While the U.S. is pretty polarized these days, I think we can all agree on one thing: Our health insurance system is broken. For starters, why must a client have a diagnosable mental illness to be covered, while normal life stressors and preventive treatment aren’t covered?

This puts therapists in a VERY awkward situation. When meeting a new client, we feel pressed to diagnose. But what if you find no clear diagnosis?

So here’s the situation …

You’ve reached the end of your first session with a new client. You’ve painstakingly assessed for symptoms of depression, anxiety, and substance abuse, but found nothing. Your own anxiety begins to climb. How are you going to bill for the session? Can you?

While you may not need a diagnosis for Employee Assistance Plan (EAP) cases, most health insurance plans require a diagnosis on claims, and require that your treatment meet their Medical Necessity Criteria.

What are your options?

OPTION #1: Don’t bill insurance for the session. Collect only the client’s expected copayment, but don’t bill insurance for the intake session. Give the client the “medical necessity” talk:

“After talking to you today, the good news is that I would be happy to work with you on your issues. The bad news is that I can’t bill your insurance, since insurance only covers therapy that addresses a mental health disorder like depression, anxiety, or substance abuse. So if you’d like to continue working with me, the fee after this session would be $XXX.”

OPTION #2: Inform clients in advance they might have to pay. When you first contact clients, tell them that by the end of the first session you will determine if their issues can be covered by insurance. Specify the cost for the session if it will NOT be covered. This ensures that clients understand they might need to pay out-of-pocket.

OPTION #3: Check with the health plan to see if you can bill using a DSM Z-code. Unfortunately, most plans don’t cover Z-codes as the sole or primary diagnosis. Z-codes are typically used to give more information about the presenting issues. Popular Z-codes include Z63.0 (problems in relationship with spouse or partner), Z63.4 (disruption of family by separation or divorce), and Z62.820 (parent-biological child conflict).

OPTION #4: Consider Adjustment Disorder, Unspecified (F43.20). This often-underutilized diagnosis might be appropriate when the client’s emotional or behavioral symptoms are linked to a significant stressor but do not fit neatly into one of the other Adjustment Disorder subtypes (like with depressed mood or anxiety). It may be appropriate for cases with subclinical symptoms, or when the predominant symptoms are unclear and need further assessment. If no other diagnosis fits, it could be suitable – even if just for the initial sessions – while you continue your assessment and/or discuss self-pay options with the client. A helpful article about Unspecified Adjustment Disorder  can be found here.

Remember that an Adjustment Disorder diagnosis may be appropriate even when the stressor isn’t a negative event (death, breakup, job loss) – it could be a positive event (marriage, new relationship, new baby, new job), or simply an ongoing strain (chronic health issues, extended unemployment, or caring for a special needs child or a parent with Alzheimer’s).

Some important take-aways

Whichever option you choose, here are some things to keep in mind:

1. Create a written policy outlining how you’ll manage this situation, so you’re prepared when it arises. For instance, if your approach requires informing clients ahead of time that they may need to pay for the initial session if no diagnosis is found, you should plan what to say as part of your intake discussions.
2. Never bill for a diagnosis unless you have the clinical information to support it. Inventing or misrepresenting a diagnosis to ensure insurance reimbursement is unethical and could be insurance fraud.
3. In each progress note, document the symptoms that you are seeing that support any diagnosis that you bill for.
4. In the client’s chart, document all conversations with clients about insurance coverage (or lack thereof), medical necessity, diagnosis, and fees.
5. If a client’s sessions won’t be covered, have them sign a Self-Pay Agreement. This document should state their new fee, and attest that they understand that insurance will not cover future sessions. (I have a Sample Self-Pay Agreement in my Practice Forms Packet, available for purchase at my online store here.) Medicare clients would need to sign an Advance Beneficiary Notice of Non-coverage (or ABN) to convey that they understand that Medicare is not likely to provide coverage – you can download an ABN here.