Insurance Billing 101 for Therapists

Knowing how to bill insurance for therapy can be a confusing process filled with complexities and nuances. It can overwhelm even seasoned professionals who’ve been practicing for a long time. It’s complicated, too — an estimated 80% of all medical bills contain errors. 

Therapy billing requires a good understanding of insurance industry jargon, claim rejections, diagnosis codes, and much more — it’s no wonder many therapists find the process daunting. 

While billing insurance is one of the most common challenges of being a therapist, mastering insurance billing is a must. It’s integral to running a practice and receiving compensation. 

Luckily, there are many options available for you to bill insurance. You can outsource the entire thing, use practice management software designed specifically for therapists, or do it yourself. 

If you’re among the many who feel billing insurance is the worst part of your job, this guide is for you. Learn how to bill insurance for therapy and explore the terminology, differences between in and out-of-network billing, why getting credentialed can help, the importance of verification and authorization, and so much more. We’re sharing everything you need to know about how to bill insurance for counseling services.

Understanding Insurance Terminology

Therapy billing in the field of mental health care involves complex terminologies, including:

• Insurance provider: The organization that offers coverage for medical services.
• Billing claim: An insurance claim is a request made by a healthcare professional asking an insurer to cover treatment costs.
• Claim status: This is the phase during which claims are processed and evaluated for validity before a payment is approved.
• Credentialing: The credentialing process verifies a therapist’s qualifications and experience as a mental health professional.
• CPT codes: Also referred to as service codes, current procedural terminology (CPT) codes are vital when filing an insurance claim.  A CPT code helps insurance companies identify the types of treatment offered during therapy.

In-Network vs. Out-of-Network Billing

Part of mastering billing and understanding insurance coverage is distinguishing between in-network and out-of-network. 

• In-network providers have agreements with insurance companies that allow them to offer their services to clients at a reduced rate. This helps someone afford therapy, but these contracts can potentially limit the choice of preferred provider if a therapist is not “in the network.”

• Out-of-network providers do not have contracts with an insurance company. This means a patient could have greater freedom in choosing a provider, but it will generally lead to higher costs since the insurance plan will not cover as much of the bill (if it covers any at all).

“The in-network billing process might seem intimidating at first, but once you are able to engage in the process and start billing insurance companies, it gets easier. The initial process is more time-consuming, but once it is in place, it is pretty smooth. In-network billing allows clients to use their insurance to pay for therapy with little or no copay. This makes therapy more accessible to those who need it the most since many people cannot afford to pay out-of-pocket for therapy.”

– Talkspace therapist Bisma Anwar, LPC, LMHC

Getting Credentialed

A big part of understanding how to bill insurance for therapy means learning the ins and outs of credentialing. This process is something mental health professionals can go through before they bill insurance companies. 

Credentialing proves that a therapist is qualified and competent to provide mental health services. Filing a claim with an insurance company can be nearly impossible without credentials.

Credentialing is important because it:

• Helps build trust between clients and medical professionals
• Shows that you meet specific standards set forth by insurance companies
• Ensures insurance companies are more likely to work with you

The process of getting credentialed involves several steps. First, gather all necessary documents, including:

• Professional liability coverage details
• Your license to practice
• Your practice tax ID number
• A completed application form

Once you have everything, you’ll submit the documents to the individual insurance company networks you wish to join. Note that while the process is generally similar for each insurance company, there can be slight differences — be sure to check with each company before you submit to ensure you’re giving them exactly what they require. 

The credentialing process looks something like this:

1. Determine which companies you want to be credentialed with
2. Apply to be part of their insurance panel for therapists
3. Complete and submit the Council for Affordable Quality Healthcare (CAQH) application
4. Follow up (and be patient) — in some cases, the credentialing process can take a few months

Verification and Authorization

Verification of client coverage lets you confirm that a client’s insurance provider will cover the therapy sessions you’re offering. Verification is a detailed and essential step that protects you so you’re paid for your services.

Pre-authorization might be required before initiating care, especially for intensive outpatient programs or residential treatment. In short, pre-authorization simply means securing approval from an insurer before starting therapeutic interventions.

