The short answer: most therapy claims are denied for preventable reasons: the patient's coverage wasn't verified, the provider wasn't in-network yet, information on the claim doesn't match the insurer's records, or the code doesn't match what was documented. The good news is that many denials can be corrected and resubmitted, and most can be prevented with a few consistent habits.
The most common reasons therapy claims get denied
1. Coverage or eligibility problems
The patient's plan was inactive on the date of service, the patient changed plans, or the visit wasn't a covered benefit. Many plans also route mental health benefits to a separate behavioral health company with its own claims address, so a claim sent to the medical plan gets denied.
Prevent it: verify eligibility and behavioral health benefits before the first visit and periodically after that, and confirm where behavioral health claims should be sent.
2. The provider wasn't in-network yet
Claims for services before a provider's effective date with an insurer are usually denied or processed out-of-network. This often happens when a new provider starts seeing patients while credentialing is still in progress.
Prevent it: confirm each provider's effective date with each insurer before scheduling that insurer's members. Our behavioral health billing guide explains why the effective date matters.
3. Information that doesn't match
A misspelled name, wrong date of birth, outdated member ID, or provider details (NPI, tax ID, or address) that don't match the insurer's records can stop a claim before it's ever paid.
Prevent it: make a copy of the front and back of the patient's insurance card, keep it in your EHR system, and enter the patient's information exactly as it appears on the card. Keep your practice and provider details identical everywhere.
4. Coding errors
Behavioral health billing has its own coding rules, and small mismatches cause denials:
- A time-based psychotherapy code (90832, 90834, or 90837) that doesn't match the documented session length
- A psychotherapy add-on code billed without the evaluation and management visit it belongs with
- A code the provider's license type isn't allowed to bill with that insurer
- A missing or unsupported diagnosis code
Prevent it: document session start and stop times, check code pairings, and confirm each payer's rules for your license type.
5. Telehealth billing mistakes
Telehealth claims usually need a telehealth place-of-service code and, for some insurers, a specific modifier. Using the wrong combination is a common, avoidable denial.
Prevent it: keep a current list of each payer's telehealth billing rules.
6. Missing prior authorization
Some services require prior authorization, which is approval from the insurer before treatment can start. TMS is the most common example in behavioral health, and many plans also require documentation of previous treatment. Once it's approved, treatment also has to happen within the approved treatment dates. Sessions outside those dates can be denied.
Prevent it: find out during the benefits check whether a service needs prior authorization, get it approved before the first treatment, and keep every session within the approved treatment dates.
7. Missed filing deadlines
Every insurer has a timely filing limit: a deadline for submitting claims after the date of service. Claims submitted late are denied, and they usually can't be recovered.
Prevent it: submit claims promptly, and track any claim that hasn't been accepted.
8. Coordination of benefits issues
When a patient has more than one insurance plan, the claim must go to the primary plan first. If the insurer's records about which plan is primary are out of date, the claim is denied until the patient updates them.
Prevent it: ask every patient about secondary insurance when you collect their information, and have patients update their coordination of benefits with their insurer when needed.
Denied vs. rejected: what's the difference?
A rejected claim never made it into the insurer's system, usually because of missing or invalid information caught by the clearinghouse or insurer. It can be corrected and resubmitted as a new claim. A denied claim was processed, but the insurer decided not to pay it. It needs to be corrected and resubmitted, or appealed, depending on the reason.
What happens after a claim is denied
Every denial comes with reason codes that explain why the claim wasn't paid. From there, the claim has to be either corrected and resubmitted or appealed, before the insurer's deadline, and then followed until it's resolved. It takes time and steady follow-up, and it's part of what we handle for our billing clients.
Signs your billing needs help
- Denials are increasing, or the same denial keeps coming back
- Unpaid claims are piling up past 60 or 90 days
- Nobody has time to follow up on denials before the deadlines
- You're not sure what you're owed, or whether you're being paid correctly
How Becker Credentialing Services helps
Becker Credentialing Services provides behavioral health billing for solo providers, small group practices, and TMS offices. Our billing is handled by Stephanie Huffstetler, who has nearly 30 years of medical billing experience: we can verify eligibility, submit claims, follow up on unpaid and denied claims, post payments, and send monthly reports.
Not sure where your denials are coming from? Request a free billing review, and we'll talk about your practice, how you're handling billing today, and how we can help.
FAQs
Why do therapy claims get denied?
The most common reasons are coverage or eligibility problems, billing before the provider's effective date with the insurer, information that doesn't match the insurer's records, coding errors such as the wrong time-based psychotherapy code, telehealth billing mistakes, missing prior authorization, and missed filing deadlines.
Can a denied claim be resubmitted?
Often, yes. If the denial was caused by an error such as a wrong code or missing information, the claim can usually be corrected and resubmitted. If you disagree with the insurer's decision, you can file an appeal. Both have deadlines that vary by insurer.
What's the difference between a rejected and a denied claim?
A rejected claim was never processed, usually because of missing or invalid information, and can be corrected and resubmitted. A denied claim was processed but not paid, and must be corrected and resubmitted or appealed.