If you are a private practice clinician, claim denials can significantly impact your cash flow – and your sanity. The good news? Most claim denials are preventable, and there are ways to fight those that happen.

So let’s take a look at why your claim might be denied, and how to prevent these denials.

Reasons for claim denials

Denials due to your errors

OK, I know it’s rare, but once in awhile we do make mistakes, right? So, what kind of mistakes are we talking about?

• The claim was illegible or incomplete (ex. you missed a box).
• Claim information didn’t match what the plan had in their database. This can happen if you use a nickname for your client. A simple typo in the ID number or date of birth can also lead to a denied claim.
• Your diagnosis code was out-of-date, or not covered by the plan. Remember, just because there is a diagnosis code for a condition, doesn’t mean the health plan will cover it! (‘’ll say more later on how to check your code).
• There was a CPT code, modifier, or place of service issue. Either you used the wrong code or neglected to put a code that was needed.
• It was a duplicate claim. Maybe you forgot that you previously billed for this session!

Denials due to claim handling

• The claim arrived late. Most insurance plans require network providers to submit claims no more than 60 or 90 days after the date of service, or else they are rejected for “lack of timely filing.” Out-of-network super bills may typically be submitted within at least one year.
• You sent the claim to the wrong address – or even to the wrong health plan.
• If you’re billing secondary insurance, you didn’t include the primary plan’s Explanation of Benefits (EOB) that describes what they paid.

The claim is being held, or “pending”

• The claim is awaiting Coordination of Benefits (COB). This is when the insurance plan is waiting for the client to provide information about other possible insurance coverage they may have. Sometimes all that needs to be done is to have your client call the plan, or fill out a COB form from the health plan.
• The claim is awaiting your progress notes. In this case, the plan has requested to review your session notes from the sessions before they will process your claim. If they don’t receive the notes, they won’t pay. Remember that health plans can even request notes from out-of-network therapists.

Denials due to insurance coverage issues

• You are not a network provider, and the plan may not reimburse for out-of-network providers. This would occur with Health Maintenance Organization (HMO) or Exclusive Provider Organization (EPO) plans.
• Telehealth sessions may be denied if this is not a covered benefit, or if it is only covered for network providers, and you are out of network.
• It’s a license issue. Your license is not covered by the plan, or you are not fully licensed, and the health plan only covers licensed providers.
• Your client was no longer (or not yet) covered at the time of service.
• You assumed. Maybe you assumed that a client’s coverage hadn’t changed from one year to the next, or that two clients with the same health plan had the same coverage or claims address.

Clinical denials

• The health plan didn’t like your notes. If the health plan asked for your progress notes before paying claims, they will be reviewing both the quality of the notes and to see whether you clearly documented medical necessity in each note. If your notes don’t meet their criteria, they may refuse to pay for the session.

10 strategies to prevent claim denials

1. 1. Verify insurance eligibility before sessions. The single most effective tool for preventing denials is verifying a client’s health insurance coverage before the first therapy session. Don’t rely on what a client tells you about their coverage. While your electronic health record (EHR) may run a coverage check, I recommend that you call the plan to verify and supplement the EHR’s information.

Don’t know what to ask? Get my Checking Coverage: 13 Essential Questions form in my book or in my Practice Forms Packet). Calling the plan eliminates many potential denials before they occur, and gives you the opportunity to:

1. 1. • Confirm that their coverage is active, and identify any session limitations or authorization requirements
      • Confirm the claim address (don’t trust the client’s card)
      • Verify mental health benefits (they often differ from medical benefits) and telehealth coverage
      • Calculate client financial responsibility
   2. Obtain proper authorizations, if needed, and track them carefully. While most mental health plans no longer require preauthorization for routine services, some plans do require this before the first session, or after a certain number of sessions, and Employee Assistance Programs (EAPs) will require this. Track the expiration dates and/or session limits.
   3. Use the proper claim form, and don’t guess how to fill it out. While most insurance plans typically require the CMS-1500 claim form, some EAPs require their own form. Don’t guess on how to fill out any box, as this can trigger automatic denials (Not sure how to fill out a claim? My book shows how to fill out each box.)
   4. Be specific in your coding. Ensure that you are using the proper CPT codes and Place of Service (POS) codes for the type of service provided. The most common POS codes are 11 for office, 10 for telehealth where the client is at home, and 02 for telehealth where the client is elsewhere (for a complete list of POS codes, click here.). Most health plans also require a modifier for telehealth sessions: Usually 95 (or sometimes GT) for video sessions and 93 for phone sessions, if covered, but check with the health plan.

To ensure you have the most up-to-date diagnosis codes, visit www.ICD10data.com and type the diagnosis code or the name of the code that you used into the search bar. Scroll down, and if a red diamond comes up next to the code, it is not billable. Click on the blue code link to find other possibilities and look for a green diamond. Remember that some sexual disorders may not be covered, and something more than a Z-code from the DSM may be required as a primary diagnosis.

1. Learn from previous denials. Create a system to track and categorize all denial data. Document denial codes, payer responses, and what worked to resolve denials with each health plan.
2. Document the medical necessity of your sessions. Since insurance plans typically do not cover counseling that is just aimed at personal growth, your session notes must clearly document the symptoms of the diagnosis and the need for treatment.
3. Make it part of your schedule to submit claims promptly (I recommend at least every other week). Late claim submission is a VERY common reason for network claim denials. (However, if you are late, read my article about getting paid for late claims.) When billing a secondary health plan, be sure to attach the Explanation of Benefits from the primary plan.
4. Set up a system to track unpaid claims. Hey, we’re busy, and it’s easy to overlook an unpaid (or unsubmitted) claim, and by the time you submit (or resubmit), it may be too late. Keep a record of submitted claims and paid claims, and review all your charts regularly to identify unpaid claims.
5. If your claim is denied, breathe. Then call the health plan. Yes, I know it is often hard to reach a live human, but the plan can often clarify the problem with a simple phone call, or give guidance on the best way to fix it. Document every detail of this phone call.
6. Ask if you can fax a corrected claim if the problem was due to your mistake.

How to successfully appeal a denial

If a claim is denied, you can always appeal the denial.

An appeal (also known as a dispute) is a formal letter you would write to the health plan, disputing the way a claim was paid, or asking them to make an exception to their payment policies due to a special circumstance. Exceptions will sometimes be made if you have a good reason for the error or that the claim was late (for example, if you were in the hospital or your office burned down, so that you were unable to file it on time).

If the plans determines that the sessions you provided were not medically necessary, you can appeal and provide more information about the case. In your appeal letter, you would need to defend why you feel the sessions were needed to address the client’s diagnosis and symptoms, at that frequency, and for that length of time, and defend the client’s progress.

If you look closely at the Explanation of Benefits which you received denying payment for the claim, it should include the appeal address. However, it is wise to call the health plan to ask where to send your mental health appeal letter and what to include in your letter.

Keep in mind that the plan usually will not allow you to bill the client for a claim that is denied due to your error or late submission.