A Guide to Billing Insurance for Therapy for Mental Health Professionals

Navigating the world of insurance billing is no easy feat, especially for mental health professionals. It involves tiny details and complexities that would make even the most seasoned therapists pull out their hair in frustration.

If you've ever dealt with the long and confusing reimbursement requests, coding protocols and policy jargon related to therapy billing, you'll know that it can be a tad bit overwhelming.

Here's a startling fact: according to Becker's Hospital Review, a whopping 80% of all medical bills contain errors – four out of five bills get it wrong. This statistic applies to mental health billing as well, making it crucial for therapists to master the insurance billing process.

It is an astonishing statistic, one that makes you wonder if there's any way we can overcome this billing conundrum in the therapy world.

But don't fret, because in this article we will dive deep into the nitty-gritty of why therapy claims sometimes get rejected, break down those confusing alphanumeric CPT codes used in mental health billing, and also untangle the complexities of insurance policies for therapy services.

Why is it essential for therapists to master the billing process?

It's possible for therapists to carry on with their practice without having to deal with insurance procedures—but that comes at a huge sacrifice. This is because many potential therapy clients cannot afford mental health treatment in this day and age, and rely on insurance to cover their costs.

So, while billing insurance for therapy sessions is a hassle, it's definitely worth the effort to expand your client base and make mental health care more accessible.

But it's not enough to just 'accept' insurance—you have to gain mastery over the procedure of billing for therapy services.

The procedure is tricky and can be overwhelming—we agree—but the way you handle it is key to your reputation as a therapist.

Apart from valuable therapy sessions, clients also look for clinics that offer safety and stability in terms of billing and insurance handling. If your insurance process for therapy is haphazard, clients will flock away from your business, and find better places to invest their time and money in.

Furthermore, if you don't have mastery over insurance billing for therapy, then you are more likely to be confronted with legal action. This can stain your reputation beyond repair—especially if it occurs at the beginning, when you still do not have a solid client base.

And even if your reputation stays more or less intact, your relationship with your current therapy clients will suffer, because the trust that you've built up with them over the sessions will waver due to billing issues.

So, we know that the insurance process for therapy billing is important and that it's hard to decode.

It's now time to understand the process, step by step, so that you can protect your therapy clients from a badly managed transaction.

What does the insurance process look like for therapists?

In a nutshell, the process of billing insurance for therapy can be broken down into four steps:

1. Insurance coverage: Seeking pre-authorization/credentialing with insurance panels, knowing expense limits for mental health services, etc.

2. Gathering policy details: Figuring out policy number and relevant codes for mental health coverage

3. Submitting claims: Filling out CMS-1500 forms and using CPT codes (like 90834 for 45-minute psychotherapy) to describe the therapy service you are providing

4. Verifying claims: Ensuring insurer's cross-checking procedure for therapy claims goes smoothly

These four steps might sound simple enough but there are many challenges that therapists face while tackling them.

Let's take a look at each of those in detail. 

Challenges Therapists Face Through Insurance Billing Process

Complex Insurance Terminologies

Naturally, as a therapist, you might not be so well-versed in the usage of certain complex insurance terminologies specific to mental health billing.

Here are a few terms that you might want to familiarise yourself with:

• Deductibles, copays, and coinsurance for mental health services

• Delayed and stuck claims in therapy billing

• CPT codes for various therapy services (e.g., 90837 for 60-minute psychotherapy)

When you struggle understanding the codes and terms, you end up overlooking important tasks to be completed to finish your insurance billings for therapy sessions.

This leads to errors in bills as well as delayed or denied payments for your mental health services.

Later in the article, we talk specifically about the terms you need to know to master insurance billing for therapy.

Challenges in Credentialing Process for Therapists

If your therapy practice is not credentialed by an insurance network or panel, you will simply not be reimbursed for payments through your client's insurance plan.

This can seriously stifle the financial health of your therapy business, especially if:

• You've recently opened your practice in a new part of town and are unaware of any insurance company's mental health networks.

• There are faults in the enrollment and application of your therapy business. This might include failing to meet insurance provider criteria for mental health professionals, incomplete/improper authorization, or delays in application process.

• Either you or your insurance company are facing delays in authorization for mental health services.

• There are mistakes in the data entry process like typos, missing information and improper documentation of therapy services.

• You face obstacles in renewing your credentials and therapy license.

The more your credentialing is delayed, the more time it will take for you to begin the insurance billing process for your therapy sessions.

