Top 5 Billing Mistakes That Cost Therapists Money (And How to Avoid Them)

Billing is one of the most important aspects of running a therapy practice, yet many providers unknowingly make mistakes that cost them thousands of dollars each year. Whether you’re a new private practice owner or have been in business for years, billing errors can lead to delayed payments, denied claims, and financial instability.

Understanding the most common billing mistakes and how to avoid them can help you maximize reimbursements, streamline your practice, and reduce stress. Discover the top five billing mistakes therapists make and learn actionable strategies to ensure you get paid on time and in full.

1. Not Verifying Client Insurance Before the First Session

One of the most common and costly mistakes therapists make is failing to verify a client’s insurance benefits before providing services. Many providers assume that because a client presents an insurance card, they are covered—but that is not always the case.

Why This Mistake Costs You Money:

• Clients may not be eligible for services, meaning their insurance won’t cover the session.

• Deductibles may not have been met, leaving clients responsible for payment, which can lead to unpaid balances.

• Certain services may require pre-authorization, and failure to obtain it can result in automatic claim denials.

How to Avoid It:

✔ Verify insurance before the client’s first appointment by calling the insurer or using an online portal.

✔ Confirm co-pays, deductibles, and covered services upfront.

✔ Inform clients of their financial responsibility before their session to prevent billing disputes.

Tip: Many therapists use electronic health record (EHR) systems like SimplePractice or TherapyNotes to streamline insurance verification.

2. Submitting Claims with Incomplete or Incorrect Information

Errors in claims submissions are a leading cause of payment delays and denials. Even small mistakes—like using the wrong CPT code, missing a modifier, or inputting an incorrect provider NPI number—can result in claim rejections.

Why This Mistake Costs You Money:

• Denied claims must be corrected and resubmitted, delaying payment by weeks or even months.

• If errors go undetected, you may never receive payment for services rendered.

• Frequent errors can trigger insurance audits, increasing administrative burden.

How to Avoid It:

✔ Double-check all CPT codes, diagnosis codes, and provider details before submitting claims.

✔ Ensure the client’s name, DOB, and insurance ID match exactly what is on file with the insurer.

✔ If billing for telehealth, use the correct place-of-service code to prevent denials.

Tip: Use a billing software or credentialed biller to minimize errors and ensure claims are submitted correctly.

3. Not Following Up on Denied or Unpaid Claims

A shocking number of therapists never follow up on denied or unpaid claims, assuming that if a claim is rejected, nothing can be done. The truth is that many claim denials can be appealed and overturned with the right documentation.

Why This Mistake Costs You Money:

• Many denied claims are fixable, but if you don’t take action, you lose the income.

• Some insurers underpay claims, and without auditing your payments, you may not notice discrepancies.

• If you don’t follow up within the insurer’s time limit, you may permanently lose the chance to collect payment.

How to Avoid It:

✔ Set up a system to track all claims, including submission date, status, and payment details.

✔ Review all Explanation of Benefits (EOBs) and check for underpaid or denied claims.

✔ Appeal denied claims promptly—most insurance companies allow 90–180 days to file an appeal.

Tip: A billing specialist can handle claim follow-ups for you, ensuring you don’t lose money due to avoidable denials.

4. Failing to Set (and Enforce) a Late Cancellation & No-Show Policy

Cancellations and no-shows can quickly drain your practice’s revenue if you don’t have a policy in place to charge for missed appointments. Many therapists hesitate to enforce these policies, fearing it will upset clients—but without them, you are losing income for reserved time slots.

Why This Mistake Costs You Money:

• If a client cancels last minute or doesn’t show, you cannot bill insurance and are left unpaid.

• Frequent no-shows reduce your available appointment slots, cutting into your earnings.

• A lack of policies encourages more last-minute cancellations.

How to Avoid It:

✔ Implement a 48-hour or 24-hour cancellation policy and have clients sign an agreement before their first session.

✔ Charge a reasonable fee for late cancellations and no-shows (many therapists charge 50–100% of the session rate).

✔ Send automated appointment reminders via email or text to reduce missed sessions.

Tip: Make sure clients understand the policy upfront to avoid conflicts later.

5. Relying on Insurance Without Offering Private Pay Options

Many therapists depend solely on insurance reimbursements, which often have low rates and delayed payments. Without private pay options, you are limiting your ability to increase revenue.

Why This Mistake Costs You Money:

• Insurance reimbursement rates are lower than private pay rates.

• Insurance payments are delayed, while private pay is immediate.

• Not all clients want to use insurance due to privacy concerns.

How to Avoid It:

✔ Offer a competitive private pay rate for clients who choose to self-pay.

✔ Consider offering package deals or sliding scale rates to encourage private pay.

✔ Educate clients on the benefits of private pay, such as increased privacy and no session limits.

Tip: Some therapists also offer superbills, allowing clients to submit for out-of-network reimbursement.

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Avoiding these common billing mistakes can significantly improve your revenue, reduce claim denials, and create a more financially stable practice. By taking the time to verify insurance, submit accurate claims, follow up on denials, enforce policies, and diversify income sources, you can prevent lost revenue and maximize your earnings.

However, managing billing while running a practice can be overwhelming. If you need expert support to streamline your billing, reduce claim denials, and increase your reimbursements, we can help.

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