Insurance billing 101 for therapists in private practice

If you're a therapist in private practice, figuring out how to bill insurance can feel overwhelming. Between credentialing, verifying benefits, choosing the right CPT and ICD-10-CM codes, submitting claims, and tracking payments, there's a lot to manage, especially when you'd rather spend your time helping clients.

Whether you're just starting to accept insurance or looking to improve your existing billing process, understanding each step can help you avoid common mistakes, reduce claim rejections and denials, and get paid more efficiently.

This guide walks you through insurance billing for therapists, from choosing insurance panels and verifying coverage to submitting clean claims and managing reimbursements.

Summary

• Whether in-network or out-of-network, therapists must navigate insurance billing, claims filing, and reimbursement processes to ensure they get paid for their services.

• Becoming an in-network provider requires credentialing and contracting with insurance companies, while out-of-network providers may offer superbills for client reimbursement. Enrolling in an insurance billing course for therapists can help providers enhance their knowledge.

• Properly filling out CMS-1500 forms, using correct CPT and ICD-10 codes, and tracking claims ensures timely payments and reduces denials or rejections.

• Practice management software with integrated billing features like TheraPlatform.com can automate claim submissions, track payments, and streamline the entire insurance billing process for therapists.

To bill insurance for therapy services, private practice therapists typically need to complete payer credentialing and contracting when participating in-network, verify client benefits, document services, assign appropriate CPT and ICD-10-CM codes, and submit claims according to payer requirements.

After submission, therapists or billing staff must monitor claim status, review payments, address rejections or denials, and collect any applicable client responsibility.

The process varies by insurance plan, therapy discipline, and provider network status. Using an EHR with integrated insurance billing tools can help organize claims, payment posting, and follow-up tasks.

In-network vs. out-of-network billing

An early decision in setting up insurance billing is deciding if you want to be an in-network or an out-of-network provider.

What is an in-network provider?

An in-network provider is a therapist who has an active contract with an insurance company or health plan to provide covered services to its members at agreed-upon reimbursement rates. Becoming an in-network provider generally involves completing the payer's credentialing and contracting requirements. Once approved and effective, therapists can submit claims according to the payer's billing requirements.

What is an out-of-network provider?

An out-of-network provider is a therapist who does not have an active in-network contract with a particular insurance company or health plan. Therapists may be out-of-network with one insurer while participating in-network with others.

Some therapists choose to be an in-network provider for some insurance companies but not for others, while some prefer to stay as an 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 may provide clients with a superbill, an itemized document they can submit to their insurance company to request reimbursement. Whether clients receive reimbursement depends on their plan's out-of-network benefits, coverage requirements, and other payer policies. Out-of-network benefits are not limited to PPO plans, and providing a superbill does not guarantee reimbursement.

Whether you participate in-network or out-of-network, understanding insurance billing and coding is important. Even if you don't submit claims directly, you'll need accurate information, including CPT codes, ICD-10-CM diagnosis codes, dates of service, and provider details, to prepare superbills and help clients navigate reimbursement.

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How to get credentialed with insurance companies

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 the insurer reimburse for your 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

The credentialing process varies by insurance company, but generally involves submitting provider information, completing the payer's credentialing requirements, and reviewing and signing a contract when approved.

Many insurers use CAQH Provider Data Portal to collect and verify provider information, although some require additional applications or documentation. Confirm the effective date of your network participation before billing as an in-network provider.

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. To participate as an in-network provider, therapists generally must complete the payer's credentialing and contracting requirements.

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 identification number (TIN) or Social Security number (SSN), as applicable, 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.

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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 the therapist's process. It is time to apply with insurance companies (panels) to get credentialed.

Depending on the insurance company, the credentialing process may include the following steps:

• Create or update your CAQH provider profile, if required by the insurance company. Many insurers use the CAQH Provider Data Portal to collect provider information for credentialing. If your payer uses CAQH, create or update your profile with your education, training, licensure, and practice information. Keep your information current to help streamline future recredentialing.
• 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 company

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

How to verify insurance eligibility, benefits, and authorizations

Before providing therapy services, verify the client's insurance coverage and benefits to understand what the plan covers and what the client may owe. Even if a client has active insurance, that doesn't necessarily mean every therapy service is covered.