Pre-authorization can seem complex, but it serves two critical purposes:

• Guaranteeing compensation for your services
• Protecting clients from unexpected out-of-pocket expenses

Common Billing Codes in Therapy

Current procedural terminology (CPT) codes denote and identify specific types of therapy sessions and modalities as well as diagnostic information. The codes function as a way to describe interventions used in sessions or reasons for treatment. Filing claims with an insurance provider using a standardized code simplifies therapy billing. It ensures you’re paid what you should be.

Some standard CPT codes in therapy include:

• 90834: Individual psychotherapy for a 45-minute session
• 90837: A 60-minute psychotherapy session
• 90791: Initial diagnostic interview or assessment, with no medical services added on

Submitting Claims

Submitting claims to insurance companies is a crucial step in mental health billing. The process must be done correctly and includes filling out insurance claim forms that share detailed and specific information. 

You only have a certain amount of time to submit claims, and the deadlines vary from insurer to insurer. 

To fill out a claim form, you must have:

• Provider’s name
• Practice tax ID
• Client information, including full name and date of birth
• Details about each therapy session, like the date and corresponding service code

Even minor errors could result in a rejection from an insurance company. Make sure that you take the time to fill out claims forms correctly using the following tips:

• Cross-check every detail
• Double-check that a patient’s identifiers match the information on their insurance card
• Look at the insurance requirements before submitting the form
• Make sure the codes you use accurately reflect the services provided

Handling Rejections and Denials

Errors in the billing process or discrepancies between service codes and providers can lead to a claim being rejected or denied.

• Rejections: Often, rejections stem from simple errors in a submission. For example, an incorrect practice tax ID number or a mix-up with patient identifiers could slow things down.

• Denied claims: A claim denial can be a big issue for therapists. A denied claim was processed but rejected. Denials can result from a keystroke error or simple mistake, or they could be due to services provided that weren’t a covered benefit.

You can appeal a rejection or denial status, but for a decision to be reversed, you must have supporting documents like session notes and treatment plans readily available to support your case. Documents like this will help you establish the necessity of services, which can improve the likelihood of payment.

Navigating Client Payments

Clients will sometimes need to pay a portion of their care services cost. 

Costs might include:

• Co-pays: An out-of-pocket fixed amount someone pays for medical services. The insurer will pay the remaining cost.
• Deductibles: An upfront payment that clients must cover before they can use their insurance benefits.
• Coinsurance: The amount a client might need to pay after meeting their deductible requirements, based on a percentage.

The best way to handle payments with clients is by being transparent. Discuss co-pays and other related costs during initial consultations and regularly stay on track with claim statuses.

Best Practices for Successful Billing

Whether you’re looking to streamline the billing process of your private practice or you’re new to adding a dedicated billing department, there’s quite a lot that goes into the process. Following the best practices for successful mental healthcare billing can help ensure the insurance process is as streamlined as possible. 

Best practices include:

• Keep accurate records
• Establish an efficient system for tracking claims and payments
• Educate clients about their responsibilities
• Keep your credentials updated at all times

Avoid the Headaches of Submitting Claims

Submitting claims can be a daunting process, especially for providers who don’t have a dedicated billing department. With the proper knowledge and some organization, though, you can avoid the common pitfalls.

• Reduce errors by ensuring all client information is accurate and complete in your records
• Know the service codes and use them accurately
• Keep copies of insurance cards on file
• Stay organized with your therapy billing process to reduce time and stress
• Systematically track claims throughout the process so you know when they’re submitted, pending approval, approved, denied, or rejected
• Use digital tools that can simplify administrative tasks, like filing electronic claims through secure portals

Insurance filing can be complicated, but it’s vital to running your practice. Maintaining organized records and tracking claims and payments are essential for timely payment. If you don’t want to deal with billing and are looking for help, Talkspace is an online therapy platform that takes the headache out of the billing process for mental health professionals, giving you more time back to achieve an ideal work-life balance as a therapist.

“Talkspace takes over the process of billing insurance so that I can just focus on helping my clients. I do not have to worry about filing the paperwork, doing submissions, or following up on claims. This really makes my life easier!”

– Talkspace therapist Bisma Anwar, LPC, LMHC

If you’re looking to untangle the confusing web of insurance billing for therapists, learn more about how Talkspace can do it for you, so you can focus on doing what you love — helping people. Become a Talkspace therapist today to make running a practice easier.