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8 Tips to Reduce Behavioral Health Insurance Claim Denials
Health insurance claim denials can bring even the most organized mental health practice to a grinding halt — delaying revenue, draining resources, and adding frustration. But with the right know-how and proactive habits, most claim denials are preventable. In this post, we’ll explore eight practical strategies to slash your denial rates, streamline billing, and help your practice reclaim both time and profitability.
Last Updated: June 24, 2025
Your behavioral health insurance claim was denied.
We’ve all been there. Whether the notice comes from a private insurer, Medicaid or Medicare, there are few things more headache-inducing in our profession than a denied claim. A denied claim means it’s back to the drawing board to refile the claim again. It also means you have to wait even longer to collect on the revenue you are owed.
Your time and your bottom line must be protected at all costs. Below, we’ll share tips to reduce claim denials so you can get paid and keep your mental health practice running smoothly.
What is a Medical Insurance Claim Denial?
A claim denial is when an insurance company refuses to pay for the services you’re billing them for. Behavioral health insurance claim denials happen after the insurer processes your claim, and the insurer will include an explanation of why they denied the claim when they send it back to you. You can’t resubmit denied claims, but you can file an appeal.
Claim Denial vs. Claim Rejection
Claim denials are different than claim rejections. An insurer or clearinghouse may reject a claim if it contains incorrect information, such as a medical coding mistake. In this case, the insurance company did not yet process your claim, meaning it didn’t have a chance to deny or approve your request. With a rejected claim, you should receive an explanation of the error. You’ll then have an opportunity to correct the issue and resubmit the claim so it can get processed.
Why do Health Insurance Payers Deny Claims?
A health insurance company can deny a claim for many reasons, and it’s essential to know the cause so you can decide whether to file an appeal. Common causes of claim denials in the mental health field include:
- The service did not meet the insurer’s medical necessity requirements.
- You missed the filing deadline.
- You provided two services in one day.
- You provided services without the necessary preauthorization or referral.
- The authorization for service expired.
- Your client changed or lost their insurance coverage.
- You submitted a duplicate claim.
- You submitted a claim for services not covered under the client’s plan.
Sometimes, a simple data entry error can lead to a denied claim.
Struggling with Claim Denials?
Make sure your documentation holds up to payer scrutiny. Download our free Behavioral Health Claims Documentation Checklist! It walks you through every essential element — from intake to billing — so you can reduce denials, support medical necessity, and get paid faster.
8 Tips for Reducing Behavioral Health Insurance Claim Denials
If your practice has seen claim denials, you’re not alone. According to the Kaiser Family Foundation, over 40 million claims were denied by HealthCare.gov issuers in 2019. Claim denials are costly because they keep you from getting paid and they take time to rework or appeal. Fortunately, there are things you can do to keep claims from getting denied in the first place. Here are some tips:
1. Adopt Automated Solutions
Adopt automated solutions wherever possible. The more you can remove human error from the equation, the fewer denied claims your practice will deal with.
Consider investing in an electronic health record (EHR) solution that integrates with a clearinghouse. This integration allows you to manage claims in an organized, centralized location. The clearinghouse will review your claims for errors before submitting them to insurers and send them back to you if there’s a mistake. That way, you can correct the mistake and avoid getting a rejected or denied claim.
2. Double-Check Patient Information
Check patient information and check it twice. Name, date of birth, Social Security number and address are all common places for a misspelling or outdated information. Consider using a patient portal so patients can easily update their own information.
Remember, there are more than 350 elements of data in any claim, and an error in even one of them can be grounds for a rejection or denial. Taking the time to verify that the information is correct and meets the insurer’s requirements will save you more time and effort in the long run. If you have questions about a client’s health insurance plan, give their insurer a call and get the information you need. It’s also a good idea to check in with payers quarterly to ensure there are no fundamental changes to their policies.