Therapists can verify eligibility and benefits through the insurance company's provider portal, by contacting the payer directly, or through an EHR or practice management system that supports eligibility checks.

What should therapists verify?

• Active coverage: Confirm that the client's insurance policy is active for the date of service.
• Covered services: Check whether the planned therapy services are covered and whether the provider is considered in-network or out-of-network.
• Copays, deductibles, and coinsurance: Determine the client's potential out-of-pocket responsibility.
• Visit limits: Check whether the plan limits the number of covered therapy visits or has other utilization requirements.
• Prior authorization: Determine whether approval is required before treatment and confirm the approved services, dates, and number of visits.
• Referral requirements: Check whether the plan requires a referral from a primary care provider or another clinician.

How often should therapists verify insurance benefits?

Ideally, therapists should verify insurance coverage before the first appointment and recheck it regularly, particularly when a client's plan changes, a new benefit year begins, or an authorization is approaching expiration.

Keep a record of eligibility checks, authorization numbers, approved visits, and relevant payer communications. Remember that verification of benefits is not a guarantee of payment. Final reimbursement depends on the payer's coverage rules and claim adjudication.

How to submit insurance claims

• 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.

Regardless of the process you choose, a basic understanding of insurance billing for therapists and medical claims is essential 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.

Rejected vs. denied insurance claims

When insurance companies receive claims with missing, incomplete, or incorrect information, the claims may be rejected or denied, depending on when the problem is identified. A rejected claim typically fails initial processing checks and is not accepted for adjudication. Common reasons include incorrect client information, invalid insurance identification numbers, or missing required fields. Rejected claims generally need to be corrected and resubmitted. A denied claim, on the other hand, has been processed by the payer but was not approved for payment. Denials may result from coverage limitations, lack of medical necessity, authorization issues, or coding errors. Therapists should review the payer's explanation, determine whether a corrected claim or appeal is appropriate, and follow applicable filing deadlines.

Before submitting a claim, review it for missing information, incorrect codes, and other errors that could delay processing. Insurance payers and clearinghouses check claims for required information and formatting, so submitting accurate, complete claims can help reduce preventable rejections and denials.

What information is needed in insurance billing on 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.
• Provide the client identifiers required by the payer and claim form. Avoid collecting unnecessary sensitive information.
• Insurance company name and plan member ID
• Insured’s information if the client is a dependent on the plan
• Gender
• Address

Practice’s information needed for medical claims

• Practice name and billing NPI, as applicable
• 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

• Applicable CPT or HCPCS codes and any modifiers required by the payer.
• Dates and place of service
• Diagnostic/ICD-10 code(s)

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How to submit a clean insurance 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 a 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.

How to track claims and post insurance payments

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.

Insurance billing example: From therapy session to payment

How does insurance billing work in a real therapy practice? Consider this fictional example of a mental health therapist billing for a 45-minute individual psychotherapy session using CPT code 90834.

1. Verify insurance benefits: Before the appointment, the therapist confirms that the client's coverage is active, checks their copay or coinsurance, and determines whether prior authorization is required.
2. Document the session: After providing 45 minutes of psychotherapy, the therapist completes a clinical note documenting the service, treatment interventions, client response, and medical necessity.
3. Create the claim: The therapist or billing staff enters CPT code 90834, the appropriate ICD-10-CM diagnosis code, date of service, provider information, and other required claim details.
4. Submit the claim: The claim is submitted electronically to the insurance payer, either directly or through a clearinghouse.
5. Review the remittance: After processing, the payer issues an electronic remittance advice (ERA) or other payment explanation showing the allowed amount, insurer payment, adjustments, and any client responsibility.

For example, if the therapist's billed charge is $150, the insurer's allowed amount is $110, and the client has a $25 copay, the insurer may pay $85, leaving a $40 contractual adjustment for an in-network provider.

This example illustrates why accurate documentation, coding, claim tracking, and payment posting are essential to managing insurance billing in private practice.

Note: All amounts are hypothetical. Actual reimbursement and client responsibility depend on the payer contract, benefits, and claim adjudication.

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?)

How to correct or appeal claims

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.

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How EHR and practice management software can save you time with insurance billing for therapists

EHRs with integrated billing software and clearing houses, such as TheraPlatform, offer therapists 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.

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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, and PTs in group and solo practices.

More resources

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• Insurance billing 101
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• Behavioral Health tools

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