Taxonomy codes for mental health therapists

Taxonomy codes are familiar to therapists who do their own billing. If you don’t do your own billing, you might be surprised to find that taxonomy codes are a vital piece of information if you want to be reimbursed by a third-party payer. They are linked to your National Provider Identifier (NPI), which is usually required if you work with clients who want to use insurance. Let’s discuss what you need to know about taxonomy codes if you are a mental health therapist.

What are taxonomy codes?

Taxonomy codes are a 10-digit alphanumeric identifier 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. Current taxonomy codes can be found on the National Uniform Claim Committee (NUCC) website. Taxonomy codes are used for all health professions, not just mental health.

Taxonomy codes are linked to the process of obtaining a National Provider Identifier (NPI). If you are a Health Insurance Portability and Accountability Act (HIPAA) covered entity or if you are a therapist who bills Medicare for your services, you are required to have a NPI.

Originally, The Centers for Medicare and Medicaid Services (CMS) included the taxonomy codes in the NPI process to help differentiate among health professionals, but insurance companies now use them to govern reimbursement.

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Taxonomy codes have three separate levels:

• Level I is the broadest provider type. It is a general grouping of healthcare providers. For example, “Behavioral Health and Social Service Providers", “Allopathic & Osteopathic Physicians”, and “Dental Providers”.

• Level II is a more specific delineation of the scope of practice and is a subset of the level I provider type. Counselors, psychologists, and social workers, for instance, are level II designations under “Behavioral Health and Social Service Providers”. 

• Level III represents a specific area of specialization. Counselors, for example, can be identified as addictions counselors, mental health counselors, or school counselors, among others. Psychologists currently have over 20 level III designations from which to choose.

Relevant points about taxonomy codes for mental health providers:

• An individual provider can choose multiple taxonomy codes to cover the scope of their practice, but only one will be considered the “primary” code.

• While it is a strict requirement of Medicare reimbursement, most other insurance carriers will also ask for your NPI and taxonomy codes.

• If you are the owner of a private practice, you will need separate taxonomy codes for each provider and the practice itself.

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What are therapist concerns with the taxonomy code?

1) Taxonomy codes were not created by mental health professionals. As such, there is some question as to whether the codes accurately represent the fields of psychology, counseling, and social work. For example, there are only two level III categories for social workers: clinical and school. We know that clinical social workers can have many specializations but they are not represented in the taxonomy codes. This begs the question: what do you put as your taxonomy number if your specialty is not accurately represented?

2a) Insurance companies are famous for finding reasons to deny payments (to be fair, some are better than others). However, if a third-party payer deems that your taxonomy code does not represent the services you are providing, they can choose to limit or deny payment. For example, say you are a psychologist treating someone with a substance abuse disorder but you did not list addictions as one of your specialties. The insurance company may question why a psychologist who does not specialize in addictions is providing treatment in this area.

2b) It is also possible that a client’s insurance doesn’t cover a specific specialization for which you signed up. For example, say you chose pastoral counseling as your primary taxonomy but their insurance doesn’t cover that speciality. You could be denied payment for your services. Even if you can eventually convince them that the payment is warranted, you will take up your precious time in the appeal process.

3) If a clinician selects numerous specialty taxonomy codes, third-party payers may question the therapist’s expertise in all these different areas. In other words, how many specialties can one person have?

Do I need an NPI and taxonomy code?

If you work in an agency or an institution, you have to have a NPI and taxonomy code. This is because larger institutions are HIPAA-covered entities that accept insurance. If you work in private practice, however, and don’t take insurance, this is a murkier area. 

Technically, a therapist who does not take insurance may not be considered a covered entity under HIPAA. As such, they may not need to follow HIPAA and have an NPI number and the accompanying taxonomy codes. However, if a client wants to submit for out-of-network benefits, their insurance company may ask for the provider’s NPI number and taxonomy codes. 

And, even if you are not part of an institution that follows HIPAA requirements, every clinician must abide by client confidentiality and privacy guidelines. So, while it may not be strictly necessary, it is a good idea for all therapists to get an NPI. It is not a difficult process and it may help you avoid unnecessary headaches at a later date.