Mental health billing
Billing for mental health services typically isn’t a core of graduate school therapy programs where students focus on studying theoretical orientations and practicing the skills required to be a clinician. Future therapists actually learn very little about the business side of being a mental health professional and, although most therapists are kind and understanding, they do want to get paid for their work.
Summary
- Accurate billing for mental health services requires correct CPT codes, ICD-10 diagnoses, and proper documentation to support medical necessity.
- Common billing errors, such as mismatched codes, incomplete documentation, or incorrect time reporting, can lead to claim denials and delayed reimbursement. Enrolling in an insurance billing course for therapists can help providers enhance their knowledge.
- Understanding payer rules, modifiers, and telehealth requirements helps reduce compliance risks and improve cash flow.
- Using a secure, therapy-specific EHR can streamline billing workflows, reduce administrative burden, and support audit-ready documentation.
Arrow Enroll in My Free, On-Demand Insurance Billing for Therapists Course
Unless they only accept private forms of payment, that means that they must be educated on the fundamentals of billing for mental health services. Here is what they didn’t teach you in school: A therapist’s guide to billing for mental health services.
Why accept insurance?
Every therapist in private practice needs to decide whether to accept insurance or only take private payments. It is entirely understandable for many therapists to want their clients to pay out-of-pocket.
The process of insurance credentialing and making claims can be burdensome, and a therapist may make more money if all their clients pay privately. As a result, approximately one-third of psychotherapists in the United States do not accept any type of insurance for their services.
However, there are several important reasons why you may wish to accept insurance:
- Expand your client base. Most clients want to use insurance. They will look up therapists on their insurance website and contact you from there. Being on insurance panels opens you up to all those potential clients instead of trying to market yourself to a limited pool of private clients from the community.
- Consistent income. Being on an insurance panel means you have a built-in reservoir of potential clients, and that likely leads to more consistent referrals and fuller caseloads. Additionally, the insurance company will pay you directly for your services, and the client is only liable for the copay. Getting private pay clients to pay their fees can be challenging, and they frequently don’t want to keep spending money over a long period of time. You don’t have to worry about that with people who use insurance.
- Treat more disadvantaged clients. The truth is that only wealthier people can afford to pay therapists out-of-pocket for any length of time. If you want to treat a wider variety of people with varying socio-economic status (SES), accepting insurance is the way to go.
Streamline your insurance billing with One EHR
- Claim batching
- Auto claims
- Automated EOB & ERA
- Real-time claim validation
- Real-time claim tracking
- Aging and other reports
Common CPT codes used for billing for mental health services
If you have decided to accept insurance and have been credentialed with an insurance panel, the next thing you need to do is become familiar with Current Procedural Terminology (CPT) codes. These are the codes that let the insurance company know what services you have performed.
Common CPT codes for mental health professionals
CPT code | Description |
|---|---|
90837 | 60-minute psychotherapy session (52 minutes or longer). Although this is usually called a 60-minute session, note that any session longer than 52 minutes gets billed with this code. |
90834 | 45-minute psychotherapy session (38 to 52 minutes). This may be the most used code in mental health. |
Psychiatric Diagnostic Evaluation. This is how you code the traditional intake session. | |
Family or couples psychotherapy, with the patient present (50 minutes). For use in a session with multiple family members or a couple. The identified patient must be present. | |
Family or couples psychotherapy, without the patient present (50 minutes). For use with multiple family members without the identified patient. | |
90853 | Group Psychotherapy. A treatment group for unrelated people, such as you might find for addiction or dialectical behavior therapy. |
90839 | Psychotherapy for Crisis, 60 minutes (30-74 minutes). This code is used in a crisis situation. If a patient is suicidal, for instance, and they require therapy to prevent self-harm and ensure stabilization. |
Steps for claim submission
Now that you are familiar with CPT codes, these are the steps you must take to submit a claim for services as a psychotherapist:
- Get to know the CMS-1500 claim form. This is the form you must fill out for every claim. It comes in paper versions, but most therapists currently use the digital format (837P).
- Check client eligibility and benefits. This requires accurate client information, including their diagnosis, insurance ID, and birthdate. Preauthorizations are not usually necessary for regular therapy sessions, but if you are treating someone with an uncommon diagnosis or providing a less conventional therapy, you will need to check if a preauthorization is necessary. You can do this on the phone to the insurance company, but most billing software allows you to do this online (and much quicker).
- Enter provider (renderer) information. Make sure to input your correct NPI, taxonomy code, and tax number. If you work as part of a practice, the practice (billing) codes need to be entered separately.
- Enter the correct CPT code and dates of service. If conducting teletherapy, special attention needs to be paid to the place of service codes and telehealth modifiers.
- Meet the submission deadline. It is best practice to submit claims as soon as possible, but some prefer to “batch” claims (send more than one at a time) to save time. Insurance companies usually allow 30-60 days for a clinician to submit the claim from the date of service.
Practice Management + EHR + Telehealth
Manage more in less time in your practice with TheraPlatform
Managing rejections and denials
If you take care with your claim submissions, rejections and denials should be relatively rare. But if they do occur, you need to know what to do. First, you need to understand the difference between claim rejections and denials:
Claim rejections vs. claim denials
Claim rejections happen before they are fully processed and are usually due to an error in the submission. They are deemed incomplete and kicked back to the filer. Denials are claims that were fully evaluated, and payment was denied based on some aspect of the policy. Denials are more difficult to resolve and will take more work on behalf of the therapist.
