‍This article is co-authored by Alma 

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If you’re a therapist starting your own practice, accepting health insurance may seem like a Gordian knot.

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Getting paneled, learning CPT codes, filing claims, reimbursements, rejected claims, clawbacks—how do you even begin to untangle it all?

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The answer: Start at the beginning, and work methodically until you reach the end. This guide helps you do that, from deciding whether to take insurance all the way up to entering reimbursed claims on the books.

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Here’s step one.

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Decide whether you’re going to accept insurance

When it comes to accepting insurance, you have three options:

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• In-network: If you’re an in-network provider, you’re credentialed with insurance companies, and only see clients who have insurance from the companies you’re paneled with.
• Out-of-network: You only see private pay clients, and you are not credentialed with any insurance companies.
• A mixture: You’re credentialed with some insurance companies, but you also see private pay clients.

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In order to accept insurance, you must apply to join an insurance panel. Each insurance company has its own panel, which you apply individually to in order to join. The process of being accepted is referred to as “credentialing,” or sometimes “paneling.”

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Once you’re on a provider’s panel, you’re set up to serve clients they insure. When an insured client comes to you for care, you bill the insurance provider, and the provider reimburses you. 

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Accepting insurance comes with both benefits and drawbacks. The benefits include:

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• Referrals. Insurance providers you’re credentialed with will refer customers to you for care, which can be helpful when you’re just starting out and your client list is small.
• Wider reach. By accepting insurance, you’re making your services available to clients who might not be able to afford private pay therapy. Your potential customer base is larger. 
• Reputation. Credentialing processes are thorough. If you pass muster, you’re showing the public that you’re trustworthy and you know what you’re doing. That can be helpful when your practice is new. 

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Like anything else, getting credentialed and accepting insurance also comes with drawbacks. Not all therapists accept insurance. In fact, around 25% of therapists who responded to a recent Heard survey said they only accepted private pay clients.

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Some reasons why:

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• Delays. Getting credentialed takes time. You can expect a wait of two to four months before you’re approved. That’s a drag when you’re in the process of launching your practice.
• Administrative duties. Billing requirements for insurance providers are stringent. You can expect filing claims to eat up a portion of your schedule. Using automating software, an insurance clearinghouse, or services like Alma can cut down on your time commitment, but some therapists choose to avoid the problem altogether by refusing to accept insurance.
• Slower payments. Private pay clients pay out of pocket immediately. Insured clients take longer to pony up: You have to file the claim, wait for it to be accepted, and then wait for the transfer of funds to go through. 

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It’s worthwhile taking time to do additional research, consult with other therapists, and explore options like Alma before deciding whether to accept insurance. Alma can handle all paperwork for clinicians, from eligibility checks to claims submissions. Therapists can also access enhanced rates and get credentialed in less than 45 days with Alma. 

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If your mind's made up and you don’t plan to be credentialed, check out our guide to out-of-network billing for more guidance. On the other hand, if you’re ready to get started with credentialing, the next section has you covered.

How much do insurance companies reimburse therapists?

For the sake of remaining competitive, insurance companies are tight-lipped about their reimbursement rates. When getting credentialed with a particular provider, you’ll learn more about their reimbursement rates. You’ll also have the opportunity to negotiate rates.

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Therapists who anonymously responded to the 2023 Heard Financial State of Private Practice Report provided their average reimbursement rates for 2022. The majority of respondents said they were reimbursed less than $150 per hour, and 12% of therapists surveyed earned less than $100 per session from insurance.

Get credentialed with insurance providers

Once you’ve decided to accept insurance, here’s what you need to do to get credentialed.

Decide on a provider

Not all insurance providers are the same. Their reimbursement rates (how much they pay out to you, the therapist, per session), restrictions, and requirements vary. Some may require you to have a certain number of years’ experience in the field before they will credential you.

