Insurance claim letter template (and how to appeal a denied insurance claim)
Learning the particulars of how to bill insurance in private practice can feel like information overload.
Summary
Complete your CAQH profile and credential with 1-2 insurance panels that are most commonly used by employers and residents in your local area.
Verify client benefits before the first session by confirming in-network status, copays, deductibles, visit limits, and prior authorization requirements.
Use current ICD-10-CM diagnostic codes and CPT procedural codes along with appropriate telehealth Place of Service codes to demonstrate medical necessity.
Submit electronic claims within one week of each session to meet timely filing deadlines and receive faster reimbursement.
Document all insurance communications and maintain detailed clinical notes to support your coding decisions and prevent claim denials or audit issues.
Between credentialing, verification, coding, and claims submission, there's a lot to navigate.
However, once you learn how to bill insurance companies, you'll open doors to new client referrals and sustainable revenue streams for your practice.
This guide breaks down the essentials of private practice insurance billing to help you make informed decisions about working with payers and avoid common pitfalls along the way.
Getting credentialed: Your first step to billing insurance
Before you can really begin determining how to bill insurance in private practice, you need to first become an in-network provider through a process called credentialing.
During credentialing, you'll apply directly through an insurance company's website and complete a Council for Affordable Quality Healthcare (CAQH) Provider Data Profile application.
The CAQH application is where you document your education, training, and experience—and you only need to complete it once as long as you re-attest your information when prompted.
When deciding how to start billing insurance companies, be strategic about which panels you join.
Research the dominant employers in your area and find out what insurance they offer.
If a large portion of your community uses Medicare or Medicaid, those panels may be worth prioritizing.
One common mistake new providers make is enrolling in too many panels at once.
Start with one or two insurance companies to get a feel for the time commitment involved in private practice medical billing before expanding.
The credentialing process is notoriously slow, so persistent follow-up is essential.
Document every interaction with insurance representatives, including their names and call reference numbers. Follow up at least twice a month until you receive confirmation of your in-network status and contracted rate.
Verifying benefits and obtaining prior authorization
Once you're credentialed and ready to learn how to bill insurance companies, verifying client benefits becomes a critical first step before each new client relationship.
You'll need to collect key information including the client's legal name, date of birth, subscriber details, plan name, and member ID number. The provider phone number is typically located on the back of the insurance card.
When you call to verify benefits as you learn how to bill insurance in private practice, confirm that you're in-network for the client's specific plan, verify the correct CPT codes you'll be using, and ask about visit limitations, copays, deductibles, and authorization requirements. Many insurance companies now offer online portals for basic verification, though phone calls remain valuable for complex situations.
Insurance billing for therapists often requires prior authorization—meaning you must obtain consent from the insurance company before services begin.
Payers may request a referral from the client's primary care physician, current diagnosis, and treatment plan to determine medical necessity.
For first-time authorizations, calling is recommended. Always document the date, time, representative name, and reference number for every authorization conversation.
Understanding diagnostic and procedural codes
Mastering coding is fundamental when you learn how to bill insurance companies.
Two code sets drive private practice insurance billing: ICD-10-CM diagnostic codes and CPT procedural codes.
ICD-10-CM (International Classification of Diseases, Tenth Revision, Clinical Modification) codes standardize diagnostic language across healthcare. These codes are updated annually on October 1, with occasional mid-year updates. It’s important to only bill active ICD-10 codes, otherwise your claim will be denied.
CPT codes describe the specific services you provide, such as evaluations or psychotherapy sessions, and are updated every January 1st.
For insurance billing for therapists, proper documentation is essential. Insurance companies require that you demonstrate medical necessity for all services provided. If a payer ever questions your treatment, you must have documentation supporting your treatment plan.
When billing telehealth sessions—now standard in behavioral health—use the appropriate Place of Service codes: POS 02 for telehealth outside the patient's home, or POS 10 for telehealth in the patient's home.
Some payers also require telehealth modifiers. Always verify current telehealth requirements with each insurance company when considering how to bill insurance in private practice.
Submitting claims and avoiding denials
Knowing how to bill insurance in private practice means understanding the claims submission process. The CMS-1500 form is the standard claim form used by all insurance carriers for non-institutional providers. Electronic claims submission has become the industry standard, offering faster processing times of 7-14 days compared to 30-45 days for paper claims.
To succeed at private practice medical billing, submit claims within a week of each session. This ensures faster payment and helps identify any issues early. Your first session with a new client should use an initial evaluation CPT code (such as 90791 or 90792), which typically reimburses at higher rates than ongoing therapy codes.
Prevention is the best strategy when it comes to denials.
Common denial reasons include missing or incorrect information, outdated codes, and missed timely filing deadlines. Timely filing requirements vary significantly—Medicare allows 365 days, while commercial insurers typically require submission within 90-180 days. Missing these deadlines usually means you cannot bill the client for the service at all.
If a claim is denied and you disagree with the reason, you can appeal. Send your appeal letter via certified mail to the insurance company's appeals department and request a return receipt.
As you learn how to bill insurance companies, document all follow-up communications carefully.
Best practices for how to start billing insurance companies
As you develop your approach to how to bill insurance in private practice, keep these principles in mind: always verify benefits before seeing new clients, communicate potential out-of-pocket costs clearly, submit claims promptly with accurate codes, and collect copays at the time of service.
Practice thorough documentation to validate your coding choices and protect yourself during audits.
Learning how to bill insurance companies takes time and patience, but with consistent effort and attention to detail, insurance billing for therapists becomes a manageable part of running a successful private practice.
Sources
Council for Affordable Quality Healthcare (CAQH). ProView Provider Data Validation.
Centers for Medicare & Medicaid Services (CMS). CMS-1500 Form and Instructions.
World Health Organization (WHO). International Classification of Diseases (ICD-10-CM).
American Medical Association (AMA). Current Procedural Terminology (CPT) Codes.
U.S. Department of Health and Human Services. No Surprises Act.
Centers for Medicare & Medicaid Services. Telehealth Services.
How SimplePractice streamlines running your practice
SimplePractice is HIPAA-compliant practice management software with everything you need to run your practice built into the platform—from booking and scheduling to insurance and client billing.
If you’ve been considering switching to an EHR system, SimplePractice empowers you to streamline appointment bookings, reminders, and rescheduling and simplify the billing and coding process—so you get more time for the things that matter most to you.
Try SimplePractice free for 30 days. No credit card required.
