Avoid Claim Denials: Teletherapy Billing Tips for Mental Health Professionals

Understanding Teletherapy Billing Essentials

The advent of teletherapy has revolutionized mental health care, offering patients increased access to services and providers the flexibility to deliver care remotely. However, with this shift comes the complexity of navigating teletherapy billing, where inaccuracies can lead to claim denials, delayed reimbursements, and compliance issues. Understanding the fundamentals of teletherapy billing is crucial for mental health professionals to ensure financial stability and uninterrupted patient care.

Verify Patient Eligibility and Coverage

Before initiating teletherapy services, it's imperative to verify each patient's insurance eligibility and coverage specifics. Real-time insurance verification helps confirm active coverage, deductible status, and whether telehealth services are included in the patient's plan. This proactive step minimizes the risk of claim denials due to ineligible services or outdated insurance information. 

Use Correct CPT Codes and Modifiers

Accurate coding is the backbone of successful teletherapy billing. Mental health professionals should familiarize themselves with the appropriate Current Procedural Terminology (CPT) codes for teletherapy services, such as:

• 90832: 30-minute psychotherapy session

• 90834: 45-minute psychotherapy session

• 90837: 60-minute psychotherapy session

In addition to CPT codes, the use of correct modifiers is essential:

• Modifier 95: Indicates synchronous telemedicine service rendered via real-time interactive audio and video telecommunications system.

• Modifier GT: Denotes services delivered via interactive audio and video telecommunications systems.

Furthermore, specifying the correct Place of Service (POS) code is vital:

• POS 02: Telehealth provided other than in the patient’s home.

• POS 10: Telehealth provided in the patient’s home.

Using the appropriate codes and modifiers ensures compliance with payer requirements and reduces the likelihood of claim denials.

Stay Updated on Payer Policies

Insurance payers, including Medicare, Medicaid, and private insurers, have varying policies regarding teletherapy services. These policies can differ in terms of covered services, documentation requirements, and billing procedures. Regularly reviewing and staying informed about each payer's telehealth guidelines is essential. This includes understanding any changes in coverage, reimbursement rates, and required documentation to ensure compliance and prevent claim denials.

Enhancing Documentation and Compliance

Accurate documentation and rigorous compliance processes are the cornerstones of successful teletherapy billing. Even with the correct codes and insurance verification, poor documentation can quickly lead to denials. Below are critical strategies for mental health professionals to strengthen their compliance practices and reduce the risk of billing rejections.

Maintain Thorough and Accurate Documentation

One of the most common reasons for teletherapy claim denials is insufficient or vague clinical documentation. Payers expect clear evidence that supports the medical necessity of the service billed. For teletherapy sessions, documentation should include:

• The date and time of the session

• Duration of the service (e.g., 53 minutes for a 90837 code)

• Confirmation that the session was conducted via a HIPAA-compliant telehealth platform

• The patient’s location (especially relevant when using POS 10)

• A brief description of the therapeutic interventions used

• Clinical observations and the patient’s response

• Plan for ongoing treatment

Example: When billing CPT code 90837, your note must indicate that at least 53 minutes of therapy occurred face-to-face via video. Failure to document the time component accurately may result in the service being downgraded to 90834 or denied altogether.

Using psychotherapy-specific EHR templates can streamline this process, reduce documentation errors, and ensure all required elements are captured consistently. Platforms like SimplePractice, TherapyNotes, or Valant offer behavioral health-focused templates with built-in compliance reminders.

Implement Robust Denial Management Processes

Even with best practices in place, some claims will inevitably be denied. However, the key difference between successful and struggling practices is how those denials are handled. Establishing a denial management system involves:

• Tracking all denials and categorizing them by reason (e.g., incorrect modifier, eligibility lapse, missing documentation).

• Setting timelines for follow-ups and appeals — most insurers only allow 90–120 days to resubmit corrected claims.

• Automating alerts and tasks within your billing software to avoid missed deadlines.

• Conducting root-cause analysis to identify trends and apply preventive measures.

For instance, if 30% of your denials are tied to missing modifier 95 for telehealth claims, you can revise your templates, re-train staff, and adjust the billing logic in your software to prevent future errors.

Many successful practices generate monthly denial reports to highlight recurring issues and develop targeted training or system improvements based on the data.

Educate and Train Staff Regularly

Insurance rules and telehealth billing guidelines are frequently updated. Staff members responsible for scheduling, verification, billing, and documentation must receive regular training to stay aligned with current best practices.

