What to Do With Insurance Company Therapy Denials

As a psychiatrist-psychoanalyst, I've witnessed how insurance barriers to psychotherapy impede patient recovery and directly interfere with the therapy process. While I recognize insurers' need to verify necessary care and their public image of patient concern, the reality differs significantly. The increasing presence of a third party in the consulting room, as insurance issues loom, has disrupted the clinician-patient relationship, once held almost sacred. Mental health stigma, lack of parity despite legislation, and the employment of different insurance company business units for physical and mental health make the situation even more convoluted.

Patients with high premiums routinely face obstacles: endless phone calls; inconsistent representatives who, while well-intentioned and heartfelt, are in the same boat of being unable to move things along; missed callbacks; denials despite meeting criteria; lengthy response times; and reviews by questionably qualified clinicians who won't disclose credentials. And, for clinicians, it's equally hard to get credentialed to be in-network and complete tasks required for patients to get what they are due.

During these delays, therapy patients experience anxiety about costs, distraction from treatment, and distress from feeling dehumanized in a process that disempowers both them and their therapists. Many patients also feel retraumatized by the failures and the sense of betrayal. Clinicians struggle to advocate for patients while facing suggestions that they're primarily concerned with compensation. Though fraud exists and not all therapists are exemplary, the majority operate in good faith. People commonly opine that insurance companies stand to gain in interest by holding onto money as long as possible.

I was therefore pleased to learn about Cover My Mental Health's updated resources for therapy. CMMH is a not-for-profit founded by mental health advocate Joe Feldman that offers new resources for navigating therapy insurance challenges.

Grant H. Brenner: What’s new at Cover My Mental Health?

Joe Feldman: Grant, thanks for checking back in.¹ Since we first talked about Cover My Mental Health, there have been some important new developments.

As your readers may remember, Cover My Mental Health is a nonprofit supporting patients, their families, and clinicians facing insurance obstacles to mental health and substance use disorder care. We offer a range of no-cost, immediately actionable resources.

One of the most confounding insurance obstacles is a denial or a delayed and never-coming prior authorization. After all, logic would tell you that the clinician taking care of the patient, from initial evaluation through treatment and any evolutions, and on recovery, would be the most reliable expert for determining which care is required.

So over the last several months, Cover My Mental Health has developed some new resources, particularly focused on helping clinicians so they can help their patients.

GHB: I'm very familiar with medical necessity letters, particularly as a TMS (transcranial magnetic stimulation) psychiatrist. Can you define it for readers?

JF: “Medical necessity” is a legal term that you will find somewhere in the dozens, maybe hundreds, of pages of a health insurance policy. Any policy I have seen states that the insurance covers only care that is “medically necessary.”

Of course, clinical training is all about care that is “safe and effective” and the application of generally accepted standards.

So when the clinical training of “generally accepted standards” does not line up with an insurer’s own definition of “medically necessary,” that is when you might find an obstacle to care.

I first encountered this years ago when our daughter required residential care, and our insurer denied coverage as “not medically necessary.” With a letter from her clinician documenting that the care was medically necessary and that her clinician had the training and practice to make that decision, we won a federal lawsuit against our insurer. The judge agreed that the care was medically necessary after all.

GHB: This seems like a distinction that clinicians should know about. What does Cover My Mental Health do to help deal with this?

JF: One of the most important resources available on our website is a template medical necessity letter.² We provide instructions for preparing such a letter and example language that can be used and adapted by a clinician to meet the particular circumstances of their patient.

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Two important developments over the last few months at Cover My Mental Health relate to our resources related to medical necessity letters.

Because many clinicians may be unfamiliar with medical necessity letters, we developed a one-page summary of best practices for medical necessity letters. It may be worth a look at it on our website. The principle is that these letters provide an opportunity for clinicians to document their training and judgment either in response to an insurer’s denial or even in anticipation of one—that is, where there might be disagreement between generally accepted standards and the legal term “medical necessity.”

GHB: You mentioned two new developments. What’s the second one?

JF: Back in November 2024, ProPublica³ reported that therapists may encounter an insurance “company representative with the Orwellian title 'care advocate' [who] would call and grill them about why they’d seen a patient twice a week or weekly for six months.”

On reading this, I could only think that this was a particular matter of determining whether the frequency of therapy was medically necessary (judged by the insurer) and/or appropriate based on the training and assessment of the clinician.

Of course, professional guidelines and expert consensus support the value of therapy with frequency and duration suited to supporting a patient toward recovery and maintenance of day-to-day functioning.

With that in mind, Cover My Mental Health now offers a template medical necessity letter specifically to respond to insurer inquiries about the frequency of therapy meetings. This new resource might prove valuable for any clinician with an outpatient practice.

GHB: Do you have anything else to share?

JF: For now, these are the most important developments that I wanted to talk about. We are always interested in learning more from clinicians about the challenges they face with insurers.

With that in mind, we welcome stories of challenges faced and (hopefully) challenges overcome with our resources. People can reach out to us directly⁴ to anonymously share their stories related to care. These can help us to better support clinicians and improve access to patient care and insurance coverage.

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