Understanding How Billing For Mental Health Services Works

Billing for mental health services is one of the most important parts of running a behavioral health practice. Between insurance verification, provider credentialing, coding, authorizations, claims processing, and patient billing, there are many moving parts. But when you understand how the system works, you can get paid more accurately and reliably, and keep your focus on delivering quality care.

In this guide, we’ll break down how billing for mental health services works, step by step, so you can streamline your revenue cycle and reduce administrative headaches.

Establish Provider Eligibility & Credentialing

Before you can bill insurance for mental health services, you must ensure that you and your practice are eligible to be a billable provider:

Licensure & Credentials

Insurance companies generally require mental health clinicians to be licensed or certified according to state and payer standards, such as:

• Licensed Professional Counselor (LPC)
• Licensed Clinical Social Worker (LCSW)
• Licensed Marriage and Family Therapist (LMFT)
• Psychologist (PhD, PsyD)
• Psychiatrist (MD/DO)
• Certified Clinical Mental Health Counselor (CCMHC), where applicable

Credentials and allowable billing vary by payer and by state. Some payers also allow supervised clinicians to bill under a supervising clinician’s NPI when appropriately documented.

Payer Credentialing

Credentialing is the process of enrolling with each insurance company so that you can bill them directly. This includes:

• Submitting your license, certifications, and documentation
• Completing applications with each payer
• Agreeing to reimbursement rates and terms

This process varies in length by payer but often takes several weeks to months. Getting started early is critical: you can’t submit claims to insurers until credentialing is complete.

Verify Insurance Benefits Before Services Begin

Once credentialed, the next step is to verify patient insurance benefits before the first appointment. This includes:

• Whether the plan covers mental health services
• Which levels of care are included (individual therapy, group therapy, family therapy, etc.)
• Copays, coinsurance, deductibles, and out-of-pocket responsibilities
• Whether pre-authorization is required
• Any limitations on covered sessions or providers

Benefits can vary widely even within the same insurer depending on the plan type. Carefully verifying benefits upfront helps prevent surprises and improves patient satisfaction.

Determine Medical Necessity & Authorization Needs

Most insurance plans require that services be medically necessary, meaning the care is appropriate and needed for a diagnosed clinical condition.

To support medical necessity and secure payment:

• Conduct a clinical assessment
• Assign a valid DSM-5 mental health diagnosis
• Document treatment plans and measurable goals

For higher levels of care (e.g., certain intensive outpatient or crisis services), plans often require prior authorization before coverage is approved. Authorizations must be tracked and documented to avoid denials.

Use the Correct Codes for Each Service

Success in mental health billing hinges on correct coding:

Common CPT® Codes

Therapy and evaluation services are billed using CPT® (Current Procedural Terminology) codes such as:

• 90791: Diagnostic evaluation (no medical services)
• 90792: Diagnostic evaluation with medical services
• 90832 / 90834 / 90837: Individual psychotherapy (different time increments)
• 90846 / 90847: Family or couples therapy
• 90853: Group therapy
• 90785: Interactive complexity add-on

Each code reflects a specific type and length of service. Using the wrong code can delay payment or trigger denials.

Modifiers

Certain services require modifiers (e.g., telehealth, co-therapy) to indicate special conditions. Your billing system or partner should apply these accurately.

Submit Claims Accurately and Promptly

After services are delivered, claims are submitted to the payer:

• Electronic Claims (837P): Most primary method for submitting mental health claims
• CMS-1500 Form: Standard paper claim form, used when needed

Clean claims have:

• Accurate CPT and diagnosis codes
• Billed charges matching payer expectations
• Correct provider identifiers and place of service
• Documentation of authorizations when required

The sooner you submit clean claims, the sooner you get paid.

Understand How Adjudication & Payment Work

Once a claim is submitted, the payer:

1. Reviews it for eligibility, coverage, and medical necessity
2. Applies the plan’s benefit structure (allowed amount, copays, coinsurance)
3. Sends an Explanation of Benefits (EOB) or remittance advice

The plan will either:

• Pay the claim,
• Deny it, or
• Request more information.

Your practice must interpret the EOB and post payments correctly in your system.

Patient Responsibility and Statements

Many mental health visits involve patient financial responsibility, such as:

• Copays
• Coinsurance
• Deductibles
• Charges for non-covered services

Patients should receive clear statements that reflect:

• Insurance payments
• Remaining balances
• Payment options

Transparent billing improves collections and patient satisfaction.

Manage Denials and Appeals

Not all claims are paid on the first try. Common reasons for denials include:

• Missing or incorrect authorizations
• Coding or documentation errors
• Eligibility issues
• Lack of medical necessity documentation

An effective denial management process:

• Tracks all denials
• Identifies denial trends
• Submits appeals with supporting clinical information
• Follows up promptly

Appeals can often recover payments that would otherwise be lost.

Consider Out-of-Network and Superbills

If you’re not contracted with a patient’s plan:

Out-of-Network Billing

You may still submit claims to the insurer for out-of-network reimbursement if the plan allows it.

Superbills

A superbill (detailed receipt) can be given to patients so they can attempt reimbursement from their insurer directly.

Both options expand access for patients and may improve revenue.

Documentation, Compliance & Privacy

Consistent, thorough documentation is essential in mental health billing. It supports:

• Medical necessity
• Claim accuracy
• Audits and compliance reviews

Careful adherence to privacy laws like HIPAA, and in some cases additional protections, ensures patient confidentiality and legal compliance.

The Value of Expert Billing Support

Billing for mental health services is complex, but you don’t have to navigate it alone. A specialized revenue cycle partner like Hansei Solutions can help your practice:

• Credential with payers and enroll providers
• Verify benefits and secure authorizations
• Code and submit clean claims
• Manage denials and appeals effectively
• Optimize revenue cycle workflows

With experienced support, you reduce administrative burden and improve financial outcomes — freeing your team to focus on care.

Hansei Can Help Simplify the Process

Understanding how billing for mental health services works is key to the financial success and sustainability of your practice. From credentialing and benefit verification to accurate coding, clean claims submission, and effective denial management, each step impacts your ability to get paid on time and in full.

If you’re ready to streamline your billing operations and maximize reimbursement, Hansei Solutions is here to partner with you. Let us help you navigate the complexity so you can spend more time doing what you do best: helping clients on their journey to mental wellness.