Insurance Billing 101 for therapists in private practice
Insurance billing for therapists and claims filing are without a doubt, two of the most frustrating tasks clinicians and therapists face. Unless you have a strictly private pay practice, insurance billing is something you have to contend with on the daily. Insurance benefits, copays, deductibles, ICD-10 codes and those dreaded CMS-1500 forms…ugh!
Chances are, your graduate program didn’t teach you about how to get paid, much less about therapy insurance billing and claims, so you may be asking yourself how to bill insurance for therapy sessions. So, how to bill insurance as a provider?
Welcome to Insurance billing 101 for therapists where you’ll learn about medical claims, medical billing process, insurance billing and coding and how to bill insurance as a provider step-by-step.
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What are the steps in the medical billing process?
Steps of insurance billing for therapists
Step 1: Decide if you want to be an in-network or an out-of network provider
Step 2: Decide which health insurance (panels) to contract with
Step 3: Insurance credentialing
Step 4: Apply with insurance companies/panels to get credentialed
Step 5: Review and understand your contract with each insurance
Step 6: Set up financial policies and consents
Step 7: Develop insurance billing processes and set up technology to help you submit claims
Step 8: Insurance billing and coding
Step 9: Understand your client’s eligibility, benefits and prior authorizations, co-pays, etc., before billing clients and insurance
Step 10: Verify client insurance to ensure that your client’s insurance plan is active and to check if the planned services are covered by their plan before each visit
Step 11: Submit claims (paper or electronically) in a timely manner
Step 12: Keep track of claims and understand the status of claims
Step 13: Getting paid from insurance and having a smart way of payment posting (save time with ERA)
Get My PDF Insurance Billing Steps Now and link it to How to bill insurance for therapy
Watch this quick video that reviews all steps in insurance billing for therapists.
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Decide if you want to be an in-network or an out-of-network provider
The first step in insurance billing for therapists is deciding if you want to be an in-network or an out-of network provider.
What is an in-network provider?
In network means that you are fully credentialed and paneled by a particular insurance company or payor. An in-network provider has a contract with a health insurance company, and can accept referrals for clients who have this type of insurance. Then you submit medical claims to get reimbursement from insurance.
What is an out-of-network provider?
Out-of-network providers are not fully credentialed providers for a particular insurance company or payor. Basically, you haven’t signed a contract with health insurance.
If you choose to see a client with insurance that you are not a provider for, any claim you submit will be denied. The exception to this is if the person has out-of-network benefits.
Some therapists choose to be an in network provider for some insurance companies but not for others while some prefer to stay out of network provider for all health insurance companies as they prefer not to deal with insurance billing.
If you choose to be an out-of-network provider, you can (but this is not mandatory), provide a client with a superbill (given that your client has a PPO and insurance pays for out-of-network services). Then, your client can submit the superbill himself or herself to the health insurance to seek reimbursement from insurance for your therapy.
In either case, with in-network vs out-of-network billing, you still need to learn how to bill insurance as a provider and learn insurance billing for therapists along with coding as you need some medical claim information for a superbill.
Decide which health insurance panels to contract with
Best insurance panels for therapists
With thousands of insurance companies out there, how do you decide which is the best panel for therapists to contract with? This is a very important step that you need to approach strategically. It’s critical to make sure the insurance you wish to sign a contract with makes sense for your practice and your community.
Do your homework and research the panels you’re interested in. Do some competitive research in your area and talk to your colleagues.
When choosing the best insurance panel for your therapy practice, consider the following:
- Contracted rates: how much will insurance pay you for your therapy services
- Geographic demand: consider how common clients with a particular insurance might be in your area. More local members mean more potential referrals.
- Panel needs: Not every panel is open to every provider. Some panels open and close as their need for clinicians changes.
- Ease of insurance billing: many insurance companies have their own billing portals. Others use a clearinghouse. Some third-party payors use their own paper forms. Understand their system to be prepared for insurance billing for therapists.
PRO TIP: If the panel is closed, try again in a few months as panel needs can change.
Once you narrow down your best insurance panels for therapists it is time to prepare for insurance credentialing.
Insurance credentialing
Insurance credentialing is the third step in insurance billing for therapists and you may wonder what it is and what documents might be needed. We have the answers for you!
What is insurance credentialing for therapists?