And the more time it takes for you to get clients via insurance, the more your breakeven point will be delayed.

If you've started a new therapy practice, you probably cannot afford to do that.

Later, we discuss how you can ensure a smooth credentialing process for your mental health clinic.

Verifying Patient Benefits: A Common Insurance Billing Challenge for Therapists

Patient benefits are those that the therapy client is entitled to receive or have covered by their insurance, such as the number of covered therapy sessions or the percentage of cost covered for mental health services.

You need to be able to verify these benefits, to avoid claim denials and payment delays for your therapy services.

The reason why therapists often struggle with this verification process is because it's a time-consuming, administrative task.

You need to gather patient information and make calls to the insurance company to verify mental health coverage. Then, you need to accurately input all the information in your claim for therapy services.

It's a labour of detail and even minor mistakes can lead to claim denials. The insurance company might decide that the patient is not eligible for the mental health benefits based on your incorrect information.

Sometimes, it's not about the information, however—sometimes, the policy itself changes, which is why it is important to stay on top of any evolving rules in mental health coverage.

Even if you're making use of software, you need to make sure that the software is up-to-date on recent changes in therapy billing procedures.

It seems like a lot, but it's better to resolve these issues beforehand, since dealing with denied claims for therapy services is another headache.

Later, we discuss how you can stay on top of patient verification for mental health benefits.

Dealing With Denied Claims and Appeal Releases for Therapy Services

Denial claims can be difficult to deal with because of several reasons, especially in the field of mental health where coverage can be complex.

Firstly, insurance companies often give vague reasons for the denials of therapy claims. This leads to the tedious task of investigating why the claim for your mental health services was denied in the first place.

Once you have figured out the reason, you need to decide whether you can appeal the therapy claim or not. This basically means you contest the denial—but again, this takes a lot of time and leads to delayed payments for your mental health services.

If you cannot appeal the claim, then you have to figure out how to cover the therapy session cost.

If you can appeal the claim, you must go through a lengthy process of documentation and back-and-forth, often involving providing additional information about the necessity of the therapy services provided.

And in the midst of all that, if you miss a deadline, then everything turns upside down.

Keeping track of all that can be hard, but it's an inevitable part of being a therapist who accepts insurance. You just need to have safety nets in place and a proper to-do list to keep your tasks organized.

The question, however, is:

Is it even worth it to appeal releases for denied therapy claims?

Do insurance companies ever reverse their decisions on mental health claims?

The simple answer is yes. However, a study by the American Psychological Association revealed that the success rate for denied claims in mental health is not exactly stellar – a meagre 30%.

What's more, such appeals result in cash flow gaps and financial losses. If you are a therapist working in a small practice, it has the potential to hit you very hard.

These challenges not only hurt the pocket, but also impact your clientele negatively. A 2021 survey by the American Psychological Association found that 85% of therapists reported that dealing with insurance billing and appeals has a negative impact on their work-life balance.

What's the verdict, then? Should you just give up on insurance billing for your therapy practice?

We discuss some of this in our solutions section later in the article.

Difficulties in Managing Client's Deductibles and Copays for Therapy

Before we delve into this problem, we must understand the terms, deductibles and copays in the context of mental health services.

As the name suggests, copays are a shared financial responsibility where the therapy client pays a small amount and the rest is covered by insurance.

Deductibles, on the other hand, are the amount patients must pay before insurance coverage for mental health services kicks in. It's like a financial hurdle race, where you have to clear the initial barrier.

But here's where it gets tricky for therapists. You might not always have easy access to clients' insurance information which means that you might have trouble managing their deductibles and copays for therapy sessions.

Some clients may face issues of financial instability and these out-of-pocket expenses for mental health services can be quite costly.

Consequently, unexpected problems such as disputes with your insurance companies over therapy claims can add a layer of unforeseen complexity.

If you already have to deal with a large number of therapy clients (a big responsibility in itself), then managing these revenues with accuracy might be rotten-cherry-on-the-top for your already-high stress levels.

And if you don't comply with the basic rules and end up messing things up for the clients, then you already know that comes next: penalties and potential loss of insurance contracts for your mental health practice.

As you might have already noticed, it all boils down to a delicate balancing act, where financial responsibility meets therapeutic care.

It's a tough act to perform—but it's crucial to keep your therapy business afloat.

