Top 5 Mental Health Billing Mistakes That Cost Therapists Thousands

If you're a therapist, psychologist, or psychiatrist running your own practice, you already know that billing is one of the most frustrating parts of the job. But what you might not realize is how much money is quietly slipping through the cracks — not because of bad luck, but because of a handful of very common, very fixable billing mistakes.

At Rill Unique Enterprises, we've spent 17+ years working with mental health providers across the United States. We see the same billing errors over and over again — and we know exactly what they cost. Here are the five that hurt practices the most.

Mistake #1: Using Incorrect or Outdated CPT Codes

Mental health billing relies on a specific set of CPT codes that cover everything from individual psychotherapy (90832, 90834, 90837) to psychiatric evaluations (90791, 90792) and crisis services (90839, 90840). These codes are updated regularly, and payers have strict rules about which codes they'll accept — and under what circumstances.

One of the most common errors we see is using the wrong time-based code. For example, billing a 90837 (60-minute session) when the session was actually 45 minutes is a compliance risk that can trigger audits and recoupments. Similarly, using an outdated code that's been replaced or bundled with another service leads to automatic denials.

The fix: Conduct a coding audit at least once a year. Make sure your billing team — whether in-house or outsourced — is up to date on the latest CPT code changes from the AMA and payer-specific guidelines.

Mistake #2: Missing or Incomplete Documentation

Payers don't just want a claim — they want proof that the service was medically necessary and properly delivered. Mental health claims are scrutinized heavily because of the subjective nature of the services. If your documentation doesn't clearly support the diagnosis, the treatment plan, and the specific service billed, you're setting yourself up for denials and potential audits.

Common documentation gaps include:

• Missing or vague treatment plan goals
• No documented progress toward goals
• Lack of medical necessity justification
• Incomplete session notes that don't match the billed CPT code

The fix: Implement a documentation checklist for every session. Your notes should clearly tie the service to the diagnosis, reflect the patient's progress, and support the specific CPT code billed. Many EHR systems have templates that can help standardize this.

Mistake #3: Ignoring Telehealth Billing Rules

Telehealth exploded during the pandemic, and mental health providers were among the biggest adopters. But telehealth billing is a minefield — payer rules vary wildly, modifier requirements change frequently, and what was covered last year may not be covered today.

Some of the most common telehealth billing mistakes include:

• Forgetting to append the correct place of service code (02 for telehealth, 10 for patient's home)
• Missing the required GT or 95 modifier
• Billing telehealth services to payers that haven't updated their policies to cover them
• Not verifying whether the patient's plan covers telehealth for mental health specifically

The fix: Before billing any telehealth service, verify the patient's telehealth benefits with their specific payer. Don't assume coverage — confirm it. And make sure your billing team is tracking modifier and place-of-service requirements for every payer you work with.

Mistake #4: Credentialing Gaps and Delays

This one isn't technically a billing error — but it costs practices just as much. If you're not credentialed with a payer, you can't bill them. And if your credentialing lapses or you add a new provider without completing the credentialing process, you could be providing services that you'll never get paid for.

Credentialing delays are especially painful for new practices and practices that are growing. The process can take 90 to 180 days with some payers, and during that time, every session with an insured patient is either out-of-pocket or a write-off.

Common credentialing mistakes include:

• Failing to re-credential on time (most payers require renewal every 2-3 years)
• Not tracking expiration dates for licenses, malpractice insurance, and DEA registrations
• Submitting incomplete applications that get kicked back and restart the clock
• Not following up proactively with payers during the review process

The fix: Treat credentialing like a business-critical process, not an afterthought. Maintain a credentialing calendar with all renewal dates. If you're adding providers, start the credentialing process as early as possible — ideally before they see their first patient.

Mistake #5: Not Following Up on Denied Claims

Here's a statistic that should get your attention: studies show that up to 65% of denied claims are never resubmitted. That means practices are leaving a significant portion of their earned revenue on the table simply by not appealing denials.

Denials aren't always final. Many are the result of simple errors — a wrong modifier, a missing authorization number, a coordination of benefits issue — that can be corrected and resubmitted. But it takes time, attention, and a systematic process to catch and work every denial.

Common denial management mistakes include:

• Not tracking denial reasons to identify patterns
• Missing the timely filing window for appeals (which varies by payer)
• Giving up after the first denial without escalating
• Not having a dedicated process for working the denial queue

The fix: Build a denial management workflow into your billing process. Every denial should be reviewed, categorized, and either corrected and resubmitted or appealed within the payer's timeframe. Tracking denial reasons over time also helps you identify systemic issues — like a coding error that's causing repeated denials — so you can fix them at the source.

The Bottom Line

Mental health billing is complex, and these mistakes are easy to make — especially when you're focused on your patients and running a practice at the same time. But each of these errors has a real dollar cost, and together they can add up to thousands of dollars in lost revenue every year.

The good news is that all of them are fixable. Whether you need a coding audit, a credentialing overhaul, or a complete billing process review, the right billing partner can make a significant difference.

Ready to find out what your practice is leaving on the table? Book a free 30-minute billing consultation with Rill Unique Enterprises — our certified specialists will review your current process and give you a clear picture of where your revenue is going.