Insurance credentialing means going through the process of becoming a member of an insurance panel. The ultimate goal is to be listed as an in-network therapist by a specific insurance company. Without credentialing, you will not be able to complete insurance billing. In other words you need to be on the panel to directly submit medical claims.
There are two parts of the insurance credentialing process, and BOTH must be completed:
- Credentialing – A vetting process to verify your practice, skills, and licensure.
- Contracting – A formal agreement between you, the provider, and the health plan.
Unfortunately, you can’t apply to one place and be credentialed with every insurance company all at once. You have to apply to be credentialed on each insurance panel separately.
What documents therapists need to get credentialed by insurance?
Each insurance company may have slightly different requirements for documents needed but common ones include:
- Copy of your valid license to practice independently in your state or any other states
- Tax ID or SSN and W-9
- Council for Affordable Quality Health Care (CAQH) provider ID
- NPI number (National Provider Identifier). If you don’t have NPI yet, you need to obtain one before submitting paperwork to the insurance company.
PRO TIP: Reach out to each health insurance company to find out what documents are needed and how to submit them.
→ Download My Free Insurance Billing Guide
How to apply with health insurance panels to get credentialed
After you gather all of your documents, it’s time for another step in your insurance billing for therapists process. It is time to apply with insurance companies (panels) to get credentialed.
- First, complete the application process for the CAQH Proview. The Council for Affordable Quality Healthcare (CAQH) runs a national database that most insurance companies use for credentialing.
- You will need to create a CAQH Pro View account and upload all your education, training, licensure, and other practice documents and information. Keeping this database updated will make your re-credentialing process much easier.
- Once you submit your credentialing packet, the health plan will begin the process of credentialing you. Once the plan completes your credentialing process, they will send you a contract to be signed.
TIP: To learn more about the credentialing process, how to bill insurance as a provider and insurance billing for therapists, consider taking this free on demand video course for therapists: Insurance Billing 101 for therapists
Review and understand your contract with each health insurance
Once you become credentialed and you have a signed contract with the insurance company, review their contract carefully to understand what you can and cannot bill.
- Check your approval date for each of your contracts
- Check your contracted rate
Set up financial policies and consents
Once you’re credentialed and have a signed contract in place, the next step in your insurance billing for therapists journey is getting your financial policies and consents in place so you have them ready for your clients. Don’t skip this part in your insurance billing process. Insurance billing for therapists is quite complex for both you and your clients and you want your clients to understand what to expect and avoid any billing surprises.
Your financial documents should reflect your payment and billing information:
- How much the client will be charged
- How the client will be charged (e.g. you will run the credit card on file; an EHR integrated with a credit card processing company will charge the card automatically or maybe the client will be directed to your client portal integrated with your EHR so client can pay himself or herself )
- When the client is expected to pay (right before session, after)
- What happens if the client does not pay
In your billing policies and consents, explain if you accept insurance, what insurance you accept in your private practice and whether you provide out-of-network services. You may also note what a copay and deductible is and what charges the client may expect and have your client sign all consents.
Develop insurance billing processes and set up technology to help you submit medical claims
Options for submitting medical claims for your therapy services
- You can outsource your therapy billing. You still have to collect the data for the biller and somehow get it to them in a HIPAA-secure manner. And, billers don’t come cheap.
- You can muddle through on your own and bill manually or through the health plan’s provider portal (if they have one).
- You can use a clearinghouse. But, you still have to gather all of the necessary data and you have to have some knowledge about billing and using the CMS-1500 format.
- You can use a practice management software that offers you seamless therapy billing capabilities. You want to do your homework because as you will see below, you want a platform that supports all of the functions you need for successful therapy billing.
Watch this quick video reviewing insurance billing struggles and solutions.
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How EHR and practice management software can save you time with insurance billing for therapists
EHR with integrated billing software and a clearing house, such as TheraPlatform, offers significant advantages in creating an efficient insurance billing process. The key is minimizing the amount of time dedicated to developing, sending, and tracking medical claims through features such as automation and batching.
What are automation and batching?
- Automation refers to setting up software to perform tasks with limited human interaction.
- Batching or performing administrative tasks in blocks of time at once allows you to perform a task from a single entry point with less clicking.
Which billing and medical claim tasks can be automated and batched through billing software?
