How Therapists Pay Their Billing Service: 3 Easy Steps
How therapists pay their billing service comes down to one monthly cycle: the payer finalizes your sessions, the billing service sends a paysheet and an invoice, and you check both against your agreement before you pay. This guide is for psychotherapists and psychiatrists and walks through each step with round-number examples.
Step 1: The payer finalizes the session
A finalized session is a claim the payer has fully processed, so the allowed amount, the client’s share and the payer’s payment are all settled. HealthCare.gov describes the allowed amount as the most a plan will pay for a covered service. Until a claim reaches that point, it is pending, denied or waiting on a second payer, and it does not belong on the month’s paysheet yet.
The proof of finalization is the explanation of benefits (EOB) and the electronic remittance advice (ERA), the payment detail the payer sends back. CMS explains that a remittance reports how each claim was adjudicated and paid, and that the ERA can be posted automatically into billing systems. Our guide to reading an ERA shows the fields.
Step 2: The paysheet and invoice arrive together
In the second step of how therapists pay their billing service, the service builds a paysheet from the payers’ EOBs and ERAs at month-end and sends it with its invoice. The paysheet lists each finalized session. The invoice is the amount you owe the billing service under your agreement. For how to read each column, see our post on the monthly paysheet report, and for the bigger picture, see how medical billing services get paid.
How therapists pay their billing service depends on three terms that show up on every line:
- Billed rate: the fee you set for the service.
- Allowed rate: what the payer will count for that service under its contract or plan rules.
- Adjustment: the difference you write off when you are in network. You cannot collect it from the client.
Three payment examples
These numbers are round and illustrative examples of how therapists pay their billing service. They are not real fee schedules, not any payer’s rates and not MCM South data. Each row shows how a finalized session splits when the client has a copay, has not met the deductible, or pays coinsurance after the deductible is met.
| Plan state | Code | Billed | Allowed | Adjustment | Client share | Payer pays |
|---|---|---|---|---|---|---|
| $30 copay | 90837 | $200 | $130 | $70 | $30 | $100 |
| $30 copay | 99213 | $150 | $90 | $60 | $30 | $60 |
| Deductible not met | 90837 | $200 | $130 | $70 | $130 | $0 |
| Deductible not met | 99213 | $150 | $90 | $60 | $90 | $0 |
| 30% coinsurance | 90837 | $200 | $130 | $70 | $39 | $91 |
| 30% coinsurance | 99213 | $150 | $90 | $60 | $27 | $63 |
In how therapists pay their billing service, the code changes the numbers: psychotherapists usually bill a psychotherapy code such as 90837. Psychiatrists and other prescribers often bill an evaluation and management (E/M) code such as 99213, sometimes with a psychotherapy add-on. Each line gets its own allowed amount, so each line shows up on the paysheet.
Private payers
For how therapists pay their billing service, the allowed amount comes from your contract if you are in network, or from the plan’s out-of-network method if you are not. The ERA shows the client’s share, so the paysheet’s client column should match it.
Medicare and Medicaid
Medicare sends remittances in the X12 835 format, per CMS. After the Part B deductible, medicare.gov says the client pays 20% of the Medicare-approved amount for outpatient mental health visits. Medicaid payment and cost-sharing rules are set state by state, so check your state Medicaid program instead of applying another state’s rule.
Step 3: Review, then pay per your agreement
How therapists pay their billing service starts with a review. Check the paysheet before you pay the invoice, because the invoice is only as accurate as the sessions behind it. The terms are set by the billing agreement, so get the fee basis, due date and dispute process in writing. Our list of billing service contract questions covers what to ask. This is operational guidance, not legal advice, so ask your attorney if a clause worries you.
What to do Monday morning after the paysheet arrives:
- Match each delivered session to a line, or to a stated reason it is not finalized.
- Compare the allowed amount on each line with your contract rate for that code.
- Check that the client share matches the copay, deductible or coinsurance on the ERA.
- Confirm the invoice math follows your agreement.
- Ask for the EOB or ERA behind any line that looks off.
How do therapists pay their billing service?
Therapists pay their billing service after month-end, when the paysheet and invoice arrive together. The paysheet shows what the payers finalized, and the invoice shows what you owe under your billing agreement. Review both, then pay as the agreement says.
The short version: how therapists pay their billing service
How therapists pay their billing service is a three-step monthly loop: the payer finalizes sessions, the service sends a paysheet and invoice, and you review and pay per your written agreement. Match every line to a remittance and you will catch most errors early.
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 send a paysheet and invoice built from the payer remittances, so you can check each line. Your billing agreement sets the fee terms.
Keep going
Related reading
Ready to hand off the billing side? We can talk through your practice.
FAQ
What is a finalized session?
A finalized session is one whose claim the payer has fully processed, so the allowed amount, the client’s share and the payer’s payment are settled. Only finalized sessions belong on the month’s paysheet. Pending, denied and second-payer claims are tracked separately.
Where does the paysheet come from?
The billing service builds it from the payers’ explanations of benefits (EOBs) and electronic remittance advices (ERAs). You can ask for the EOB or ERA behind any line.
When is the invoice due and what is it based on?
Your billing agreement sets both, so get the fee basis and due date in writing before you sign. Ask which figure the fee is based on and how disputes are handled.
What if a session is missing from the paysheet?
Check whether the claim is still pending, was denied or went to a second payer. If none of those apply, ask the billing service for the claim status and the remittance, and have them tell you the next step.
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.