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Talk to other therapists in your network to learn who they’re credentialed with and what their experiences have been working with different providers. And consider getting in touch with major employers in your area to see what companies they use for their employees’ health insurance.

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Here are some factors to consider when you’re checking out different providers. 

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• Payment speed, reliability, and rates. How long does it typically take a provider to reimburse therapists? Have any therapists you know struggled to get reimbursed, or faced other issues with reliability? These factors can have a major impact on your experience with a provider.
• Marketing and referral services. How does the provider help customers find in-network therapists? Do they provide additional services to help you market your business?
• Accessibility and support. If you need to get in touch with the provider, what sort of wait time should you expect? Do they offer online chat? What is it like navigating their phone system?

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Once you’ve chosen a provider, it’s time to plan your application.

Gather all the information you need

To apply to an insurance panel, you’ll need:

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• Your license information
• Your Nation Provider Identifier (NPI) number
• Your healthcare taxonomy code
• A copy of your resume
• Proof you’re insured for malpractice (professional liability insurance)
• Liability insurance covering rental property (if applicable)
• Paperwork covering any advanced training you’ve received

Complete a CAQH application

CAQH stands for the Council of Affordable Quality Healthcare. The Council has created a standardized application for being credentialed with insurance providers.

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While it’s worth noting in any list of credentialing must-haves, you actually complete the CAQH after you’ve begun the credentialing process. That’s because you’re only able to fill out the application if you’re invited to do so.

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Here’s how it works:

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1. You apply to an insurer to be credentialed, then follow up with them.
2. The insurer sends you a CAQH number, which allows you to access the application.
3. You complete and submit the CAQH application.

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Some good news: After you complete the CAQH for one insurer, you won’t need to complete it again. The same application is used again for future applications to panels.

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Be extra careful filling out the CAQH, and keep a copy of it for your files. Quadruple check it. A minor error can result in major delays having your application accepted.

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Once you’re credentialed, you’ll be required to reattest your CAQH every four months. The insurance provider will send you a notice asking that you confirm everything on the CAQH is still relevant. Be sure to do this promptly to avoid any complications.

File your application, then follow up

After filing your application, hold on to a copy for your files. Then check with the insurer to make sure they’ve received everything. Some insurers require a specific time to elapse before you follow up. If they don’t, check with them after three or four weeks.

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The purpose of checking in is to make sure the application hasn’t been lost, or that it isn’t being held up by some sort of technical error. Insurance companies are huge organizations, and mistakes happen.

Familiarize yourself with the terms of approval

Once you’ve been approved, spend some time getting familiar with the insurer’s requirements. That includes:

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• Fee schedules
• Claim processes
• Documentation requirements
• Current procedural terminology (CPT) codes
• Appeals processes

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Also, keep a file of relevant phone numbers and email addresses to get in touch with the provider, and familiarize yourself with their online portal for panel members.

What if you aren’t approved?

Rejection is a part of life. If an insurance provider rejects your application, don’t despair. You may be able to have your application reconsidered in the future. Be sure to contact the provider about any changes in your practice—for instance, if you hire employees, expand your offerings, or begin offering bilingual services.

How to get help with credentialing

If you’d like to be credentialed with multiple insurance providers, consider using a service like Alma. Alma helps automate the credentialing and claims filing processes for therapists, while making it easier for clients to find therapists who accept their insurance.

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Learn how to bill insurance

Once you’re credentialed with an insurance provider, it’s time to familiarize yourself with the process of submitting claims. Many therapists outsource this part to a biller.

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Most providers allow you to file claims via their online portals. You can also choose to mail in claims manually with CMS-1500.

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A CMS-1500 is the standard claims form for medical and mental health services. If you’re using an online portal to file a claim, you answer the prompts on the screen, and the portal effectively fills out the CMS-1500 for you. 

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If you’re filing manually, you’ll have to fill out a digital version of the CMS-1500, print it, and mail it to the insurance provider. CMS-1500s cannot be filled out with a pen.

