Therapists vs. Insurance: How AI Could End the Battle Over Mental Health Care

If you’ve ever wondered why a lot of therapists do not take insurance, here’s the euphemistic answer: dealing with insurance companies sucks. 

From submitting reimbursement claims to navigating stringent documentation requirements, the process of dealing with insurers is riddled with obstacles. Therapists face frequent claim denials — about 15%, even when prior authorization is obtained — alongside the constant threat of audits and clawbacks. The administrative toll often results in delayed payments or, worse, wasted hours chasing claims, leaving providers financially strained and emotionally drained.

The challenges don’t end there. Insurers often dictate who receives care and for how long, undermining the expertise and treatment plans of therapists. By imposing their own definitions of what is medically necessary, insurance companies create barriers that alienate many providers from the system entirely. 

It’s no wonder, then, that nearly half of all mental health professionals have refused to work with insurance companies.

Enter AI. 

By automating administrative tasks from clinical note-taking to billing and documentation, AI reduces the burdens therapists face when dealing with insurance. For example, when it comes to documenting medical necessity, AI can adapt to these requirements, giving therapists the confidence that their documentation will meet the medical necessity standard. This not only minimizes the risk of claim denials but also streamlines the process, allowing therapists to focus more on patient care.

This article will explore three transformative ways AI is reshaping the insurance landscape for mental health providers. First, we’ll examine how AI enhances clinical documentation to meet even the strictest insurance requirements. Next, we’ll delve into how voice AI agents can simplify time-intensive tasks like benefit verifications, prior authorizations, and claim follow-ups. Finally, we’ll discuss how AI can ensure accurate billing by assigning the appropriate codes automatically. 

Together, these advancements are helping end the battles therapists face when working with insurance companies.

The role of AI in clinical documentation

By now, many of us have witnessed that generative AI is pretty darn good at stringing together lots of words. But we also know that it can hallucinate too, which means that it can introduce errors. Despite these hallucinations, a recent Nature Medicine study showed that AI often outperformed clinical experts in writing clinical notes. This isn’t surprising: folks enter the mental health profession expecting to spend the majority of their time helping make people’s lives better and certainly not to spend 25% of their time doing admin work.

Let’s be clear: documentation is important for many reasons including ensuring continuity of care, meeting legal and ethical obligations, and enhancing communication. But while the  documentation requirements of insurance companies may seem reasonable on paper, it adds a significant layer of administrative burden for mental health professionals. Documenting the intricacies of a session while ensuring compliance with constantly changing standards can turn into a time-consuming exercise in frustration.

For many clinicians, this additional workflow is not just cumbersome — it’s disruptive. Each hour spent fine-tuning documentation to satisfy insurance criteria is an hour taken away from patient care or personal well-being. Worse, even small errors in documentation can result in claim denials or payment delays, further compounding stress and financial strain.

This is where AI steps in to rewrite the narrative. AI-powered tools can analyze session details in real-time and generate clinical notes that are not only as accurate as human-generated notes but also aligned with stringent insurance requirements. These systems are trained to recognize patterns, terminology, and phrasing that meets any standard, providing therapists with peace of mind that their documentation is compliant.

By automating the most tedious aspects of documentation, especially when that documentation and the AI are integrated into an Electronic Health Record (EHR), therapists regain valuable time to focus on what matters most: their patients. And when claims are less likely to be denied, the financial stability of their practices improves, making it more feasible for them to accept insurance in the first place.

With AI, clinical documentation evolves from a source of frustration to a tool for empowerment, creating a foundation for a more sustainable and accessible mental health care system. 

Streamlining insurance interactions with voice AI

For mental health professionals who accept insurance, spending hours on the phone with insurers is often an unavoidable — and exhausting — part of their work. Therapists frequently find themselves navigating automated phone systems, waiting on hold, and engaging in circular conversations with insurance representatives.

According to a recent survey, clinicians spend an average of 12 hours per week on prior authorizations alone. And in one particularly striking example of insurance inefficiencies, one therapist reported making 45 calls to Cigna to get reimbursed for just one claim, losing an estimated $5,000 of wages from time spent on these calls. 

