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In 2025, mental health providers continue to face common billing denials tied to documentation gaps, coding mistakes, and payer-specific requirements. With the growing use of telehealth and stricter review processes, claims are being more closely examined before approval. Accurate CPT and diagnosis coding, verified insurance details, and clear clinical documentation have become essential for submitting clean claims. Based on current standards from CMS and guidance followed by certified coders, practices that invest in prevention see fewer disruptions in reimbursement. This article explains how to prevent the most frequent denials and how to resolve them when they occur.
Prevention of Mental Health Billing Denials
Mental health billing denials can delay payments, impact provider revenue, and disrupt patient care. Most denials occur not because services weren’t delivered, but because of preventable administrative and coding issues.
Preventing denials means identifying potential billing problems before the claim is submitted. This includes verifying insurance details, applying the correct codes, ensuring that documentation matches the billed services, and staying current with payer rules. Proactive prevention reduces the need for appeals, lowers staff workload, and improves cash flow.
Patient & Payer Verification Best Practices
Before the first session, it’s critical to verify the patient’s insurance details, benefits, and authorization requirements. Many payers now require real-time eligibility checks, including verification of mental health coverage limits, copays, deductibles, and confirmation of whether services are covered under medical or behavioral health plans.
- Real-time insurance and benefit checks: Utilize clearinghouses or payer portals to verify if the plan covers behavioral health services, particularly for codes such as 90791 or 90837.
- Authorization/referral tracking systems: Many payers require prior authorization for higher-level codes (e.g., 90837) or initial evaluations (90791). If not obtained, the claim may be denied regardless of medical necessity.
- Medicare vs. commercial payer nuances: Medicare may not require prior authorization for standard therapy sessions, but commercial plans often do. Medicaid varies by state.
- Example: A provider bills 90837 (60-minute therapy), but the plan only authorized 90834 (45 minutes). The result is a partial denial or complete rejection of payment.
Code-Level Accuracy and Documentation Integrity
Accurate CPT and ICD coding is the foundation of successful billing. Even one incorrect or unsupported code can lead to claim denial.
- Common coding errors: Mental health claims are often denied due to mismatched codes, such as using 90837 without proper documentation or repeating 90791 beyond payer limits.
- Time-based CPT documentation: CPT codes for psychotherapy (e.g., 90832, 90834, 90837) are time-specific. Progress notes must include session duration and therapeutic content to justify the code used.
- High-level code usage: When billing for higher codes, such as 90837, ensure there’s a clear justification for the intensity, complexity, or extended time. Some payers flag this code for overuse unless supported.
- Tips: Use EMR prompts to capture required note elements, and run pre-bill coding audits to catch errors before submission.
Modifier and Service-Type Accuracy
Modifiers indicate specific billing conditions and are especially important when billing telehealth or combined services.
- Common modifiers:
- 95: Synchronous telehealth (audio-video)
- GT: Older telehealth indicator (still used by some payers)
- 25: Significant, separately identifiable E/M service on the same day as psychotherapy
- Telehealth types: Since 2024, many payers have separate rules for audio-only vs video visits. Audio-only visits may require modifier FQ (for Medicare).
- Psychotherapy + E/M mistakes: When billing codes such as 99213 and 90833 are used, many practitioners often forget to use modifier 25 on the E/M code, resulting in denials.
Provider Credentialing & NPI Consistency
Payers require accurate provider enrollment and NPI matching to ensure claims are processed correctly.
- Credentialing delays: New providers often face delays if credentialing is incomplete or if their start date hasn’t been activated in the payer’s system.
- Taxonomy/NPI mismatch: A group practice may bill under a group NPI, but the rendering provider must also be enrolled and have their correct taxonomy listed.
- Case example: A therapist’s claim is denied because the payer had an outdated NPI or incorrect license type on file, despite services being properly documented.
Staying Compliant with Regulations and Updates
Billing rules change regularly. CPT codes, ICD-10 codes, and payer-specific billing guidelines are updated annually. Failure to stay current can lead to avoidable denials.
- Annual code updates: Each year, CPT and ICD codes are revised. Using outdated codes (even by one year) can trigger automatic denials.
- NCCI edits: These are code pairing rules used to prevent incorrect combinations (e.g., billing two services together that aren’t allowed). Always review these edits during code selection.
- LCD/NCD policies: Local and national coverage determinations define what services are covered and under what conditions. If a diagnosis or service doesn’t match policy, it may be denied.
- Quarterly audits: Regular internal chart and claim reviews help catch patterns of error.
- Staff training: Keep billing, front desk, and clinical staff updated with brief, focused training, primarily when code updates or payer changes occur.
Telehealth & Hybrid Care Billing Risks
Telehealth billing continues to evolve post-pandemic. While virtual care remains widely covered in 2025, billing errors are common due to inconsistent payer rules and regulations.
- Post-pandemic rules: Some payers now limit the duration for which telehealth codes will be reimbursed or require providers to switch to in-person care after a specified number of sessions.
- Audio-only billing: Claims submitted without the correct modifier (e.g., FQ) or documentation of patient consent can be denied.
- CMS 2025 guidance: CMS continues to permit telehealth coverage for behavioral health services, subject to specific documentation requirements, including periodic in-person visits and time tracking.
- Cross-state billing tips: Ensure you are licensed to practice (and bill) in the patient’s state if delivering telehealth. Many payers now verify license locations during the claim processing stage.
