How to Ask for a Raise When You’re Underpaid: Insurance Edition
Taking insurance is a financial decision, and for many therapists it is also a values decision — a way to make care accessible to clients who otherwise couldn't afford it. We respect that. We also want to be honest about what that decision costs, what you can do about it, and what your options are when negotiation reaches its limits.
This guide is about negotiating your fee schedule with insurance companies. What to know before you try, how to make your case, and what to do when the system doesn't move. Insurance panels are not required to pay you a livable wage. Knowing that going in — and knowing the tools available to you — is the starting point.
Reimbursement rates from insurance companies have not kept pace with the cost of living, practice overhead, or clinical training requirements. At the same time, insurance companies are increasingly using AI to auto-deny or reduce claims, adding administrative burden on top of already compressed margins. Some panels have cut rates further through platform intermediaries in recent years. All of this means the gap between what you need to earn and what panels reimburse is, for many therapists, wider than it has ever been.
Negotiating is still worth trying. And we'll show you exactly how. But we also want you to go in with clear eyes about what you're up against.
What determines your reimbursement rate
Before you negotiate, it helps to understand why you're being paid what you're being paid. Insurance reimbursement rates aren't arbitrary — they're calculated using a set of factors that vary significantly by company, region, and market. None of these factors account for your actual cost of living or the real cost of providing quality clinical care.
License type
Psychologists are typically reimbursed at higher rates than master's-level clinicians. LMFTs, LPCs, LMHCs, and LCSWs are often paid less for the same session regardless of clinical experience.
Location and market saturation
Where you practice matters. In saturated markets with many clinicians applying for panels, companies have less incentive to be competitive. In underserved areas or specialties with few providers, you may have more leverage.
Specialty and demand
If the panel doesn't have enough providers for a specific population or specialty — EMDR, perinatal mental health, bilingual services, specific age groups — you have a stronger case for a higher rate.
The contract itself
Your initial rate is set when you sign your contract. Read it carefully — panels can sometimes change your rate with minimal notice, and the rate you sign at may not reflect what you'll actually receive over time.
There is no requirement for insurance contracts to provide a livable wage. The government treats therapists as business owners — which means the protections that exist for W-2 employees do not apply to you. You are expected, as a business owner, to only sign contracts that work for your financial situation. That's a legal and policy reality, not a moral statement about your worth.
You won't know your actual rate until you're accepted into the network and receive your contract — often after you've already invested time, money, and paperwork in the credentialing process. Know your numbers before you sign. Take our free fee-setting training if you haven't already so you know exactly what rate you need before you evaluate any offer.
The truth about reimbursement rates
Reimbursement rates vary more than most therapists realize — and not always in ways that make sense. We've worked with clinicians within ten miles of each other, with the same license type, paneled with the same insurance company, being reimbursed at a difference of $50 an hour.
Your rate can also change after you've signed. Insurance contracts often allow the company to adjust rates with relatively little notice. AI-driven claims review has added another layer of unpredictability — denials that once went to a human reviewer may now be generated automatically, requiring appeals that eat into your administrative time with no guarantee of resolution.
What to know about BCBS
Blue Cross Blue Shield is one of the most commonly discussed insurance panels among therapists — in part because it operates separately in each state, which means rates vary dramatically. We cannot give you a reliable national rate because there isn't one. What we can tell you: ask colleagues in your specific state and market about their current reimbursement rates, timelines, and clawback experiences before applying or renewing. Real-time, local information from fellow clinicians is more reliable than any published figure.
What to know about Tricare
Tricare — the military health system — draws many clinicians who are committed to serving veterans and active duty service members. That commitment is meaningful and real. The same realities apply: rates vary, clawbacks happen, and your business still needs to sustain you in order for you to keep serving this population. Love for the work and a sustainable income are not mutually exclusive.
Clawbacks — what they are and why they matter
A clawback is when an insurance company determines — sometimes months or years after the fact — that they overpaid you, and seeks to recover that money. This can happen even when your documentation is excellent, your clinical decisions were sound, and you followed every protocol correctly.
You are responsible for repaying money the insurance claims even if you did nothing wrong. In some states, legislation limits clawbacks to one year after the original claim. In others, there is no limit — we have seen clawbacks arrive years after services were provided.
Clawbacks can arrive as a formal letter with a bill. They can also arrive as a sudden, unexplained reduction in your reimbursements — without a clear notice that money is being recovered. We have worked with therapists who paid the requested amount in full and on time, only to have the insurance company pull the same amount a second time from their future reimbursements. Thousands of dollars, gone — sometimes resulting in overdrafts, drawn savings, and in some cases practice closure.
