whatever clinical information they want with the rationale that it is needed to determine their own private definition of "medical necessity."  Insurance companies, HMOs, self-insured employers, etc., are all asserting their "right to know."  Mental health clinicians who accept third-party reimbursement through care managers are forced to divulge more and more confidential information in order to justify treatments.

Insurers have gained virtually unlimited access to what has traditionally been private information in at least two ways.  When an individual enrolls in an insurance plan, the application form includes a nonspecific consent for the release to the insurer of all medical information.  Agreeing to the release of medical information is a condition of enrollment.  As individual reimbursement forms are completed the patient is again required to sign a blanket release of information.   Despite the reality that the insurance benefit may have been purchased by either the patient or the patient's employer, the patient's confidentiality is something he or she must trade in exchange for mental health treatment.

The fact that most insurance is purchased by employers for their employees intensifies the violations of confidentiality.  A recent University of Illinois study found that one half of the Fortune 500 corporations admitted to using employee medical records in making employment decisions.  Of those corporations who made this admission, 20% stated that they did so without telling their employees.   The practice of the employer purchasing insurance for their employees, which then allows the employer access to detailed information about their employees, is a conflict of interest.  But there are no guidelines or codes of ethics with which to monitor these practices by employers or insurance companies and so far, the employees have not demanded a different practice.

Patients who hope to use medical insurance that is provided by self-insured employers to pay for their therapy have no legal means to prevent their employers from having access to their medical records.  In fact, it is a common practice of HMOs to send letters to employers detailing the health problems of their employees.  The U.S. Court of Appeals for the Third Circuit recently ruled that an employer's right to access an employee's health records outweighed the employee's right to privacy in health information.  The decision grew out of a case that began in November 1992."  Continue reading this source

(2) You lose control over some of the therapy process.

Throughout treatment, insurance companies might request additional information prior to authorizing suggested treatment. These approvals may take time and interrupt the course of treatment. With private pay, you can decide how often your sessions are, how long you continue in treatment and when you're finished with treatment. 


Additional Information: