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Why Mental Health Billing Can Be Complicated

Therapist wondering why insurance billing is so complicated

Mental health billing can be complicated due to a variety of nuances that you may not even be aware of until you begin billing insurance. At Practice Solutions, we consider it our job to educate you on these billing nuances, and equip you with solutions to either manage them yourself, or have our trusted billing experts manage them for you. In this blog we would like to take you through some of the mental health billing factors that make billing and collections complicated for providers in private practice, and provide you with suggestions on how to manage these complications.

Carve Out Insurance

One of the surprises that you may run into if you are taking insurance is called a Carve Out. This refers to an insurance company who has sub-contracted out mental health benefits. For example, an insurance company, Insurance A, has contracted with Insurance B to pay for specific parts of a patient’s insurance coverage- in this case, mental health benefits. While your patient’s insurance card is for Insurance A, their mental health benefits are actually covered and paid for by the carve out insurance, Insurance B. In the event of a carve out, if you are not credentialed with the subcontracted insurance company, Insurance B, you will experience denied claims regardless of whether or not you are credentialed with Insurance A. If you are credentialed with Insurance B, you may or may not be able to submit claims and receive payments depending on the patient’s plan. This can be confirmed by doing an eligibility check.

Carve outs can cause three distinct sets of problems for providers when billing insurance claims. The first is that eligibility and benefit checks become much more difficult and time consuming since you will need information from two insurance companies, yet the information obtained in the eligibility check becomes more valuable to you for billing. The second is that carve outs yield uncertainty about what to charge a patient when they experience a denied claim as a result of you not being in-network with the carve-out insurance company. The last complication is knowing and understanding which clients have carved-out benefits and which do not, as this may not be cut and dry for every client with that particular insurance.

When approaching these various complications with insurance, medical billing, and collections you will need to think through how you are going to solve them and what systems you can implement in order to catch these kinds of situations so your practice does not run into a cash flow problem. There are two main ways to solve for these complications in mental health billing. The first is to hire a front office staff person for your practice so that you can control the workflow and have easy access to the individual who is intersecting with your clients on a day to day basis. Having an internal staff person presents its own list of challenges but it is one way that practices deal with these kinds of issues. Practice Solutions offers a second way to manage these complications. By hiring Practice Solutions to take care of your billing, you are guaranteed a biller that has the knowledge and experience to perform eligibility and benefit checks for you, help you navigate what to charge your patients if you find that you are out-of-network due to a carve-out, and keep track of patient benefit information.


In graduate school, student therapists are rarely if ever taught about coding and billing. Most of the time therapists learn about coding and billing from on the job experience and training but they are not prepared in the finer points of coding, such as Modifiers. Modifiers are alpha-numeric identifiers added on to CPT codes that help the insurance company process claims according to specific information. There are modifiers to communicate where the services were held or the educational level of the provider.

For example, place of service code 11 helps the insurance company know that a service was rendered in an office setting and in-person.

Insurance companies have also learned that they can create their own list of modifiers to help communicate other specific information like the educational level of the provider. This is really important information to know and understand as most modifiers are tied directly to the fee schedule. If you put an incorrect modifier or no modifier on a claim when you should, you are likely to experience a denial or incorrect payment to your practice.

Fixing a modifier issue, especially if you are submitting high volumes of claims, is a real headache and can take a long time to fix. You certainly don’t want your cash flow to be hindered because of a modifier issue nor would you want to trigger a compliance audit from the insurance company because of a lack of modifier use.

This complication is seemingly small but it can create a lot of issues for you and your clients. The solution to this particular complication in mental health billing is to take the time to really understand the insurance companies that you are in-network with. Take the time to read the provider manual and your contract with the insurance company. Schedule a call with a provider representative or a provider area consultant and ask them questions about how your medical billing and collections can make their life easier. Here are some questions you may want to consider asking the provider representative:

  • For my licensure type, are there any billing modifiers I need to know or put on my claims for specific codes?

  • Where do I send claim forms?

  • What is your payer ID?

In addition to understanding your relationship and responsibilities with the insurance company, the other solution to this complication is to find a billing company or an employee who has experience dealing with modifiers and the specific regulations around modifiers for your practice. Keep in mind that every other medical specialty has their own modifiers so you will want to make sure that whoever you hire has mental health experience and a lot of it. This is one of the many benefits that Practice Solutions has to offer to mental health providers; our team has years of mental health billing experience, and we train our billers to understand the unique problems that arise within mental health billing, including modifiers. Our team is located here in the U.S., and we leverage the knowledge of our entire team to get your claims paid!

Verification and Eligibility

Verification and eligibility is the process that a provider uses to verify if the client they are about to see has insurance that is active and what (if anything) they need to collect from the client at the time of service. It is crucial that this particular process is completed before every initial encounter and preferably before every session. Verification is the bedrock of a successful practice and is something that cannot go missing within your private practice.

Verification and eligibility can make mental health billing complicated because it is so often misleading or the people doing the verifications don’t understand the right questions to ask the insurance company. Because the insurance company has call center representatives handling a large volume of calls from providers, there are details that can be lost in translation.

In order to help make this complication not so complicated we recommend a few things as it relates to verification and eligibility. If you are doing verifications in-house, you will need a clear process and a standard list of questions to ask when performing an eligibility check that you know yields results.. When you sign up for billing with Practice Solutions, your biller will also perform eligibility checks for you upon request. Our billers are there to help you understand the verifications as they are occurring, and are there to answer any questions you may have regarding eligibility. We do our best to help you understand that the correct amounts are being collected from insurance based on the eligibility check.

No matter what you are doing you will want to make sure that you are doing verifications and that they are effective in obtaining the information that you need in order to bill the insurance and collect from your clients.


Mental health billing can be complicated but there are good solutions that you can implement in your private practice to ensure that your medical billing and collections go smoothly. There are systems of operation and even companies that specialize in simplifying the process of billing and collections to be the engine to your practice. Practice Solutions was developed with this in mind, operating under the mission to relieve the burden of billing from providers so that they can focus on patient care. Contact us today to see if our billing services would work for you so that you can grow and sustain your business.


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