Insurance Billing Options & Resources For Psychotherapists and Counselors

By Ofer Zur, Ph.D.


Notes & Updates:

  • Most experts and organizations believe that before long most insurance companies will accept only electronic claims, and that paper claims will be obsolete. It is important that you don’t get shut out of insurance companies, which accept only electronic bills. Equally important that you comply with HIPAA regulations if you or someone on your behalf is filing electronic billing with insurance company. Also important that you familiarize yourself with ICD-10.
  • A new law (SB137) requiring insurers/health plans in CA to keep their provider directories more accurate and up-to-date went into effect on July 1, 2016. More information
  • Covered Entity: Clarify whether you are considered a Covered Entity by HIPAA: You are considered to be “Covered Entity” under HIPAA only if you are engaged in electronic billing to insurance companies (See HHS definition of Covered Entity). Please note that on one hand, if you have not been submitting electronic billing to insurance companies, you are not a “covered entity” and thus not legally mandated to follow the HIPAA law and cannot be investigated or penalized by HHS or OCR for HIPAA violations. However, on the other hand, regardless of whether you’re a covered entity or not, HIPAA security and privacy regulations, including issues of confidentiality, have been becoming the standard of care and thus, all psychotherapists and counselors need to comply with it.
  • If you are “Covered Entity” make sure you obtain a National Provider Identity – NPI # or #’s.
  • CAMFT Achieves Recognition for LMFTs and Interns as Medi-Cal Providers
    On May 2, 2014 the Center for Medicare and Medicaid Services approved the State Plan Amendment (SPA 14-012) adding LMFTs and registered interns to the list of providers of psychology services for Medi-Cal. This will allow private practitioners who are not already seeing Medi-Cal clients through contracts with the County or Medi-Cal Managed Care plans to work with Medi-Cal clients and, most importantly, directly bill Medi-Cal for the mental health services provided. (Source: CAMFT June, 2014)

This page complements Dr Zur’s HIPAA Compliance Kit & HIPAA Forms, 9th Ed. Revised May 2018.
Order the entire Kit



One of the biggest challenges psychotherapists face regarding HIPAA is the fact that sooner or later insurance companies will accept only electronic billing. Some stopped accepting paper billing after October 16, 2003. While HIPAA does not mandate that therapists bill electronically, it is likely to become part of financial survival for psychotherapists. Even those of us in fee-for-service practice may need to make some adjustments, because most insurance companies are unlikely to accept paper invoices any longer.

The APA (American Psychological Association) Practice organization anticipates that many insurance companies will not want to deal with paper claims and eventually will require health professionals in their programs to file electronically.
          APA Monitor on Psychology

In fact, if you only accept cash payments from patients, or if you or your patients submit the insurance claims by mail, you do not fall within HIPAA’s purview. However, as attractive as that sounds, the position does come with some consequences. First of all, the rest of the country is going to leave you “in the dust” as we rely more and more on technology in the health care milieu.
          California Association of Marriage and Family Therapists (CAMFT) Staff attorney, Jensen, J.D.

I am aware what a daunting task it is to figure out how to choose from the hundreds of available billing options. Many do not know where to start. Therefore, I decided to explore some of the options, personally. On this page I will elaborate on some of these options and give you several specific recommendations.


Option #1: Low Tech (No-Tech) Option

  • For those who don’t even have a computer (or simply hate it).
  • For those who don’t want to hassle with software installation.
  • For those who do not want to deal with management and employment of billing staff.



This is the simplest and lowest tech option either for therapists who do not want to deal at all with computers, electronic billing, installation of special software, doing their own billing, and handling billing staff, or for those who do not even own a computer. You can simply fax or mail in your patients’ bills and be reimbursed quickly and without hassles.

