Practitioners Tap into the Self-pay Market

by Communications Staff

This article profiles three practitioners who have successfully identified opportunities to develop non-insurance-based services and incorporated self-pay services into their practices.

Angela Dedmon, PhD, a clinical child/pediatric psychologist in Edmond, Okla., was frustrated with the managed care system for several years before she decided to leave it behind.

She had encountered repeated payment denials, partial payments and payment delays from managed care companies. The companies had started broadening the diagnoses they did not cover, including some of the diagnoses involved in her practice. Finally, one of the companies cut her reimbursement rate by a third.

In January 2004, Dedmon removed herself from all insurance panels and began accepting only self-pay clients.

In the 14 months since she made the leap into self-pay practice, Dedmon has experienced several benefits. For one, her income has increased. “I have made more money by actually getting paid what I bill,” she says. In addition, her overhead costs have decreased. She used to pay an assistant to resubmit insurance claims each month, but now she handles her own billing. And, she now has more time to provide quality care. “I have more time to work with clients, versus dealing with managed care company issues,” says Dedmon. “The quality of life not having to deal with insurance companies has been nice.”

Dedmon says that several factors have contributed to the success of her self-pay practice:

• Her services are in demand. “I was able to do this because I am only one of a handful of people who do what I do in a fairly large city,” says Dedmon, who specializes in treating children under the age of eight.

• Most of her clients receive at least partial reimbursement using their out-of-network insurance benefits. Dedmon says that many insurance companies are willing to reimburse her clients for her services. “In my area of child psychology, many managed care companies provide benefits identical to that of in-network providers, because they do not have someone on their panel who does what I do.”

• She instituted a sliding-scale fee schedule, based on income, for clients unable to pay her full fee. “I didn’t want to limit my services to upper-income patients,” says Dedmon.

• She developed a referral network before transitioning into self-pay practice. “I waited [to become a self-pay provider] until I had been in private practice for three years and had adequately established my referral sources,” says Dedmon.

Dedmon encourages other practitioners to incorporate self-pay services into their practices. “I think more people could do this but they don't realize it,” she says.

Lisa A. DeLeonardo, PsyD, a practicing psychologist in Wilmington, Del., has accepted only self-pay clients since she opened her private practice in 2000.

Her practice offers traditional mental health services to adults and older adolescents dealing with difficulties ranging from depression/anxiety to personality disorders to severe trauma history.

DeLeonardo has built her referral base by promoting her services to primary care doctors, psychiatrists and other psychologists. After securing the necessary consent from her clients, she works closely with their other health care professionals. “It seems that once these professionals have had some experience with my helping their clients, they are very likely to refer to me again,” says DeLeonardo.

A local university counseling center where DeLeonardo did a post doc is another key referral source. When DeLeonardo started her practice, she agreed to see, on a sliding scale basis, some of the students referred to her from the center. She continues to designate a percentage of her caseload for clients who cannot afford to pay full fee.

DeLeonardo collects 95 percent of her fees at the time of service. She says a third to one-half of her clients use out-of-network insurance benefits to receive some reimbursement for her fee, and the rest either have no insurance benefits or choose not to use them because of privacy concerns.

“While it has taken me longer to grow my practice than if I had been on insurance panels, it has been more than worth it to me to take this route,” says DeLeonardo. “I have been able to devote all of my energy to the clinical work I love and very little to filling out insurance forms or making calls for authorization. I have the freedom to establish a treatment relationship that meets the client’s needs, not the insurance company's needs.”

Richard Tomanelli, PhD, has run a self-pay psychology practice for nine years. His practice, located in Greenwich, Conn., specializes in treating addictive/oppositional teenagers.

“I got out of managed care because of the usual frustrations but primarily because I felt my professional autonomy was compromised [by the restrictions of managed care],” says Tomanelli. “I terminated all my managed care contracts in 1996 in one fell swoop.”

For Tomanelli, professional networks, location and diversification have been the keys to building a non-managed-care practice.

Tomanelli’s chief referral sources are general physicians and psychiatrists, attorneys and dentists. Many of his referral sources are part of a network of professional connections that he established when he moved into full-time private practice.

Tomanelli acknowledges that the location of his practice also facilitated his transition out of managed care. “It helped that I practice in an affluent area where out-of-pocket arrangements do not present a problem for most clients,” he says.

In addition to treating clients in his practice, Tomanelli has sought out other opportunities outside of managed care. “Diversification of income sources is a must,” he says. He has held several adjunct teaching positions, which have supplemented his income and served as referral sources. And, in the past he held consulting positions at a local substance abuse rehabilitation facility and at a geriatric convalescent center. This spring, he hopes to take on a new consulting assignment at a psychiatric center for adolescents that is part of a residential treatment center.

For additional information, review pointers on tapping into the self-pay market.