Solutions for Overcoming Insurance Challenges as a Therapist 

Solution #1: Understanding complex insurance terminologies and CPT codes for mental health services

It's impossible to cover all insurance terminologies within this article, but let's take a look at a few of them that are particularly relevant to therapy billing.

We have already discussed deductibles and copays in the context of mental health services.

Claim denials and payment delays basically occur when insurance companies reject your claim for therapy services for whatever reason.

That means they cannot reimburse you for your therapy session, unless you file an appeal and go through the lengthy process of winning the company over.

CPT codes, on the other hand, are like labels for medical services given to a patient. These must be included in all insurance claims for therapy. Here are some common CPT codes used in mental health billing:

• 90832 - Psychotherapy, 30 minutes

• 90834 - Psychotherapy, 45 minutes

• 90837 - Psychotherapy, 60 minutes

• 90847 - Family psychotherapy (conjoint psychotherapy, with patient present), 50 minutes

• 90853 - Group psychotherapy (not family)

This is the biggest mistake made by therapists when crafting such claims—using incorrect CPT codes—and often lead to unnecessary claim denials.

To find out your country-specific code for mental health services, you need to use an updated CPT codebook.

In America, you can find it on the American Medical Association (AMA) website.

In the UK, you can find the codes on the NHS website. Instead of a "CPT" codebook, however, you'll find a CTV3 codebook for mental health services.

For other countries, you can simply Google where you can find the most up-to-date local codebooks for therapy services.

There are other terms that you might need to be aware of like UCR (Usual, Customary, and Reasonable) fees for mental health services, balance billing, and coinsurance for therapy.

To understand what they mean, we suggest you take a short online course specifically for mental health billing or talk to an insurance expert familiar with therapy services. This is a step that you must take before embarking on your insurance journey as a therapist—otherwise, you'll face many roadblocks and a lot of claim denials.

For the first few months, you can also outsource the insurance process and keep an eye on how the third-party individual conducts his/her business in terms of therapy billing.

Once you have a complete understanding of the terms specific to mental health billing, you can take over the insurance billing again.

Solution #2: Making Use of Credentialing Services for Mental Health Professionals

Credentialing is not easy for therapists—so it's best to make use of external services that specialize in mental health credentialing, instead of tackling it on your own.

This will save you time and money in the long run.

Look at this way: If you try to take on a difficult task like credentialing for mental health services yourself, it'll lead to a lot of mistakes, which will then lead to payment delays and cash flow gaps for your therapy practice.

On the other hand, you just have to pay once for credentialing, and you'll be saved from a lifetime of payment issues related to your therapy services.

Considering the variety of available services, you can choose the cheapest and most efficient service out there to maximise your profit and minimise your costs as a therapist.

In either case, you'll find the service extremely beneficial because:

• You won't have to research viable insurance agencies for mental health services by yourself

• Your credentials as a therapist will be automatically renewed before the expiration date

• You will have expert opinion, which will save you from frauds and scams in the mental health insurance world

Credentials serve as a golden seal of approval for your therapy practice. They don't simply validate your credentials and insurance coverage; they also boost your reputation and business as a mental health professional.

Clients seek confidence of quality in their therapists, and credentials provide just that—so it's best to secure them as quickly as possible for your mental health practice.

Solution #3: Keeping Careful Record of Therapy Client Data  

It is always valuable to recheck certain information such as the therapy client's:

• Name

• Contact information

• Date of birth

• Insurance provider information

• Policy Number

• Specific mental health coverage details

This information is high-risk as getting it wrong can result in identity errors and privacy issues, ultimately leading to lawsuits or legal action against your therapy practice.

To verify information as crucial as this, you can certainly hire trained professionals familiar with mental health billing.

Or, you can go the automated route and use time-efficient software made specifically for these troubles in therapy practices.

Sometimes, miscommunication with insurance companies can lead to the problems above. To make sure this doesn't happen, you can:

• Maintain clear channels for sharing information about mental health services

• Solve problems quickly with everyone in the loop, including the therapy client and insurance provider

Lastly, you need to make sure that everything is organized in your therapy practice.

Even if you've already submitted a claim for a therapy session, make sure you have all the information stored meticulously, in case it is denied.

Create a system, train staff on mental health billing procedures, and involve software wherever you have to. Just make sure that when the call comes, you have all your information about the therapy services provided at hand.

Solution #4: Avoiding and Resolving Claim Denials for Therapy Services

Claim denials are inevitable in mental health billing, yes—but you can minimise them to the best of your ability.

