Running a mental health therapy private practice is both fulfilling and complex. While the ability to set your own schedule, control your environment, and provide personalized care is likely what drew you to private practice, the administrative side—particularly billing—can often feel overwhelming. 

Many therapists find billing to be one of the most intimidating aspects of running a practice, but with a clear understanding and structured approach, it can become much more manageable. Proper billing ensures timely reimbursements, financial stability, and a smoothly operating practice. This guide will walk you through the essentials of billing for mental health services, covering both cash-pay and insurance billing, step-by-step processes, and tools that can simplify your workflow. 

Cash pay vs. insurance billing for therapy

Deciding whether to offer both cash pay and insurance billing is one of the first financial decisions a therapist must make for their practice. A cash-pay model allows for straightforward transactions, predictable revenue, and less administrative burden. Clients pay out-of-pocket, forgoing the complexities of insurance claims, prior authorizations, and delayed reimbursements. This approach gives therapists full control over their pricing and reduces dependence on insurance policies that may otherwise dictate session length, frequency, or treatment modalities.

While a cash-pay model sounds ideal, it does have limitations. The cost of recurring therapy sessions can quickly become unaffordable for many clients, leading to reduced session frequency or the inability to continue care altogether. Since most clients rely on insurance to offset healthcare costs, a cash-only practice may limit accessibility and restrict your potential client base.

On the other hand, accepting insurance allows therapists to reach a broader audience and establish a more consistent flow of clients. However, it comes with added responsibilities such as credentialing, verifying benefits, and submitting claims. To maintain a financially sustainable practice, therapists accepting insurance must stay informed about reimbursement rates, effectively handle claim denials, and ensure compliance with insurance policies. Mastering these aspects helps secure steady revenue while reducing administrative headaches and financial uncertainties. Many therapists choose a hybrid approach, accepting both insurance and private-pay to maximize accessibility while maintaining financial stability.

Getting started with insurance billing 

Before billing insurance, therapists must first establish themselves as in-network clinicians with insurance companies. This process, known as credentialing, involves submitting proof of licensure, liability insurance, and other necessary documents. Because credentialing can take several months, it’s important to begin the process well before expecting to accept insurance payments. Want to learn more about credentialing? We break this process down in 6 easy steps. 

Once credentialed, therapists must ensure they fully understand the insurance policies they work with, including reimbursement rates, session limits, and coverage requirements. Establishing a routine for verifying benefits before each new client’s session can prevent unexpected claim denials and ensure that both the therapist and the client are clear on any out-of-pocket costs. Additionally, obtaining an Assignment of Benefits (AOB) form allows therapists to bill insurance directly rather than requiring clients to submit claims on their own.

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Each insurance company has its own guidelines for billing, so it’s helpful to familiarize yourself with their requirements, from documentation expectations to pre-authorization processes. Staying up to date with CPT codes, such as 90837 for a 60-minute therapy session or 90785 for interactive complexity, will help ensure claims are filed correctly and reimbursed without delay. Check out a list of common mental health CPT codes here. 

A Step-by-Step Guide to Billing Mental Health Services

Billing for mental health services can be a complex process, but following a structured approach ensures smoother operations and timely reimbursements. Each phase of the billing process— from collecting client details to submitting claims and reconciling payments—plays a crucial part in maintaining the financial health of your practice. Below is a detailed breakdown of the necessary steps to ensure accurate and efficient billing.

1. Collect Client Information – Gather demographic and insurance details, including a copy of the client’s insurance card and an AOB form. Ensure that personal information is up to date, and confirm the client’s coverage status before the first appointment to avoid surprises in fees.
2. Verify Eligibility & Benefits – Contact the insurer or use an online verification tool to confirm coverage, deductibles, co-pays, session limits, and pre-authorization requirements. It’s essential to document this information for future reference and to prevent claim denials due to eligibility issues.
3. Determine CPT Codes – Select the correct CPT code based on session length and complexity. Using the correct codes ensures proper reimbursement and minimizes claim denials. Some common therapy codes include:
   
   • 90791 – Initial diagnostic evaluation
   • 90834 – 45-minute therapy session
   • 90837 – 60-minute therapy session
   • 90785 – Interactive complexity add-on
   • 96127 – Brief emotional/behavioral assessment 
4. Document the Session Thoroughly – Proper documentation supports claims and protects against audits. Notes should include session start and end times, key topics discussed, clinical interventions used, and any treatment plan updates. If applicable, justify the use of add-on codes like 90785 for interactive complexity.
5. Submit Claims – Claims can be submitted through an electronic clearinghouse, a billing service, or an EHR platform. Ensure that each claim includes the correct CPT codes, ICD-10 diagnosis codes, clinician information, and client details. Submitting clean claims reduces the likelihood of rejections and delays. 
6. Monitor Claim Status – Regularly check on the status of submitted claims. Use an EHR or billing platform to track payments and follow up on unpaid claims. Most insurers allow online tracking of claim progress, which can help identify issues before they result in denials.

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7. Manage Denials & Appeals – If a claim is rejected, review the explanation of benefits (EOB) to understand the reason for denial. Common issues include incorrect coding, missing information, or eligibility errors. Correct and resubmit claims promptly. If necessary, file an appeal with supporting documentation to ensure reimbursement.
8. Reconcile Payments & Generate Client Invoices – Once payments are received, compare them against expected reimbursement rates to ensure accuracy. If there is an outstanding balance, generate an itemized medical bill example to provide clients with a clear breakdown of charges. This helps maintain transparency and improves client satisfaction.

Following these steps ensures smoother claim processing, maximizes reimbursement, and minimizes financial disruptions in your practice.

Billing tools versus billing services

Therapists can manage billing in-house using software tools or outsource the process to a billing service. Billing tools, such as EHR-integrated billing platforms, streamline claim submissions, track payments, and generate reports. They require therapists to actively monitor claims and address denials but provide control over the revenue cycle while reducing costs associated with third-party services.

Alternatively, you can hire a billing service to offload the administrative burden. These services handle credentialing, claim submissions, denials, and payment reconciliation. While they save time and reduce errors, they come at a cost (typically a percentage of collections). The decision between using software or a billing service depends on your workload, comfort with administrative tasks, and financial goals.

Healthie’s EHR and billing platform

Healthie’s all-in-one platform simplifies billing for mental health professionals by integrating scheduling, documentation, and claims management. With automated eligibility verification, pre-built CPT codes, and electronic claim submissions, therapists can efficiently manage insurance billing while being able to focus on client care. Healthie also supports cash-pay models by offering secure invoicing and payment processing.

By using an EHR like Healthie, therapists can reduce administrative stress, improve revenue cycle efficiency, and ensure compliance with insurance requirements. Whether handling billing in-house or outsourcing, leveraging a comprehensive platform streamlines operations and supports financial sustainability in private practice.