by: Mary Riemersma,  Former Executive Director
      (with input from Richard Leslie, Of Counsel)
The California Therapist
(March/April 2001)

Updated December 2009 by Ann Tran, JD, (CAMFT Staff Attorney)
Reviewed October, 2017 by David G. Jensen, JD (CAMFT Staff Attorney)

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Members often ask this question or ask for a resource to guide them in understanding what is insurance fraud and what is not insurance fraud. It is unlawful to knowingly file multiple claims for the same loss or injury with more than one insurer with intent to defraud the insurer. ¹Additionally, it is unlawful to knowingly prepare, make, or subscribe any writing, with the intent to present or use it, or to allow it to be presented, in support of any false or fraudulent claim.² A violation of this section is punishable as a felony.³ Section 4982 (j) of the Business and Professions Code (the LMFT licensing law) provides that unprofessional conduct includes "the commission of any dishonest, corrupt or fraudulent act substantially related to the qualifications, functions, or duties of a licensee or registrant."

In light of the above, let us discuss some common practices of health care professionals which insurance companies may view as fraudulent. Some of these practices have become so commonplace that many health care practitioners forget that what they are really doing is misrepresenting their services to insurance companies solely for the purpose of getting reimbursed. Following are some of these often- asked questions and their answers.

Q. When I submit a claim I use only the diagnoses of anxiety or depression because I know insurance companies will pay for these diagnoses. Is there any problem with that?
A. Of course there is no problem if indeed the patient's diagnosis is anxiety or depression. But, there is a serious problem if you misrepresent the diagnosis. You should not name a diagnosis solely for the purpose of expediting or guaranteeing reimbursement. In all instances, it is necessary to accurately inform the insurance company of the disorder which you are treating.⁴

Sometimes members call and ask, “what diagnosis do I use to get paid?” Again, let us emphasize, use only the diagnosis which is appropriate to the disorder. If the insurance company pays, great. If they do not, you can, of course, argue for reimbursement on the merits of each case.

Sometimes a mental health practitioner may experience a denied claim simply because the problem being treated is not "a mental disorder."

For example, you see a couple for marriage counseling to help them improve their communication. In such a situation, you should not submit a claim giving a falsified diagnosis of some mental disorder just so you or your patients receive reimbursement. Insurance generally pays for sickness, illness or injury— e.g., the diagnosis and treatment of a mental disorder.

Q. My patient's insurance company has changed and the new company will not pay because of the “pre-existing condition” clause. Is there a problem if I change the diagnosis so that she is able to get reimbursed?
A. Similar to the previous question and answer, it is inappropriate to change a diagnosis solely for the purpose of expediting or guaranteeing reimbursement. A diagnosis should not be changed unless a mistake was made in the original diagnosis or unless the patient's condition has changed, thus warranting a change in diagnosis. Expect to provide written clinical support to the insurance company to substantiate any change made in a diagnosis. Also, expect that such a change could cause them to be suspicious and to ask questions, which you would need to clarify with good clinical arguments justifying the change.

Q. Is it okay to see a couple and to bill both partner's insurance for “individual therapy?”
A. As a result of the most recent revisions of the CPT (procedure) codes, there no longer is a CPT code for "individual therapy." It is always necessary to accurately describe the type of treatment that was provided. The procedure codes 90834 and 90837 allow for the inclusion of another person or persons in a given session with the identified patient. Alternately, CPT code 90847 designates that the treatment modality utilized was conjoint family therapy with the patient present; Code 90846 designates conjoint family therapy without the patient present. In circumstances where a diagnosis is inapplicable to either client, insurance will not, as a general rule, reimburse for the services provided, as insurance is intended to provide reimbursement for the diagnosis and treatment of a mental disorder. (EAP benefits, by contrast, do not generally require the assignment of a diagnosis as they are not considered to be a type of health insurance). It is illegal and unethical to assign a diagnosis to any person unless he or she meets the criterion for the diagnosis in question.

Q. I don't want the patient to know, or the patient does not want the insurance company to know, because the employer might discover, the real diagnosis. Is it okay in these situations to use a similar but lesser diagnosis?
A. The answer, of course, is no. The diagnosis that most correctly identifies the patient's problem should be the diagnosis submitted to the insurance company. The diagnosis given should inform the insurance company of the disorder being treated. Discrepancies between your records, your treatment and what is billed could create problems for you. Don't permit your patient to manipulate your good judgment. If the patient is concerned about the employer's reaction to a diagnosis, should the employer be so informed, then it is up to the patient to decide not to submit the claim for third party reimbursement. As well, the patient should be informed about the nature of his/her diagnosis. Likewise, the patient should be informed and be permitted to give knowing consent to the treatment for the diagnosis.