- Invoices: Create multiple invoices for multiple clients with a click or two of a button or set up auto-invoice creation, and the software will automatically create invoices for you at the preferred time. You can even have the system automatically send invoices to your clients.
- Credit card processing: Charge multiple clients with a click of a button or set up auto credit card billing, and the billing software will automatically charge the card (easier than swiping!).
- Email payment reminders: Never manually send another reminder email for payment again, or skip this altogether by enabling auto credit card charges.
- Automated claim creation and submission: Batch multiple claims with one button click or turn auto claim creation and submission on.
- Live claim validation: The system reviews each claim to catch any human errors before submission, saving you time and reducing rejected claims.
- Automated payment posting: Streamline posting procedures for paid medical claims with ERA. When insurance offers ERA, all their payments will post automatically on TheraPlatform's EHR.
- Tracking: Track payment and profits, including aging invoices, overdue invoices, transactions, billed services, service providers.
Utilizing billing software integrated with an EHR and practice management software can make storing and sharing billing and insurance easy and save providers time when it comes to insurance billing for therapists.
Start 30-day Free Trial and explore TheraPlatform. HIPAA Compliant Video and Practice Management Software for Therapists.
Regardless of the process you choose, a basic understanding of insurance billing for therapists and medical claims is must-have knowledge for any clinician. This brings us to the next step in insurance billing for therapists, which is medical claims and coding.
Insurance billing and coding
Familiarize yourself with each insurance requirement on what information is needed for submitting medical claims for each client and how to bill insurance for therapy.
How to bill insurance as a provider
The fact is, no matter what process you choose, filing claims that get paid comes down to 1 very important thing: a clean claim.
What is a clean claim? “Clean claim” is the billing industry’s term for a claim that is complete, factually correct and formatted correctly. Almost every therapy billing platform, portal or clearinghouse uses the industry-standard format style of the CMS-1500.
When third party payers, like insurance companies, receive claims that are missing information, have incorrect information or are not in the correct format, they are required to deny the claim administratively. These are NOT denials due to medical necessity issues. It simply means there is a problem with the claim itself.
What is a CMS-1500?
The CMS-1500 is the standard claim form for outpatient medical and psychiatric services. You’ve probably seen it before – red ink on white paper, a gazillion boxes including a place for your therapy billing codes. It was first developed by the Centers for Medicare and Medicaid (CMS) and has since become the industry-standard form for filing insurance claims.
Filing a claim
Depending on what process you’re using, the steps will vary a little bit. However, every claim requires certain information to be included.
If you’re billing “by hand”, you will need hard copy CMS-1500 forms and a way to print on them. Most insurance companies no longer accept hand-written claims forms. If you’re using a biller, you’ll need a way to securely allow them access to the needed client information.
Filing a medical or professional claim involves a little preparation that will save you headaches down the road. You’ll want to have your client’s information at the ready along with information about your practice so you can complete the claims submission thoroughly.
You may want to keep your practice information in a centralized location so you can readily refer to it each time you file a claim (until you memorize it, of course!)
TIP: Don’t assume a claims processor will overlook something that is missing.
Insurance companies are held to very strict regulatory standards for processing claims. They cannot “assume” or “overlook” something incorrect or missing on a claim – even if they know you really, really well. They are required to act on a claim within a very strict window. They are not being mean to you if they deny your claim because you forgot to sign it.
Ready to file a clean claim? Let’s do it!
What information is needed on insurance billing claims?
To bill insurance for your therapy services you need to provide the following information on medical or professional claims: your client information, your practice’s information, diagnostic codes, service information (CPT codes), sometimes taxonomy codes and modifiers.
Client information needed on medical claims
- Correct spelling of full name. Double check the spelling on the insurance card
- Date of birth and SSN if required
- Insurance name and Plan member ID
- Insured’s information if client is a dependent on the plan
- Gender
- Address
Practice information needed for medical claims
- Practice name NPI (may be different from service provider if billing under a group)
- Practice location (full address)
- Service provider’s NPI – this tells them who provided the service
- Service provider’s taxonomy code – this tells them what kind of provider you are (this requirement varies from insurance to insurance)
- Practice tax ID (may be different from service provider if billing under a group) or social security number depending on how you file your taxes
Service information needed for medical claims
- Service code (CPT codes) and at times, but not always, modifiers (this depends on insurance) for each date of service
- Dates and place of service
- Diagnostic/ICD-10 code(s)
Let’s take a look at some of the terminology mentioned above … NPI, CPT codes, diagnostic codes, taxonomy codes and modifiers.