Key topics for ongoing staff education include:

• Annual updates to CPT codes and telehealth billing policies (such as CMS guidelines)

• Insurance-specific documentation and credentialing requirements

• Use of modifiers and POS codes for virtual services

• Understanding medical necessity documentation

Creating a centralized billing reference manual, hosting quarterly staff training, and subscribing to payer newsletters can ensure your team remains informed. You can also partner with a certified medical coder or billing trainer to conduct custom workshops, especially when high denial rates are observed.

Quick Tip: If you’re billing internally, assign a team lead or billing champion to stay current with payer updates, train new staff, and lead denial trend analyses.

Leveraging Technology, Outsourcing, and KPI Monitoring

After mastering CPT coding, insurance verification, and documentation, mental health professionals must focus on scalability and sustainability. Efficient billing operations require smart technology, well-chosen partners, and performance monitoring to reduce denials and maximize collections over time.

Use Integrated EHR and Teletherapy Platforms

The right software can dramatically reduce errors and automate much of the claim lifecycle. Modern mental health-focused EHR systems integrate telehealth features, billing automation, and claim scrubbing to improve your clean claim rate.

Key features to look for:

• Automatic CPT code suggestions based on session type and length

• Real-time eligibility verification prior to each appointment

• Telehealth compliance tools, including modifier and POS auto-assignments

• Claim scrubbers that flag errors before submission

• Denial tracking dashboards and rejection analysis tools

• Secure video platforms that meet HIPAA/FERPA requirements

Platforms like TheraNest, Kareo, Valant, and SimplePractice are excellent options for small and mid-sized mental health practices offering teletherapy. Many include customizable templates and workflows that ensure compliance with payers’ documentation requirements.

Consider Partnering with a Mental Health Billing Service

If billing in-house is draining your resources, it may be time to outsource to a specialized mental health billing partner. These services understand the nuances of psychiatry and therapy billing, including teletherapy-specific guidelines.

Benefits of outsourcing:

• Higher clean claims rate (often 95%+)

• Faster reimbursements and fewer aged receivables

• Professional appeal management and denial recovery

• Ongoing compliance monitoring

• Reduction in administrative burden

• Access to certified coders and billing analysts

Look for partners who offer transparent monthly reporting, HIPAA-compliant operations, payer-specific experience, and a proven track record in behavioral health RCM. A qualified billing company typically charges 4–9% of collections, but the improvement in revenue cycle performance often justifies the cost.

Monitor KPIs and Billing Performance Regularly

Successful practices track their financial health like they track clinical outcomes. Setting up a few core key performance indicators (KPIs) can help mental health professionals catch red flags and optimize revenue.

Top billing KPIs to monitor:

KPI	Target Benchmark
Clean Claims Rate	95%+
Days in A/R	Under 45 days
Denial Rate	Under 5%
Net Collection Rate	95%+
First-Pass Resolution Rate	90%+
Patient Responsibility Collection Rate	85%+

If your numbers fall below these benchmarks, analyze where breakdowns are occurring—whether in eligibility, coding, documentation, or payer delays—and implement targeted solutions. Modern billing software and RCM dashboards can make this process seamless.

Stay Informed About Evolving Telehealth Policies

Teletherapy billing continues to evolve, especially post-pandemic, as CMS and commercial payers update their telehealth coverage and documentation requirements. Staying informed is essential to maintaining claim approval.

Stay ahead by:

• Subscribing to CMS, AMA, and payer newsletters

• Attending webinars from billing and compliance organizations

• Networking with other mental health providers or billing professionals

• Bookmarking payer telehealth policy pages for reference

• Reviewing quarterly CPT and modifier updates

Being proactive—not reactive—is key to protecting your revenue. A policy change can lead to denials overnight if you’re not prepared. Invest in education, stay alert to change, and regularly audit your billing processes to remain compliant and competitive.

Final Thought

Avoiding claim denials in teletherapy isn’t just about billing codes—it’s about building a system that ensures accuracy, compliance, and efficiency at every step of the revenue cycle.

By mastering teletherapy-specific CPT codes and modifiers, verifying insurance eligibility in real-time, maintaining thorough documentation, and investing in the right tools or partners, mental health professionals can reduce denials and increase revenue. Tracking billing KPIs and staying informed about policy changes ensures long-term success.

In the fast-paced world of mental health billing, especially in telehealth, being proactive is not optional—it’s essential. With the right knowledge, systems, and support, your practice can focus less on paperwork and more on patient care.