The administrative burden of these interactions isn’t just frustrating — it’s financially debilitating. Every hour spent managing insurance-related tasks is time that could have been used for providing care, growing a practice, or simply resting. For solo practitioners — who represent the majority of mental health practices and typically lack dedicated administrative support — the impact is even more pronounced, contributing to burnout and financial strain.

With voice AI, handling repetitive, time-intensive tasks, such as claims follow-ups can be a task of the past. Today, voice AI sounds uncannily human with a recent survey of 1,000 Americans showing that the majority think an AI voice is a human voice. And with lower latency in processing a conversation, voice AI systems will navigate insurer menus, capture necessary details, and even escalate complex cases to human staff when needed.

The potential for cost-savings are undeniable. Imagine a solo therapist who currently spends 10 hours a month on insurance-related calls. With voice AI, those hours could shrink to mere minutes, freeing up time for patient care or professional development. For instance, a voice AI system could automatically verify a patient’s benefits before their first appointment, ensuring clarity about coverage and out-of-pocket costs. Similarly, when a claim is under review, voice AI can track its status and notify the provider as soon as it’s resolved, reducing the need for follow-ups.

The advantages go beyond time savings. By ensuring accuracy in these interactions, voice AI helps reduce errors that could lead to disputes or claim denials. The result? More efficient practices, improved patient experiences, and a renewed focus for therapists on what truly matters: delivering high-quality care.

Ensuring accurate billing with AI

One of the most significant challenges mental health professionals face when dealing with insurance is the complexity of billing codes. Therapists must choose from a labyrinth of codes that reflect not only the type of service provided but also the nuances of insurance policies, which can vary widely between payers. These codes — such as CPT (Current Procedural Terminology) codes for psychotherapy sessions — must be accurate to ensure reimbursement. Adding to the difficulty, insurance companies frequently update their billing requirements, leaving clinicians to navigate shifting standards and potential pitfalls: for example, some insurers require adding what are called “modifiers” if the session is telehealth.

For many therapists, this complexity is more than an administrative headache; it’s a financial risk. Errors in coding can lead to claim denials, delayed payments, or even audits that require practices to refund payments already received — a process known as clawbacks. The constant need to “get it right” adds another layer of stress, especially for solo practitioners who lack dedicated billing support.

AI is an obvious answer to this lack of billing support for independent providers and can even assist group practices. By analyzing the length of the session, session notes, and clinical histories, AI can recommend the most accurate billing codes. This is not even a hard technical lift, as all that’s required are the insurers policies and access to an EHR. To understand the nuances of various insurance policies and match the appropriate codes to specific treatments. For example, if a therapist conducts a 60-minute individual psychotherapy session, the AI can identify and recommend the correct CPT code based on the session details and the insurance provider’s guidelines.

The impact of AI-driven billing is profound. By reducing errors in code assignment, therapists experience fewer claim denials and faster reimbursements. Accurate billing also mitigates the risk of audits and clawbacks, providing financial stability and peace of mind for clinicians. Moreover, automation streamlines the billing process, allowing therapists to focus on their core mission: providing care.

Imagine a small mental health practice where billing errors once led to a 15% claim denial rate. With AI handling code assignment, that rate drops dramatically, saving the practice thousands of dollars annually. Additionally, therapists can feel confident that their billing is compliant, regardless of changing insurance policies, which reduces the stress of navigating the administrative maze of insurance reimbursement.

By easing the billing process, AI not only addresses a persistent pain point for therapists but also creates a more efficient and financially sustainable mental health care system. It empowers providers to focus less on paperwork and more on delivering the care their patients need.

A better system for all

As a chief AI architect, it’s challenging to keep up with all these exciting technological developments. But it’s clear how much AI can help mental health professionals navigate the complexities of insurance, arming them with a set of assistants to take on the multi-billion dollar insurance companies while also running a successful practice. 

By automating clinical documentation, streamlining insurance communications, and ensuring accurate billing, AI will significantly decrease the administrative burdens that have driven many therapists away from accepting insurance. With these tools, therapists can reclaim their time, focus on their patients, and deliver the high-quality care that every individual deserves — all while maintaining the financial stability to thrive in their practices. 

Soon, the stories of spending full days catching up on notes or enduring hours of hold music will be relics of the past. I’m excited for the day to come when clinicians will be able to say that insurance doesn’t suck, that much.

Photo credit: Olga Strelnikova, Getty Images

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