Keep a financial buffer in your business account specifically for clawback risk. Know your state's statute of limitations on insurance clawbacks and stay current with any legislative changes. Document meticulously — not because documentation prevents clawbacks, but because it is your strongest protection in an appeal. If you receive a clawback notice, do not pay without requesting a detailed explanation and, if warranted, filing an appeal.
Negotiating your fee schedule with insurance companies
The biggest mistake you can make is never asking for better. Insurance companies do not proactively increase your rates — you have to initiate that conversation. Many therapists assume a request will be denied and never try. In our experience, requests are often successful, particularly when they are specific, documented, and speak to your value to the network.
Before you write the letter
Know your numbers. Know what you need to earn per hour to run a sustainable practice — not what feels "reasonable," but what the actual math requires. Know how long you've been on the panel, what percentage of your practice this panel represents, and what you're being paid for each CPT code relative to your other panels.
Know your leverage. Are you the only provider in your area with your specialty? Do you serve a population the panel is struggling to serve? Are you bilingual? Do you have specialty certifications or additional training? Do you track outcomes data that demonstrates clinical effectiveness? These are your strongest arguments.
How to submit your request
Call the insurance panel's Provider Relations or Provider Contracting department and ask where and how to submit a rate increase request — the process differs by company. Ask for the name of the representative who handles these requests. A letter addressed to a specific person is more effective than one addressed to a generic department.
Ask whether you can submit by email or fax, and get confirmation of receipt. If mailing, send with signature confirmation — you'll have a tracking record. Follow up after two to three weeks if you haven't heard back.
The sample letter
When you write your letter, speak to your value — not your hardship. Insurance companies are not moved by the cost of your daughter's college tuition or the fact that your rent has gone up (though these are legitimate reasons for your request). They respond to the case that you are an asset to their network and that losing you would cost them more than retaining you with a better rate.
Dear [Representative Name],
This letter is a formal request to review my contracted reimbursement rates. I am [Your Name], [License Type], NPI [number], practicing at [Practice Name].
I have been paneled with [Insurance Company] for [X years] and currently serve [percentage]% of my caseload through your network. I specialize in [specialty], working with [population]. [If applicable: I hold additional certifications in X. I am one of [number] providers in [area] offering this specialty to your members. I track clinical outcomes and have seen a [X]% reduction in symptoms among my clients.]
After reviewing my current reimbursement rates and comparing them to other panels I participate in, I have determined my current rates are not competitive. Below are my current rates, your current rate, rates from other panels I am contracted with, and my requested rate:
In order to continue providing specialized care to your members and to sustain my participation on your panel, I am requesting the rate increases detailed above. I value this relationship and hope to continue serving your members. Please respond within two weeks of receiving this request at [email] or [phone].
Thank you for your consideration.
Sincerely,
[Your Name, Credentials]
If you have not requested a rate increase in the past two years, ask for 10–15%. If you received an increase more recently, a request of 6–10% is more appropriate. Ask for more than you need — you can negotiate down, but you cannot negotiate up from your opening ask. Do not frame it as a threat, but you may note that you are evaluating whether you can continue to serve the panel at the current rate.
Advocating beyond your individual contract
Individual negotiation has limits. One of the most effective ways therapists have seen change at a systemic level is through insurance task forces within state professional associations. When large numbers of providers document rate inadequacy and advocate collectively through official channels, companies are more likely to respond. Contact your state association to find out what advocacy mechanisms exist.
You can also contact your state insurance commissioner. This is appropriate in several situations:
- Frequent or large clawbacks — especially if they threaten your ability to continue serving clients
- Rates that have not changed in many years — we have worked with therapists whose panels hadn't adjusted rates in over a decade
- Fraudulent or unexplained claims
- Breaches of contract — including late payments, unreasonable denials, or denials driven by AI review without adequate human oversight
- Phantom networks — insurance companies listing providers as available who are not accepting new clients, creating the appearance of coverage that doesn't exist in practice
- Contract cancellations that harm your practice or your clients without adequate notice
When negotiation isn't enough
We want to name something directly: deciding whether to stay on insurance panels, negotiate, or leave is a personal decision. It is also a decision that is wrapped in real privilege — your location, your client population, your financial runway, your family obligations, your immigration status, your ability to market and fill a caseload. Not everyone has the same options. We don't judge any therapist for the decision they make.
What we do want you to know is that if negotiation hasn't worked — if you've asked and been denied, if the rates simply cannot sustain your practice no matter how you structure it — there are paths forward that don't require leaving behind your values or your clients. Going private pay or reducing your panel participation is not abandoning accessibility. It is building the financial foundation that makes it possible to serve anyone at all over the long term.
We have a free training specifically on this decision — including how to read your contracts, understand your obligations to current clients, and navigate a transition if and when you're ready:
If you want personalized support working through your specific panel situation, income goals, or practice model — our coaches work with therapists at every stage of this decision. No judgment about where you land.