Insurance Billing: For Therapists
A Simple Guide to CPT Codes, Copays, Deductibles, and More
Whether you're a new therapist entering private practice or a seasoned clinician navigating insurance billing, understanding the basics of insurance terminology and CPT codes is essential. This guide will walk you through the key concepts of insurance billing for therapists, including definitions, examples, and common CPT codes used in mental health.
Below is a beginner guide. This is not all inclusive by any means. There are professionals who literally do this all day. When in doubt, trust a professional.
What Is Insurance Billing in Therapy?
Insurance billing is the process of submitting claims to a client’s health insurance provider for reimbursement of therapy services. Depending on your client’s plan and your contract with the insurance company, you may be reimbursed in full or in part—and your client may owe a copay, coinsurance, or the full session fee if their deductible hasn’t been met.
Common Insurance Terms Every Therapist Should Know
1. Copay
A copay is a fixed dollar amount the client pays at each therapy session.
Example:
If your contracted rate with an insurance plan is $120 per session and the client's copay is $25, the client pays $25 at each visit, and insurance covers the remaining $95.
Caveat:
If someone has a primary policy and a secondary policy, the secondary policy may cover the cost of the copayment. But not always. Be aware of the Medicaid rules in your state for billing primary and secondary. In my state, if a client has a copay with your primary insurance, but the primary pays more than the Medicaid rate, Medicaid will not pay the copay and I’m not allowed to collect it from the patient.
2. Deductible
A deductible is the amount the client must pay out-of-pocket before their insurance begins to cover services.
Example:
If a client has a $1,500 deductible and has not paid any of it yet, they are responsible for the “full allowed amount” (aka:contracted rate) cost of each session until they’ve reached $1,500.
Caution: Some individuals have HIGH deductible plans. This means they have to pay that amount before insurance covers. These plans usually cost less per month though (also referred to as “lower premium plans”). When someone has a high deductible plan you charge them what your contracted rate is for that insurer. It is not appropriate to “waive” the deductible cost as this is part of the contract. You must collect it from the client.
3. Coinsurance
Coinsurance is a percentage of the service cost the client is responsible for after meeting their deductible.
Example:
Your client has met their deductible and their plan requires 20% coinsurance. If the session is $120, the client pays $24 (20%), and the insurance pays $96 (80%).
4. Coordination of Benefits
Coordination of Benefits is the coordination that happens when someone has two insurance policies on them. This can happen for several reasons. There might be a commercial policy and a military policy. Or a commercial policy and Medicaid policy. Or being covered under each parent’s employer offered plan. It is SUPER important to make sure that you are asking clients about extra policies.
Here’s a fun (and helpful in select instances) fact about minors being on two insurance policies. It is the Birthday Rule. The birthday rule in health insurance determines which parent's insurance is primary when a child is covered under both parents' plans. The parent whose birthday (month and day) comes first in the calendar year has the primary plan, according to some sources. The other parent's plan is considered secondary.
What Are CPT Codes in Therapy?
CPT (Current Procedural Terminology) codes are numeric codes used to describe the type and length of service provided. These codes are required when submitting claims to insurance.
Most Common Therapy CPT Codes
CPT CODE SERVICE TYPICAL TIME
90791 Intake/Initial Diagnostic Evaluation 60 minutes
90834 Individual Psychotherapy 38–52 minutes
90837 Individual Psychotherapy 53+ minutes
90832 Individual Psychotherapy 6–37 minutes
90846 Family Therapy (w/o client present) 50 minutes
90847 Family Therapy (w/ client present) 50 minutes
90853 Group Psychotherapy 45–60 minutes
How Does the Insurance Billing Process Work?
Client Intake & Verification:
Collect insurance information during intake. Verify their eligibility, deductible, copay, and coinsurance using the provider portal or by calling the insurance company. When you are collecting insurance information, be sure to get the following information:Who is the person who holds the policy (is the client, their parent, spouse, etc.)
The birthdate of the person who holds the policy
The address of the person who holds the policy
A copy of the insurance card (this helps confirm any potential member id errors in misspelling or missed numbers)
Provide the Service:
Document the session and determine the correct CPT code based on session length and type.Submit the Claim:
Use a clearinghouse or Electronic Health Record (EHR) system to submit the claim with all required information (CPT code, diagnosis code, provider info, etc.).Receive Payment:
The insurance company will process the claim and issue an EOB (Explanation of Benefits) to the client, showing what they paid and what the client owes (if anything), and will send the provider an ERA (Electronic Remittance Advice) showing payments and what the client owes. The difference between EOB and ERA is that the ERA often comes with several client claims in one document.Client Payment:
Collect any client responsibility (copay, deductible, or coinsurance).
Tips for Therapists New to Insurance Billing
Know your contracts: Understand your fee schedules with each insurer.
Verify benefits: Always check client coverage before the first session.
Stay organized: Use an EHR or billing software to track claims and payments.
Keep learning: Insurance guidelines change—stay updated with payer bulletins and webinars.
Final Thoughts
Insurance billing for therapists doesn’t have to be overwhelming. Understanding how copays, coinsurance, deductibles, and CPT codes work will help you get paid correctly and reduce confusion for your clients. With the right systems and a bit of patience, you’ll build confidence in navigating the insurance maze.
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