Terminology you should know in insurance billing for therapists
What’s NPI?
NPI stands for the National Provider Identifier and is a unique identification number covered under HIPAA health care providers, including therapists. Per HIPAA, covered health care providers are required to share their NPI with other health care providers, health plans, clearinghouses and any other entity that needs it for billing purposes.
Types of NPI
There are 2 types of NPIs: individual NPI and organization (aka group) NPI. The type of NPI you need for your medical claims depends on how you file your taxes and whether you’re a solo vs group practice.
NPI type 1
NPI type 1 is the individual NPI assigned to individual providers (e.g., therapist, SLP, OT, PT, etc.)
NPI type 2
NPI type 2 is an organization or group NPI that covers clinics, group practices, home health agencies, etc.
How to get an NPI number
To get an NPI number, create an account and log onto the National Plan and Provider Enumeration System (NPPES) and apply online there.
TIP: Refer to this PDF provided by CMS that explains in detail the differences between NPIs and which one you should get. It also explains how to apply for NPI on behalf of employed providers and 3 ways you can apply for an NPI.
What are CPT codes?
The CPT ® code stands for Current Procedural Terminology and it provides health care professionals (including therapists) with a uniform and specific language for coding medical services and procedures, including therapy services (such as mental health, speech therapy, occupational therapy, etc.)
CPT codes have five-digit numeric codes describing your service. They were developed by the American Medical Association (AMA) and you can look up CPT codes on their site.
Knowledge of CPT codes for insurance billing for therapists is critical as you need to report the correct codes to get paid by health insurance.
The CPT codes you report on the claim will depend on your profession.
Common CPT codes for mental health providers include:
- CPT Code 90837
- CPT Code 90834
- CPT code 90832
- CPT code 90791
TIP: Refer to this blog for a complete list of common mental health and psychotherapy CPT codes that includes criteria for each.
Common CPT codes for speech therapists
- CPT code 92507
- CPT code 92523
- CPT code 92522
TIP: Refer to this blog for a complete list of common speech therapy CPT codes with criteria for each code.
Common CPT codes for occupational therapists
- CPT code 97110
- CPT code 97112
- CPT code 97113
TIP: Refer to this blog for a complete list of common occupational therapy CPT codes with criteria for each code.
Common CPT codes for physical therapists
- CPT code 97110
- CPT code 97140
- CPT code 97535
TIP: Refer to this blog for a complete list of common physical therapy CPT codes with criteria for each code.
CPT codes are also divided into timed and untimed CPT codes and each insurance company may have different requirements. If the health insurance company wants you to use timed CPT codes and follow the 8 minute rule, you would need to enter timed CPT code plus the number of units that comes with the code.
Important: Keep in mind that CPT codes get updated. Keeping current with changes will help you reduce rejected claims.
Start 30-day Free Trial and explore TheraPlatform. HIPAA Compliant Video and Practice Management Software for Therapists.
What are diagnostic codes?
A client’s diagnosis is represented with a diagnostic code/s (ICD-10 or the 10th edition) which is the standard at the time of this blog. ICD- 10 was developed by the World Health Organization (WHO). These codes are used to describe a diagnosis when billing insurance.
For more insurance billing for therapists resources, check out the blogs below for common ICD 10 codes for various industries.
- ICD 10 diagnostic codes for mental health providers
- ICD 10 codes for speech therapy
- Common ICD 10 diagnostic codes for occupational therapists
- Common ICD 10 diagnostic codes for physical therapists
What is a taxonomy code?
Taxonomy codes are 10-digit alphanumeric identifiers used to describe the scope of your practice. For example, if you identify yourself as a clinical child psychologist, you would have the following taxonomy code: 103TC2200X (At the time of this blog.)
Please keep in mind that taxonomy codes are updated twice a year (in January and July). The January publication is effective for use on April 1st and the July publication is effective for use on October 1st.
TIP: To learn more about taxonomy codes and how to obtain taxonomy codes refer to this blog
What are modifiers?