Common reasons for claims rejections and denials
The following reasons may result in an unpaid claim:
- Typos or missing information. Entering the wrong number or letter, or forgetting to fill in essential information, is the most common reason for a rejection. Double-checking your data is essential.
- Wrong codes. So many codes! And it is easy to confuse them, especially since some of them get changed over time. For example, CPT/HCPS codes are updated annually. Therapists must always ensure they have the most up-to-date code information.
- Policy details. Every policy is different, and they all have their particular rules that may result in a denial. For example, certain services may not be covered under the client’s plan, or their benefits have been exhausted. It is important to read the fine print.
- Not medically necessary. In this case, the treatment provided is deemed not medically necessary for the diagnosis. This could be because the therapy has not been proven effective for a particular problem, or the insurer deems that the amount of therapy is excessive for the issue described.
Free Resources for Therapists
Click below and help yourself to peer-created resources:
What to do about rejections and denials
Here is how to handle a claim rejection or denial:
- View the Explanation of Benefits (EOB) for reasons why the claim was rejected or denied.
- Call the payer for clarification if the reason for rejection or denial is unclear. It never hurts to talk to someone from the insurance company, especially if you are dealing with a denial.
- Rejections are usually because of a data entry error or missing information. This is easy to correct after you understand what happened. Just remember, you need to file this as a replacement claim to avoid duplication; put the number “7” in field 22 on the CMS-1500. You usually have 30 to 60 days to resubmit a claim after a rejection.
- Every payor has their own appeal process, and it is essential that you understand what they require. In addition to a repeal letter, therapists will likely need to include documentation justifying why they feel their services should be covered. You generally have 180 days to file an appeal. If the internal appeal is denied, the client can request an external review, which needs to be filed within four months of the internal appeal denial.
- Be persistent. Insurance companies are very stringent about denying claims, and they hope you won’t make the effort to appeal. The more tenacious you are, the better chance your claim will eventually be covered.
Consider automating billing for mental health services
Submitting claims manually is a tedious process that is prone to errors. Automated billing for mental health services has made the process much easier and more accurate.
Here are some of the primary benefits:
- Auto-populate client and therapist data into forms, decreasing human error.
- Verify client eligibility and benefits immediately.
- “Scrub” claims to search for and eliminate errors before submission.
- Track claims in real time.
Billing for mental health services has traditionally provoked fear in therapists. Many were so intimidated that they hired another person just to take care of it. However, a little education, and the right software, has made the billing for mental health services much less threatening and time-consuming.
Practice Management + EHR + Telehealth
Manage more in less time in your practice with TheraPlatform
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.
Watch this video to see how TheraPlatform’s EHR saves time on insurance billing
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.
Streamline your practice with One EHR
- Scheduling
- Flexible notes
- Template library
- Billing & payments
- Insurance claims
- Client portal
- Telehealth
- E-fax
Resources for mental health therapists
Theraplatform is an all-in-one EHR, practice management and teletherapy solution with AI-powered notes and Wiley Treatment Planners that allow you to focus more on patient care. With a 30-day free trial, you have the opportunity to experience Theraplatform for yourself with no credit card required. Cancel anytime. They also support different industries including mental and behavioral health therapists in group practices and solo practices.
More resources
- Therapy resources and worksheets
- Therapy private practice courses
- Ultimate teletherapy ebook
- The Ultimate Insurance Billing Guide for Therapists
- The Ultimate Guide to Starting a Private Therapy Practice
- Insurance billing 101
- Practice management tools
Free video classes
- Free on-demand insurance billing for therapist course
- Free mini video lessons to enhance your private practice
- 9 Admin tasks to automate in your private practice
References
American Psychiatric Association. Appealing treatment denials: Letter appealing treatment denials from commercial insurers. https://www.psychiatry.org/psychiatrists/practice/helping-patients-access-care/appealing-treatment-denials#:~:text=To%20Whom%20It%20May%20Concern,be%20a%20very%20valuable%20asset
Centers for Medicare & Medicaid Services. (2024, May2). Place of service code set. https://www.cms.gov/medicare/coding-billing/place-of-service-codes/code-sets
https://Healthcare.gov . Appealing a health plan decision: External Review. https://www.healthcare.gov/appeal-insurance-company-decision/external-review/
Mend. 2026 telemedicine billing: GT, 95 & GQ modifier differences. https://mend.com/resource/telemedicine-billing-gt-95-gq-modifier/
National Uniform Claim Committee. (2024). 1500 health insurance claim form reference instruction manual for form version 12/12 (Version 9.0). https://www.nucc.org/images/stories/PDF/1500_claim_form_instruction_manual_2024_07-v12.pdf
Theraplatform. Mental health credentialing with insurance companies. https://www.theraplatform.com/blog/528/mental-health-credentialing-with-insurance-companies
Zhu, J. M., Huntington, A., Haeder, S., Wolk, C., & McConnell, K. J. (2024). Insurance acceptance and cash pay rates for psychotherapy in the US. Health affairs scholar, 2(9), qxae110. https://doi.org/10.1093/haschl/qxae110
FAQs about billing for mental health services
What is included in billing for mental health services?
It includes selecting appropriate CPT codes, assigning accurate ICD-10 diagnoses, documenting medical necessity, and submitting claims to insurance payers.
Why are mental health claims denied?
Claims are often denied due to coding errors, lack of documentation, incorrect modifiers, or failure to meet payer-specific requirements.
How can therapists improve billing accuracy?
Staying updated on payer guidelines, using standardized documentation templates, and leveraging a compliant EHR system can significantly reduce billing errors.
