If you’ve recently received a denial for a mental health insurance claim, you’re not alone. Thousands of therapy sessions and mental health treatments are rejected every year—even when the care is medically necessary. Mental health claim denials are frustrating, confusing, and often come with vague explanations like “not medically necessary” or “incomplete documentation.”
In this article, we’ll break down five common reasons mental health claims get denied and, more importantly, show you what you can do to fight back or prevent it from happening again.
1. The Insurance Company Says It’s “Not Medically Necessary”
This is one of the most common—and misunderstood—reasons mental health insurance claims are denied.
What it means:
Insurers evaluate whether your therapy or psychiatric treatment fits their criteria for medical necessity. If the diagnosis doesn’t align with their accepted conditions or if your progress notes are too vague, they may deny the claim.
Examples of common denials:
- Therapy for stress or relationship issues coded under general “Z-codes”
- No measurable improvement noted in progress documentation
- Diagnosis not listed under covered conditions
What to do:
- Make sure your therapist uses an ICD-10 “F-code” (like F32.1 for depression) that reflects a clinical diagnosis
- Ask for clear treatment goals and track progress
- If denied, request the insurer’s criteria for medical necessity and file an appeal with updated documentation
2. You Didn’t Get Pre-Authorization
Some mental health services—especially longer-term therapy, psychiatric evaluations, or intensive outpatient programs—require prior authorization from your insurance provider.
Without it, even covered services can be denied.
Why this happens:
- Many insurance plans require approval before starting therapy beyond an intake session
- Telehealth sessions or certain types of therapy (like EMDR or ABA) may also need authorization
What to do:
- Always call your insurer before beginning a new treatment plan
- Ask: “Is pre-authorization required for this service and diagnosis?”
- Keep written or digital proof of authorization
3. There Was Missing or Incomplete Documentation
Insurers rely heavily on your provider’s documentation to decide whether to approve a claim. Even small errors can result in a denial.
Common issues include:
- No mention of time spent during the session
- Missing progress notes or treatment plans
- Documentation that doesn’t justify continued therapy
What to do:
- Ask your provider to use standardized formats like SOAP or DAP notes
- Ensure they record session time, symptoms discussed, interventions used, and outcomes
- For recurring therapy, make sure updated treatment plans are regularly added
4. Your Insurance Coverage Was Inactive or Outdated
This might seem like an obvious one, but many mental health claim denials happen simply because the coverage expired or changed.
What can trigger this:
- New calendar year = new deductible or plan changes
- Switching jobs or health plans
- Forgetting to update provider with new insurance info
What to do:
- Always verify mental health coverage before each session
- Use your insurance provider’s online portal or ask your therapist’s office to confirm eligibility
- Save screenshots or confirmation emails for proof
5. Wrong CPT or ICD-10 Codes Were Used
Mental health billing is highly sensitive to coding errors. A mismatched or outdated CPT or ICD-10 code can get your claim rejected—even if the service was legitimate.
Common coding mistakes:
- Billing 90837 (60-minute therapy) when the session was only 45 minutes
- Using Z-codes for life stressors instead of clinical diagnoses
- Forgetting telehealth modifiers like 95 or using the wrong place of service code
What to do:
- Ask your therapist if they’re using up-to-date codes
- If a claim was denied for incorrect coding, request a corrected claim submission
- Make sure telehealth services include proper modifiers (like Modifier 95) and POS code (02 or 10)
What You Can Do If Your Mental Health Claim Was Denied
Even if your claim was denied, you still have options. Most insurance companies allow you to appeal the decision—and many denials get reversed when the right documentation is submitted.
Step-by-step appeal process:
- Get the Explanation of Benefits (EOB):
It will include a denial code and brief reason - Call the insurance company:
Ask for specific reasons and what documentation is missing - Work with your provider:
Have them update progress notes or resubmit the claim with the correct codes - Submit an appeal:
Include:
- Patient name and ID
- Date of service
- Reason for appeal
- Supporting documents (notes, pre-auth, treatment plan)
- Follow up regularly:
Don’t assume the insurer will process it quickly—call every 2–3 weeks
Quick Tips to Avoid Future Mental Health Claim Denials
- Always verify coverage before treatment
- Make sure your provider is in-network and properly credentialed
- Use correct diagnosis codes (F-codes) and procedure codes (CPT)
- Track timely filing limits (some insurers only give you 90 days)
- Ask for a written treatment plan that matches insurance criteria
Final Thoughts
Mental health claims often face stricter scrutiny than physical health claims. From coding errors to missing documentation and pre-authorization issues, there are several technical reasons your therapy or psychiatric claim may be denied—even if your care is valid and necessary.
Understanding the system empowers you to avoid common mistakes and advocate for the care you deserve. If your claim was denied, don’t give up. Appeal it, ask for help from your provider, and stay proactive.
