Understanding Mental Health Insurance: Part 1 – Understanding Policy Types

This guide will help mental health therapists and behavioral health practitioners understand the different types of benefits and coverage new patients have, if they will be paid, and what steps are required to ensure payment.

The Confusing Mess of Insurance Policies

HMO, PPO, EAP, EPO, In-network, Out-of-network, contracted and subcontracted insurance..

Mental health insurance policies are often elaborate and wildly confusing. Let’s spend some time understanding insurance policy types in the ways most important and relevant to your practice practice:

  • Will I get paid?
    • Depends on if you are in-network or out-of-network
  • What does it take to make sure I get paid?
    • Authorizations
  • What can I do to make sure I get paid in the future?

Types of Behavioral Health Insurance Policies

There are two major ways that a new patient will be eligible for insurance: either 1) they pay for insurance themselves (often discounted by their employer) or 2) their employer has a special relationship with an insurance company and that relationship provides eligibility for that patient.  This is an important distinction because if they fit in the later category, often times the patient’s eligibility will be limited and you, as the provider, will have to authorize treatment for that new patient.

In the first category, we have the following types of policies:

  • PPO — Preferred Provider Organization
  • EPO — Exclusive Provider Organization
  • HMO — Health Maintenance Organization
  • Health Insurance without mental health benefits — all patient payments are applied against their health benefits deductible (100% out of pocket for patient)

This is important: even if a new patient has insurance, that does not guarantee they have mental health coverage!  To learn how to make sure your new patients are covered and your claims will never be denied, click here.

In the second category, we have just one major type of policy:

  • EAP — Employee Assistance Program

Again, EAP policies are offered through a large company’s relationship with an insurance company and as such, are often limited to 5 sessions with authorization required.

US20NFRWill I Get Paid?  In-Network Providers

You’ve called the insurance company and you’re positive you’re in-network and on their mental health panel.  Fantastic, let’s take a look at how these policies break down for you..

  • PPO — Yes!  Just file your claims normally and charge the patient for their copayment or coinsurance.
  • EPO — Yes!  Same as above
  • HMO — Yes!  Be extra careful that you are contracted directly with the mental health department of that insurance company (which can often be subcontracted out to other companies) — always check.  In rare cases, you may also need to authorize your sessions.
  • Health insurance without mental health benefits — Yes!  Make sure to file for that patient and they will be asked to pay your contracted rate with that insurance company in full.  Make sure to file for these patients as well because their payment will be applied against their deductible.
  • EAP — Yes!  Always call the insurance company to authorize sessions and always call them back before the last session to authorize more sessions if required.

Will I Get Paid?  Out-of-Network Providers

So you’re positive you’re not contracted with that panel.  (Learn how to get contracted here).  That’s okay, let’s go through these policy types to make sure you can still get paid..


There you have it!  Mental health insurance policies are complex and it’s to your benefit to always call to check eligibility and benefits of a new patient before seeing them.  We have a great guide with scripts and tips to skip the insurance phone system prompts right here to please do take a look.


I thought I was in-network but because their mental health benefits are subcontracted with a subdivision of the company, I’m not actually in-network.  Is there anything I can do?

Call up the mental health department of that big organization and ask about an appeal.  If you followed our guide about checking eligibility and benefits for that new patient, you will have a reference ID for that call that you can use to fight this issue.  Insurance companies do make this mistake so, using the aforementioned guide, be ready to fight them!

My new patient has co-insurance but not a co-payment.  I’m confused!

Great question.  Co-payments are straight forward: every time they see you, they pay $20 or $30 or $15 in office.  Co-insurance is like a co-payment but is not an absolute number but rather a percentage of the amount that you’ll be paid by the patient and insurance company.  So if you were to hypothetically receive $100 as your contracted rate for CPT 90847 (how to negotiate higher rates) and the patient’s co-payment was 25%, the patient will pay $25 and the insurance will pay $75.

As another example, say you are contracted for $66 for CPT 90834 and your new patient has a 30% co-payment — you multiply 0.3 * $66 to find the amount the patient owes ($19.80) and then subtract that amount from the contracted rate ($66 – $19.80) to find the amount the insurance company is obligated to pay you ($46.20).

Because contracted rates depend on CPT codes and co-insurance percentages vary, we often recommend collecting a conservative amount of money from the new patient in-office for each visit, explain they have co-insurance and how it works, and let them know that once you file and receive EOBs from the insurance company, you will even up what’s owed.  For the first example, you’d want to just charge $20 in office and then collect the $5 later and for the second example, you’d want to charge $15 in session and collect the remaining $4.80 at the end of the month.

It is confusing!  If you’re really struggling, shoot your insurance co a call and ask to talk through the EOB on the phone.

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