Balance Billing for Therapists: 5 Easy, Essential Rules

Balance billing for therapists means billing a client for the gap between your fee and what the payer allows. Whether you may do that depends on the client’s coverage, your contract and your state. HealthCare.gov describes it as a provider billing the difference between its price and the insurer’s agreed amount, and says preferred providers cannot do this for covered services.

Can a therapist bill a client the difference after insurance pays?

Not if you are in network and the service is covered. Your contract almost always requires you to accept the payer’s allowed amount as payment in full, so you collect only the client’s share. That is the short answer on balance billing for therapists. Out-of-network, Medicare, Medicaid and self-pay each work differently, so check the rule for that payer before you send a bill.

Balance billing for therapists starts with your contract

An in-network contract is what limits you. Our glossary entry on balance billing covers the term, and the practical point is simple: the write-off is yours, the client’s share is theirs.

Private payers

Balance billing for therapists is mostly a question of who you contract with.

In network, you collect the copay, coinsurance and deductible the remittance shows as patient responsibility (group code PR). You do not bill the contractual adjustment (group code CO). If you want to see how those codes appear, read our guide to CARC and RARC codes.

Out of network, there is no contract capping you, but other limits may apply: state law, the plan type, and what you told the client in writing before the first visit. Do not assume you can bill the difference until you have checked all three. Our comparison of in-network and out-of-network credentialing shows how the two paths differ.

Medicare and Medicaid

For Original Medicare, Medicare.gov says that after the Part B deductible, the client pays 20% of the Medicare-approved amount for outpatient mental health visits, and that costs depend partly on whether the provider accepts assignment. Medicare also sets rules for what providers may charge above the approved amount when they do not accept assignment. Confirm the current rules for your enrollment status with your Medicare contractor before billing a client any amount over the approved amount.

Medicaid is stricter. Federal rules require state Medicaid plans to limit participation to providers who accept the state’s payment, plus any required cost-sharing, as payment in full (42 CFR 447.15). Bill a Medicaid client only for the cost-sharing your state allows, and check your state Medicaid manual and any managed care plan manual.

State rules

State balance-billing and surprise-billing laws vary, and one state’s rule does not carry over to another. Look up your own state on its insurance department or Medicaid website, or ask your attorney. Balance billing for therapists is where state law matters most in out-of-network work, because it may allow, limit or condition the practice.

Balance billing for therapists: who you can bill, by situation

Situation	What you can usually bill the client	What to confirm
In-network commercial	Copay, coinsurance and deductible shown as patient responsibility (PR)	Payment-in-full language in your contract; the remittance
Out-of-network commercial	The client’s share of the allowed amount; the difference only if state law and the plan allow it	State law, plan type, your written policy
Medicare	The client’s share of the Medicare-approved amount (20% after the Part B deductible)	Whether you accept assignment; current limits with your Medicare contractor
Medicaid	Only cost-sharing your state requires	State Medicaid and managed care plan rules
Self-pay	Your fee, as agreed and disclosed in writing	Good faith estimate rules; your signed policy

The “allowed amount” in that table is the number every client share is built on. Our guide to the allowed amount in therapy billing shows the math.

Federal surprise billing rules and self-pay clients

The No Surprises Act is a federal law that limits surprise medical bills. According to the CMS rules overview, the 2021 rules restrict surprise billing for people in job-based and individual health plans who get emergency care, non-emergency care from out-of-network providers at in-network facilities, and air ambulance services from out-of-network providers. A routine outpatient therapy visit is not one of those listed situations, but ask your attorney how the rules apply to your setting.

The same law has a separate rule for people who do not have or do not use insurance. According to CMS, providers usually must give a good faith estimate of expected costs to a self-pay client who asks for one or who schedules care at least 3 business days ahead. CMS adds that a client may be able to dispute a bill that is at least $400 above the estimate (CMS medical bill rights). Treat this as a reason to document your fees clearly, and confirm your obligations with counsel.

Put it in writing: your financial policy

A signed financial policy before the first visit helps head off billing disputes. It tells the client what they owe and why, and it is where balance billing for therapists becomes concrete for each client. Have your attorney review it, because the right wording depends on your state and payer mix.

• Your fee for each service you offer.
• Which plans you are in network with, and that you collect only the client’s share for those.
• For out-of-network clients, what the plan may pay and what the client is responsible for if it pays less than your fee.
• When copays and other balances are due, and how you take payment.
• Your no-show and late-cancellation fees.
• For self-pay clients, the good faith estimate.
• A signature, a date, and a copy for the client.

What to do Monday morning

Use this list to audit balance billing for therapists in your own practice.

1. Sort your clients by payer type: in network, out of network, Medicare, Medicaid, self-pay.
2. Pull your current financial policy and compare it with the table above.
3. Run a benefit verification before the next new-client visit, so you know the client’s share up front.
4. Check that no in-network or Medicaid ledger shows a bill for a CO adjustment.
5. Send questions about your state or Medicare status to your attorney or Medicare contractor.

The short version: balance billing for therapists

In network and on Medicaid, you collect only the client’s share. Out of network, Medicare and self-pay depend on the rules, your enrollment and what you put in writing. When in doubt, verify first and bill second.

How MCM South helps

MCM South Medical Billing Service, LLC bills mental and behavioral health claims for psychotherapists and psychiatrists, including out-of-network claims. We read each remittance so the client balances you send match what the payer says is patient responsibility.

Ready to hand off the billing side? We can talk through your practice.

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FAQ

Where MCM South works

MCM South Medical Billing Service, LLC works with psychotherapists and psychiatrists in our ten currently served states: Georgia, Massachusetts, Connecticut, Texas, Florida, New York, Colorado, Tennessee, North Carolina and Illinois. We serve solo and medium-size practices that bill mental and behavioral health. Founder Michael Williams has worked with insurance payers in all 50 states. Browse the state and regional billing guides for rules that vary by state, or see our billing services.

This post is operational guidance for billing, not legal advice. Rules change, so confirm with the payer or your counsel.