Q. Is it okay to bill an insurance company for a missed appointment?
A. As a general rule, insurance companies do not provide reimbursement for missed appointments. That is why many, or most therapists, have a policy which states that the client is responsible for payment for sessions which are not cancelled at least 24 hours in advance. However, in order to charge a client for missed appointments, it is necessary to inform the client, in advance, of the fact that such a policy exists and that he or she is expected to provide payment in the event of failure to provide the required notice. ⁵

Q. Is it okay to have my supervisor sign an insurance claim form even though he or she did not provide the services?
A. Even though the answer should be clear, this question is often asked. And, of course, the answer is absolutely not. When the provider of services is different than the signer and the provider is not indicated, the claim form could be considered fraudulent. An exception may be when all claims for an entity which provides counseling or psychotherapy are submitted under the signature of the "clinical director." Insurance companies are generally aware that "clinical directors" are not the providers of service. The insurance company, in this instance, can always ask for further clarification regarding the name and license designation of the provider of services. The provider, or the insured, is also free to contact the insurance carrier prior to rendering services, to inquire whether the carrier is willing to reimburse for services provided by a pre-licensed clinician. If a supervisor elects to sign an insurance claim form, it should be clearly indicated that the registered associate was the provider of services.

Q. My patient can't afford to pay his/her portion of my fee. Is it okay if I waive, in advance, the patient's portion of the fee?
A. The answer is no. Insurance is based upon a co-payment system to have the patient, in addition to the insurance company, exercise some responsibility in controlling health care costs. Waiving the patient's portion in advance may be considered to be a breach of the provider's contract with the carrier (if the provider is "in-network"), or potentially misleading the carrier.

Q. Is it okay to bill for other services such as reports, treatment plans, consultations with other health care practitioners, etc.?
A. Often, insurance companies will deny reimbursement of such charges, but there is no problem with billing an insurance company for these services as long as appropriate procedural codes are used. The use of a CPT code such as 90834 or 90837 to identify such services is not appropriate and could be considered to be insurance fraud. Let me state again that it is less costly to forego reimbursement than it is to defend against a claim of insurance fraud. If you do charge for such services, make sure that the responsibility to pay is clarified with the patient at the commencement of therapy.

Q. Is it okay to charge my patients who have insurance a higher fee than I charge patients who do not have insurance?
A. No, you should set and charge the same fee for all patients regardless of insurance. This does not mean that you cannot lower your fee for patients who are financially needy. However, anytime the fee is lowered, the insurance company should also get the advantage of the lowered fee. For example, if you lower your fee from $80 to $40 because a patient is financially needy, the amount billed to the insurance company should be based upon the $40, rather than $80. If the insurance company reimburses at the rate of 50 percent and the patient is responsible for 50 percent, each will pay $20. If you billed at $80 with full knowledge at the time of billing that the patient is not going to pay his/her share, that is the same as waiving the co-payment, as discussed earlier.

This does not mean, however, that you cannot forgive outstanding balances. If the patient does not pay, or states that he or she is unable to pay you the amount owed, you may decide to forgive the debt. This practice is acceptable as long as the debt is not waived prior to or at the commencement of treatment. It should also be clear that this practice does not occur with every patient, and that the decision to forgive the outstanding balance is based upon your appraisal of the client's financial circumstances.

Q. Are there any other situations in insurance billing that therapists should avoid?
A. Billing for unperformed services is clearly fraudulent. For example, billing insurance companies for certain psychological tests which are not performed is fraudulent. And, of course, billing for more sessions than occurred is fraudulent. In addition, billing multiple insurance companies, where the patient has more than one coverage, without informing each insurance company about other coverage is also fraudulent.

Do not allow yourself to be misled or manipulated by your clients into engaging in a fraudulent billing practice. You are the therapist, the one in control of the situation and you should be the role model. The costs to you as the therapist can be very great should you be charged with insurance fraud or some other violation of law.

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¹See California Penal Code Section 550(a)(2)
² See California Penal Code Section 550(a)(5)
³ See California Penal Code Section 550(c)(1)
⁴ 9.6, CAMFT Code of Ethics, Third-Party Payers: Marriage and family therapists represent facts regarding services rendered and payment for services fully and truthfully to third-party payers and others.
⁵ 9.3, CAMFT Code of Ethics, Disclosure of Fees: Marriage and family therapists disclose, in advance, their fees and the basis upon which they are computed, including, but not limited to, charges for canceled or missed appointments and any interest to be charged on unpaid balances, at the beginning of treatment and give reasonable notice of any changes in fees or other charges.