Resolution of Mental Health Billing Denials
Despite best efforts to prevent denials, some claims will still be rejected. What matters most is how quickly and accurately these denials are addressed. Timely and effective resolution protects revenue, reduces rework, and ensures uninterrupted patient care. In 2025, payers are using more automated and data-driven systems to process and deny claims. This makes it essential for providers to understand the language of denials, identify the root cause, and follow a structured process for correction or appeal.
Categorizing and Understanding Denials
The first step in resolving denials is understanding why the claim was rejected. This requires a careful review of the Explanation of Benefits (EOB) or Electronic Remittance Advice (ERA).
Common categories of mental health billing denials include:
- Eligibility or coverage issues (e.g., patient not active on the date of service)
- Authorization or referral is missing
- Incorrect or missing diagnosis or CPT codes
- Modifier errors
- Lack of medical necessity
- Duplicate claims
- Late submissions beyond the payer's timely filing window
To streamline resolution, practices should develop a simple denial classification system. This helps identify trends and prioritize high-volume or high-dollar denials for faster recovery.
Root Cause Identification and Internal Review
Resolving denials isn't just about fixing a single claim. It's also about identifying whether the problem is isolated or part of a pattern.
Steps to identify the root cause:
- Review the patient's chart and documentation for the denied service
- Compare submitted claim details with payer requirements
- Check for system or human error (e.g., incorrect code mapping or missed modifier)
- Determine whether the issue came from intake, documentation, or billing entry
If a particular provider or service type is consistently triggering denials, flag it for additional review or training. Use the findings to update internal processes and prevent repeat errors.
Effective Appeals Process
When a denial cannot be corrected with a simple claim edit, an appeal is the next step. A well-prepared appeal increases the chances of overturning a denial.
Key components of a strong appeal:
- Appeal letter: Brief, factual, and includes medical justification
- Supporting documentation: Progress notes, treatment plan, provider credentials
- Timeliness: Appeals must be submitted within the window set by the payer (e.g., 60–120 days depending on the plan)
Example scenario:
A 90837 session is denied as "not medically necessary." The appeal includes a cover letter that summarizes the patient's diagnosis, treatment history, and explains why a more extended session was clinically appropriate. It also consists of the progress note for the session and documentation of treatment goals.
Tips for writing appeals:
- Reference the denial reason exactly as stated on the EOB
- Attach only relevant documentation
- Avoid emotional or vague language
- Always follow the payer's format and submission instructions
If available, some payers allow peer-to-peer reviews, where the treating provider can speak directly with a payer's clinical reviewer. These are often effective for overturning denials based on clinical judgment.
Corrected Claims and Resubmissions
Not every denial requires a formal appeal. If the denial is due to a technical error, it can often be resolved by submitting a corrected claim.
Scenarios where corrected claims are appropriate:
- Wrong diagnosis or CPT code
- Missing or incorrect modifier
- Incorrect place of service
- Typographical or billing system errors
When submitting a corrected claim:
- Use the correct claim frequency code (typically 7 on the CMS-1500 form)
- Indicate clearly that the submission is a corrected version
- Include only the updated and accurate information
Avoid submitting a new claim without correcting the error, as this can trigger duplicate claim denials.
Denial Management and Tracking Systems
A structured approach to tracking denials improves resolution time and reveals larger issues across the billing cycle.
Recommended tools and practices:
- Denial log: Document each denial with date, reason, payer, resolution status, and action taken
- Weekly or monthly reporting: Track denial rates, top denial reasons, and appeal outcomes
- Follow-up timelines: Set specific timeframes for each type of denial action (e.g., 3 days for resubmission, 7 days for appeal draft)
Roles should also be clearly defined:
- Billers should handle technical denials (e.g., coding or modifier errors)
- Clinical staff should assist with documentation-related appeals
- Management should monitor trends and adjust training or policies
Compliance and Risk Mitigation
Denial resolution is not only an operational task, but it also plays a crucial role in ensuring compliance with legal and regulatory requirements.
Ways to reduce risk and ensure compliance:
- Audit appeal letters and documentation for accuracy and appropriateness
- Avoid upcoding or resubmitting claims without accurate corrections
- Follow payer rules carefully, especially when using modifiers or time-based codes
- Retain documentation for all appeal and resubmission activities as part of the patient's billing record
CMS's compliance guidelines for 2025 emphasize the importance of accurate billing, proper use of diagnosis codes, and avoiding the misrepresentation of services. Denials that result from compliance issues may trigger audits or further investigation if not handled correctly.
How MindCare Helps Mental Health Practices Reduce Denials and Improve Revenue?
According to a report initiated in 2025, Mental health providers lose up to 20–30% of their revenue annually due to claim denials, delayed reimbursements, and administrative oversights.
At MindCare, we work closely with behavioral health practices to strengthen their revenue cycle by reducing billing errors and creating long-term prevention systems.
Real-time data, compliance with payer policies, and a deep understanding of clinical and operational workflows in mental health care drive our results.
Key outcomes we’ve delivered for our clients include:
- Up to 45% reduction in denial rates within the first quarter of onboarding
- An average 20–30% increase in net revenue through improved coding, documentation support, and resubmission strategies
- Over 60% fewer pre-service denials due to streamlined prior authorization tracking
- Consistently achieving 99% clean claim submission rates with pre-bill coding reviews and payer-specific audits.
- Optimized billing for telehealth and hybrid care models, including correct modifier usage and state-specific licensing compliance
- Reduced audit risk through routine internal compliance reviews and documentation accuracy checks
- Empowered clinical and billing staff with custom training based on real denial trends
At MindCare, we don’t just manage claims. We build systems that support sustainable growth and financial clarity. If your practice is ready to improve performance and reduce administrative burden, explore our dedicated mental health billing services and see the difference strategic billing support can make.