3. Learn From Past Mistakes
Learn from past rejections and denials to help prevent future issues. When rejection or denial occurs, there is always a reason, and in some cases, it’s because the correct data has not been established.
EHR software solutions like ICANotes make it easier to ensure the data you use for claims is correct. For example, with ICANotes, you can create a shortlist of insurance companies you frequently work with. Use this list to establish insurance types, payer IDs and American National Standards Institute (ANSI) options for all patients that share a given insurance. Streamlining this process will help you reduce rejections and denials in the future.
4. Meet the Timely Filing Deadline
Deadlines are a part of life, and they affect the claim filing process, as well. For instance, according to the Centers for Medicare and Medicaid Services, healthcare providers must file a Medicare claim no later than 12 months after the service date. If the claim is not submitted by the deadline, it will be denied. While filing deadlines typically range from 90 days to a year, some insurance companies may require the claim in as little as 15 to 30 days after the service.
Whether you have a year or a few weeks to file a claim, it’s still essential not to wait until the last minute. You may need extra time to correct any errors or find out more information, and you likely want to get paid as soon as possible. As a general rule, try to submit claims within 24 hours of the service you provided.
5. Get Acquainted With Your Clearinghouse
Your clearinghouse is an integral partner in the filing process. You’ll work side by side with your clearinghouse constantly to review claims, correct errors and securely submit claims electronically. Some clearinghouses also offer eligibility verification, electronic remittance advice and claim status reports — among other perks. Take the time to learn more about your points of contact and build a strong relationship with them. Nurturing this partnership will improve the processes for both of you.
6. Know Your Claim Format
All practices using EHRs send their claims through a standardized format. If a claim is denied, understanding that format can make it easier to rectify the problem. For example, most practices submit their claims in the ANSI 837 format, and knowing this allows you to apply ANSI loop and segment references in the case of a denial.
7. Take Accurate Progress Notes
Insurers can deny a claim if the services you’re billing for are not considered medically necessary. Ensure you know how various insurance companies define medical necessity and keep their requirements in mind when you write progress notes. Your progress notes provide proof that your services meet the medical necessity requirements to help you avoid a denial. If a claim is denied, these notes can support your appeal. Using a thorough note-writing format can help you include the most essential details.
8. Never Stop Learning
Healthcare is a market of constant innovation and change, and the billing process is no different. Consider scheduling a refresher training every six months to make sure you’re on top of the latest billing and coding changes. Your EHR will update regularly, and this refresher can help you learn more about industry changes, making the billing process easier and possibly reducing your risk of claims denial. What could be better than that?
Submit Accurate Health Insurance Claims with ICANotes
Reducing insurance claim denials starts with accurate, compliant documentation—and ICANotes is built to help you get it right the first time. Our behavioral health EHR streamlines every step of the documentation and billing process, ensuring your notes clearly support medical necessity and meet payer requirements. With built-in risk assessments, automated coding suggestions, and progress note templates that prompt for all key clinical elements, ICANotes helps you create defensible, detailed records with ease.
Prefer to outsource your billing? ICANotes also offers full-service revenue cycle management (RCM) for behavioral health practices. Our experienced billing team handles everything from eligibility verification and claims submission to denial management and payment posting—freeing your staff to focus on client care while improving reimbursement rates.
Whether you manage your billing in-house or want a trusted partner to handle it for you, ICANotes provides the tools and services to help your practice minimize denials and maximize revenue.
Book a meeting with us today to find out we can simplify the billing process for your mental health practice.
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Dr. October Boyles
DNP, MSN, BSN, RN
Dr. October Boyles is a behavioral health expert and clinical leader with extensive expertise in nursing, compliance, and healthcare operations. With a Doctor of Nursing Practice (DNP) from Aspen University and advanced degrees in nursing, she specializes in evidence-based practices, EHR optimization, and improving outcomes in behavioral health settings. Dr. Boyles is passionate about empowering clinicians with the tools and strategies needed to deliver high-quality, patient-centered care.