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Here are the basic steps to follow when billing an insurance provider.

Collect your client’s information

That includes:

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• Their full name
• Date of birth and SSN (if required)
• Plan member ID
• The main insured person on the plan (if client is a dependent)
• The date and place your services were provided (in-office or online)
• ICD-10 codes
• Service code and modifier for each service you provided
• Your NPI
• Your taxonomy code
• Your practice’s tax ID
• Your practice’s NPI (if different from your own)
• Your practice’s address

Double check your claims submission deadline

Before you file, make sure you haven’t missed the deadline to file a claim. If you find you frequently struggle to meet claims deadlines, adjust the protocol and schedule you follow for the purposes of filing.

Fill out the claim

Either complete the onscreen steps when using a provider’s web portal, or fill out the CMS-1500.

Double check for errors

Even minor typos or oversights can significantly delay reimbursement and lead to extra paperwork. Make sure everything is 100% accurate before submitting.

Submit the claim

Finish the online submission, or mail the CMS-1500. 

Always check new clients’ benefits

One of the most common reasons insurance companies deny therapists’ claims is that their services aren’t covered by the client’s benefits. Make it a practice, every time you accept a new insured client, to check with their insurance company and make sure they have coverage for the services you’re providing.

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Checking benefits is typically a matter of calling up the insurance company, providing them with the relevant information about you and your new client, and getting confirmation that the client has coverage.

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Before you get on the phone, make sure you have two things.

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Your provider information:

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• NPI number
• Tax ID
• Your service address
• Your license number

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The client’s information:

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• Address
• Date of birth
• First and last name
• Subscriber ID number
• Insured first and last name (if client is a dependent on another’s plan)
• Relationship to insured (if client is a dependent)

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Whenever you take on a new client, get a scan or photo of the front and back of their insurance card, and keep it on file. It will save checking their benefits and filing future claims easier.

Talking to the insurance company on the phone

In most cases when you call an insurance company’s provider hotline to check on a client’s coverage, a representative will prompt you through all the information you need to provide.

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Make sure, during the conversation, you confirm:

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• That you are an in-network provider for their panel
• The address they have on file is correct
• The client’s subscriber ID, first and last name, and date of birth
• There are no limitations or authorizations required for the client
• The CPT codes on file for your practice are correct
• What the client’s copayment and coinsurance are
• Whether the client has an outstanding deductible
• The payer ID for claims filed online
• The rep’s name and reference ID for your records

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ICD-10 and CPT: Know your codes

If you’ve made it to the point where you’re credentialed with an insurance panel, you’re likely already familiar with International Classification of Diseases (ICD-10) and common procedural technology (CPT) codes. But, just in case, here’s a quick refresher:

ICD-10 codes for therapists

ICD codes correspond to patients’ diagnoses. They’re used when submitting claims to justify the particular treatment you’re charging for; the treatment itself corresponds with a CPT code.

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There are about 70,000 different ICD-10 codes, but only a fraction of those apply to psychotherapy. All the codes a therapist can expect to use fall under the categories Mental, Behavioral and Neurodevelopmental Disorders (codes starting with “F”) or Factors Influencing Health Status and Contact with Health Services (codes starting with “Z”).

CPT codes for therapists

CPT codes are used to identify treatment you provided clients, for which the insurance company reimburses you.

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The most common CPT codes for therapists are:

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• 90791: Psychiatric diagnostic evaluation 
• 90832: Psychotherapy, 30 minutes (may be 16–37 minutes in practice)
• 90834: Psychotherapy, 45 minutes (may be 38–52 minutes in practice)
• 90837: Psychotherapy, 60 minutes (53 minutes and over in practice)
• 90846: Family or couples psychotherapy without the patient present
• 90847: Family or couples psychotherapy with the patient present
• 90853: Group psychotherapy (not including family)

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It’s important to use the right code. Using an incorrect code could result in a denied claim or even an insurance audit.