Depending on the health insurance, you may need to enter modifiers in addition to CPT codes. Code modifiers are 2-digit or 2-letter codes used to provide additional information about service to a payer. For example, some health plans require that one enters a modifier indicating that your service took place via Telehealth (Modifier 95 or GT). Not every health insurance company requires modifiers and modifiers can vary slightly per insurance, so always double check with each insurance.
TIP: Insurance credentialing, coding including CPT codes, modifiers, taxonomy codes, diagnostic codes, clean claims are also covered in details in this free, on-demand Insurance billing for therapists video course
Tips on filing a medical claim (clean claim)
Input all of your information into whatever system you use to generate your claim
If you’re using an insurance plan’s claims portal or clearinghouse, follow the prompts on the screen.
If you’re entering manually onto a CMS-1500, type all information onto the form or template you’re using.
If you’re using an integrated practice management system with claims capabilities, like TheraPlatform, this information may already be in place. (Lucky you!) Click your claim button.
If you use a biller, make arrangements to send them the information. If you use a secure, integrated platform like TheraPlatform, you can give your biller access to your claims data. Again, lucky you! One less thing to do!
Double check your medical claim for data-entry accuracy
- Check for typos. They happen.
- Check for missing information.
- If your claims system allows for a scan for errors, definitely do it!
Know your claims submission deadline
- Most insurance companies have deadlines for filing claims.
- To avoid missing submission deadlines, file regularly.
- Establish a claims filing schedule or protocol.
Click send (or mail it if you’re doing hard copy)
- You’d be surprised how many “lost” claims are actually the result of someone forgetting to click send.
- Make sure you either print a copy of your sent claim or have a way to access the claim in your system.
Track your claims status
So now you know the logistics of how to bill insurance for therapy and your claim is sent. How long it takes to process depends largely on the insurance company. In general, though, clean electronic claims are turned around pretty quickly. But how do you know you got paid?
When a claim is paid, you will either get a paper check or an electronic transfer of funds. Either way, you will receive some kind of documentation either in the form of an Explanation of Benefits or what is called a Remittance Advice. This document informs you of the claims status and how much was paid.
If you do your own therapy billing, you should have a way to track claims that are submitted and their status. If your biller does this for you, you should have access to that information and a way to provide oversight. It is, after all, your practice and your money.
If you use a therapy billing system, you may have a way to track claims. If not, you will have to devise a system for tracking them. Ideally, you want a system that submits and tracks your claims. TheraPlatform does both.
Rejected and denied claims
Even when you know how to bill insurance for therapy, a claim can get denied despite your best efforts. Sometimes, it is simply human error and easily corrected. Sometimes, it is an error on your part. It happens. Sometimes, benefits don’t cover a particular service. And yes, sometimes, people’s benefits expire mid-treatment. (How often do you re-verify benefits?)
What can you do? First thing, stay calm. Getting upset won’t fix anything. Next, pull your claims information. Is it accurate? If not, you may have to refile. If so, it might mean a call to the insurance company. You should see a claims number on your Explanation of Benefits.
If you have to call and inquire about a pending or denied claim, it will not help you to be ugly or angry with the claims processor. They are limited as to what they can do with a claim that has discrepancies. Their systems generally do not allow for overrides. Stay calm and explain your concern. There is usually a mechanism for correction or refiling. You may have to speak with a claims supervisor who can advise you on the next steps for how to bill insurance for therapy. Remember, there are usually also filing deadlines for resubmitted claims too.
Filing and managing therapy billing and claims doesn’t have to be a nightmare. With a little planning, a little practice and the right tools, even the most claims-aversive therapist can learn how to bill insurance for therapy.
Insurance billing for therapists resources
TheraPlatform is an all-in-one EHR, practice management, and teletherapy software built for therapists to help them save time on admin tasks. It offers a 30-day risk-free trial with no credit card required and supports mental and behavioral health, SLPs, OTs, PTs in group and solo practices.
Free worksheets, guides and e-books for therapists in private practice
- Therapy resources and worksheets
- Therapy private practice courses
- Ultimate teletherapy ebook
- The Ultimate Insurance Billing for Therapists Guide
- The Ultimate Guide to Starting a Private Therapy Practice
- Mental health credentialing
- Insurance billing 101
- Practice management tools
- Behavioral Health tools