The phrase 'knowledge is power' is particularly apt for this task. There are three areas in particular which you need to be really mindful of to avoid claim denials for your therapy services:

• Country and company specific insurance policy for mental health coverage

• Therapy client data

• CPT codes for mental health services

When you have this information under your belt, your chances of receiving denied claims for therapy sessions decreases.

Apart from that, you can also stick to in-network providers, instead of going for out-of-network ones.

That basically means that you take on therapy clients that have contracts with the same insurance companies that you are recognized at.

This will save you the documentation hassle, which can ultimately lead to documentation errors in mental health billing.

However, that might mean sacrificing some of your potential therapy client base. In the end, the choice is yours, depending on your current financial situation as a mental health professional.

Given that you've made your choices and taken the precautions, and then you receive claim denials for your therapy services, you need to investigate the reasons.

There are three major reasons for claim denials in mental health billing:

1. You've filed the claim too late (many insurers have strict deadlines for therapy claims)

2. You're working with an out-of-network provider (some insurance plans have limited mental health coverage for out-of-network therapists)

3. You've filed for services that are not covered in the client's insurance (e.g., couples therapy when only individual therapy is covered)

In response, you can gather supporting documentation to appeal the denial and negotiate with the insurance company accordingly. For mental health claims, this might include:

• Detailed progress notes demonstrating the necessity of the therapy

• Any relevant diagnostic assessments

• Treatment plans showing the goals and expected duration of therapy

If you are appealing a denial for your therapy services, you should ensure that your letter is professional, polite, contains relevant and specific evidence, and explains any errors on your part. Be sure to emphasize the medical necessity of the mental health services provided.

Furthermore, it is not enough to send out a letter—you must also follow up on it. Insurance companies deal with countless claims, so being proactive about your therapy claim appeals can make a difference.

Solution #5: Staying on Top of Deductibles and Copays for Mental Health Services

Communication is key when dealing with deductibles and copays for therapy services.

You must be transparent with the client about their financial plan for mental health treatment. They should know from the onset how much they have to pay, how much the insurance will cover, and when they are expected to receive reimbursement for the therapy sessions through their company.

This is not just important to avoid legal action, but to secure the trust of your therapy client. Mental health is a sensitive area, and financial surprises can add unnecessary stress to your clients' lives.

If they think you are trying to rob them, you can hardly help them on their journey to better mental health.

Furthermore, you need to make sure you have all the information at hand.

In the intake session, you must ask your client for all information regarding insurance coverage for mental health services. You don't have to do this yourself—you can hire an assistant who enters this data into your software, before you actually begin therapy.

In case the client says they are unable to pay for therapy, you can send them off with extra information about financial assistance programs or sliding scale options for mental health services. If they find something viable, they will return on their own.

Even if you go through all these steps, you should be prepared to deal directly with insurance companies when disagreements arise over mental health claims.

If you can't settle, then you must file an appeal. You can also take the help of the state commissioner's office for guidelines regarding the dispute and appeal process for mental health insurance claims.

It's best to take external help in these cases, because as a therapist, you are unlikely to be familiar with the ins and outs of insurance law, especially as it pertains to mental health services.

Lastly, if all this sounds too overwhelming, then you can just research relevant software for these tasks in mental health billing.

Automation is everyone's best friend these days—and it can help you focus on your real task, which is to make life better for your therapy clients.

Conclusion

In closing, it is clear that the robust knowledge of insurance billing for mental health services is more than just a skill – it's a shield against financial pitfalls and a cornerstone of professionalism for therapists.

While the journey of understanding this process may seem daunting at times, it is heartening to know that with the right tools and methods, you can navigate this landscape of mental health billing with precision and efficiency.

Lastly, it is important to remember that this is not just about paperwork, it's about preserving the sanctity of therapeutic care, ensuring that both you and your therapy clients can find a way to financial well-being and quality mental health treatment.

Manage Insurance Billing for Your Therapy Practice with Allia

Allia can help you:

• Manage all administrative tasks related to insurance billing for mental health services

• Keep track of deductibles, copays, and claim denials specific to therapy sessions

• Offer a precise and personalized treatment experience to your clients using AI

Remember, mastering insurance billing for your therapy practice is an ongoing process. Stay informed about changes in mental health coverage, keep your documentation meticulous, and don't hesitate to seek help when needed. With persistence and the right approach, you can create a thriving therapy practice that seamlessly blends quality care with efficient business practices.