    The process is as follows:

  • You contract with a billing service (they will give you the HIPAA Business Associate contract and all other necessary forms). Typically, it involves paying both a set-up fee and a certain percentage amount based only on what you get paid by the insurance companies, not on what you bill.
  • The billing service gets paid ONLY if you get paid.
  • You obtain the patient’s authorization (form available in our HIPAA Compliance Kit or Clinical Forms), giving you permission to communicate with the billing service, clearinghouse and insurance companies.
  • Then you simply fax or snail-mail your bills and clients’ insurance information to them.
  • The billing service enters the therapist, client and billing information into their computer and transmits insurance claims via a modem to a clearinghouse.
  • The clearinghouse, when applicable, converts the claims to the HIPAA compliant electronic format and sends them electronically to the insurance companies.
  • You or your client get paid fast and without hassles, if everything goes right.
  • If there are any questions or problems, the billing service usually deals with them, not you.
  • There are hundreds if not thousands of billing services available. Make sure that you find the right one for you and of course, check that they are HIPAA Compliant.
  • For recommendation, you can contact Barbara Griswold, LMFT or check with NAPPP’s Recommended (or used to be recommended) billing service of SAVI Group.

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Option #2: Using basic billing software to submit claims via a clearinghouse


This is likely to be a popular option for therapists who are willing to install practice management or billing software, such as the popular Medisoft (about $190 for the most basic product, up to about $750). Most of the hundreds of available programs are PC only. Some are also Mac compatible. After installing the software you contract with a clearinghouse. The software creates an electonic file which is uploaded to the clearinghouse, which then submits your bills instantaneously in HIPAA compliant format to the insurance companies.

Billing/Management software resources:

Clearinghouses resources: Medisoft has their own clearing house and are very reputable and, of course, is compatible with their popular Medisoft software. Signature Claims works as both a clearinghouse that will interface with your billing software as well as a claim entry system. They can get you started immediately by sending you the software and forms via email or by mailing you a CD. They have NO set-fee and charge either a per claim charge or a flat monthly fee. Contact person: Bill Greenland. Phone (877) 744-2561. Email.

NOTE: Be sure that the insurance plans you bill are on the payer list of your clearinghouse!

Free HIPAA Compliant billing Software for Medicare: CMS, apparently, can supply clinicians with HIPAA compliant free billing software for submissions of Medicare claims by calling 213-593-6950.

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Option #3: Online Data Entry

  • For those who want to do it themselves online.
  • No additional software is required.



Only Internet access is required for this option, in which you simply enter clients’ information online. The billing service (via a clearinghouse) or the clearinghouse itself handles the conversion and transmission of claims for therapists. To use this web-based application, you mostly need Internet access and a contract with a billing service. This option is for therapists who need (or choose) to submit insurance bills electronically, one-by-one rather than in batches, but who do not want to deal with any practice management and billing software. In these web-based applications you enter your clients’ information online, and the billing information later on. You can do the entire transaction online. This arrangement is not for large groups, but can be helpful for individual practitioners. Check the Web for any application you are considering and ask for a free demo. Ask if they have a set-up fee and if they charge either monthly or per each billing.


NOTE: Be sure that the insurance plans you bill are on the payer list of your clearinghouse!

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Option #4: Submit directly to insurance companies

  • For those who want to do it themselves.



This option is geared primarily to therapists who work with very few insurance companies. For this option therapists submit directly from their computer, either using billing software or submitting through the insurance company’s web page. While the former requires billing software (as in option #2 above,) the latter does not involve any special software only Internet access (similar to option #3 above). Of course this arrangement must be coordinated with the insurance companies themselves. The advantage of this option is that billing itself does not cost anything.

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DISCLAIMER & DISCLOSURE: The above list of resources and options is definitely not exhaustive, as there are hundreds, if not thousands, of billing resources available and many other billing options. While Dr. Zur makes some recommendations based on his limited research and experience, he does not guarantee any of these products, does not insure that they are HIPAA compliant, and cannot be sure that they will suit your individual professional needs. Furthermore, he cannot guarantee that they won’t interfere with your computer system or clients’ care and confidentiality. Before buying or installing any software, Dr. Zur highly recommends that you consult with your tech support person (get one if you do not have one already) and computer vendor. There are various sites on the Internet, such as and, where you can find software reviews. It is your responsibility to seek further information and verify the professionalism, competence, HIPAA compliance and compliance with federal, state and professional laws, codes and guidelines of all these products and services.

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