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The two most common CPT code mistakes therapists make when filing claims are undercoding and upcoding.

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Undercoding occurs when a submitted CPT code corresponds to a treatment that's less costly than what was actually provided to the patient. While sometimes done intentionally to reduce costs for patients, undercoding is illegal.

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Upcoding, also known as overcoding, is the use of a code that indicates a pricier treatment than what the patient actually received. This is often done to get a larger reimbursement. It is also illegal.

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Both undercoding and upcoding can occur due to honest mistakes on the part of a therapist or staff members—but even if it’s a mistake, it can lead to major problems. Double check all your CPT codes before submitting.

Learn how to handle claim denials, rejected claims, and clawbacks

On occasion, a claim you submit may be denied, rejected, or even clawed back: 

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• A claim is denied after an insurer processes your claim, then refuses to pay for the services you’re billing them for.
• A claim is rejected when it’s received by the insurer but not processed because they detect an error.
• A claim is clawed back when it’s initially accepted and reimbursed, but the insurer later determines it was invalid, and demands the therapist pay back the money.

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Here’s what to do in each situation.

Claim denials for therapists

The most common reasons insurance companies deny claims are:

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• The service wasn't in line with the insurer's medical necessity criteria
• The submission was past its deadline
• You provided two services in a single day
• Services were provided without required pre-approval or referral
• The claim submission deadline passed
• The client changed or no longer has their insurance coverage
• The same claim was submitted twice
• A claim was made for services not included in the client's package

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If a claim is denied, and you believe the reason provided is not valid, you can choose to file an appeal with the insurance company.

Claim rejections for therapists

If a claim is rejected, it’s usually due to a simple typo or information that was accidentally omitted. The easiest way to resolve the problem is to rewrite and resubmit the claim.

Claim clawbacks for therapists

Sometimes an insurer processes and pays out a claim, but realizes after the fact that it was invalid. Typically this is because:

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• The client’s insurance coverage expired but the claim was processed anyway
• The insurer determines the service provided was unnecessary or falls outside the client’s coverage

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Different states have different limits on how much time must pass before an insurer can no longer claw back a charge. When you’re credentialed with an insurance company, they should make the conditions under which they can make clawbacks explicit. If not, talk to a representative.

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You can appeal clawbacks at multiple levels. The first one therapists typically turn to is the insurer’s internal appeals system. 

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If you appeal a clawback but you believe your appeal is unfairly rejected, you can contact your state’s Attorney General or Department of Insurance. They may be able to start an investigation. In the past, courts have rejected insurers’ clawbacks when the clawback was made to cover a mistake the insurer made reimbursing the therapist.

Set up your bookkeeping system to handle insurance reimbursements

Like all revenue your therapy practice earns, reimbursement from insurance providers must be recorded on the books.

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Your journal entries for medical insurance reimbursements differ according to whether you use cash basis accounting or the accrual method.

Insurance reimbursements using cash basis accounting

When you use the cash basis method of accounting, you only record revenue on the books when you have the cash in hand.

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So when you charge a client and file their insurance claim, you do not record it on the books. You only record it as revenue when you receive a payment from the insurance company. And if you don’t receive payment, you cannot write it off on your taxes because technically it’s not an expense. 

Insurance reimbursements using the accrual method

If you use the accrual method of accounting, you first record the amount of the reimbursement when you file it, under Accounts Receivable.

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After you receive payment, the amount is debited from Accounts Receivable, and credited to Cash.

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To learn more about the different types of accounts therapists use to do their bookkeeping, check out our chart of accounts for therapists.

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Accepting insurance has drawbacks as well as benefits. One of the biggest drawbacks is the time it takes to tackle extra administrative tasks and navigate your way through the paperwork involved. 

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Alma handles all paperwork, from eligibility checks to claims submissions, so you can focus on helping your clients. Learn more about how Alma helps therapists.

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This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult their own attorney, business advisor, or tax advisor with respect to matters referenced in this post.

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