Out-of-Network Billing For Mental Health Providers in California
Introduction
Running a private mental health practice in California is as rewarding as it is complex. While providers have more freedom to set their own fees and deliver patient-centered care, they also face one major challenge that can slow their growth — out-of-network (OON) billing.
For many therapists, psychologists, and psychiatrists across the state, dealing with insurance reimbursements, superbills, and patient balances feels like an endless administrative maze. Each payer follows its own reimbursement process. Patients often misunderstand how much they owe. And without a streamlined billing system, private practices risk unpaid balances and disrupted cash flow.
California’s strict payer regulations — including the No Surprises Act and AB 72 (California’s Balance Billing Law) — have further complicated out-of-network billing. These laws protect patients but also demand that providers maintain precise documentation, good faith estimates, and transparent financial policies.
In short, out-of-network billing is not just about submitting claims, it is about mastering California’s legal, ethical, and financial rules for getting paid correctly and on time. That is why many independent providers now partner with professional mental health billing services in California to handle their superbills, claim submissions, and balance collections with accuracy and compliance.
Understanding Out-of-Network Billing for Mental Health Providers in California
For most mental health providers in California, understanding out-of-network (OON) billing is the first step to managing a financially healthy private practice. Unlike in-network providers — who sign contracts with insurance companies and agree to their rates — out-of-network providers set their own fees and allow patients to seek reimbursement directly from their insurance plans.
In simpler terms, out-of-network billing means that the provider is not under a contract with the patient’s insurance and the patient pays upfront or receives an invoice i.e. superbill (details about super bill for patients), which is then submitted to their insurance for partial reimbursement. This model gives California therapists, psychologists, and psychiatrists more flexibility — but it also introduces complex administrative work. Each payer has its own reimbursement rules, timelines, and claim submission criteria. Without a structured process, out-of-network billing can lead to lost reimbursements, delayed payments, or billing disputes. According to the California Department of Managed Health Care (DMHC), patients using out-of-network behavioral health services may receive reimbursement ranging from 50%–80%, depending on their plan, deductible, and documentation accuracy.
Why Many California Providers Choose to Stay Out-of-Network
California’s mental health professionals — particularly in high-demand areas like Los Angeles, San Diego, and the Bay Area — often remain out-of-network for two key reasons:
Flexibility and Fair Compensation
Providers can set rates that reflect their expertise and time investment, rather than being restricted by low in-network reimbursement schedules.
Simplified Operations
By avoiding insurer contracts, providers can reduce administrative overhead tied to authorizations and rate negotiations — focusing instead on quality care.
However, this independence comes with the responsibility of ensuring accurate superbills, patient communication, and reimbursement tracking — something many private practices underestimate.
How California’s Laws Impact Out-of-Network Billing
California has some of the most patient-protective billing laws in the nation — and these apply directly to out-of-network providers.
- AB 72 (California Balance Billing Law):
Prohibits surprise billing when a patient receives care from an out-of-network provider at an in-network facility. Mental health providers working in hospitals or group settings must understand when this applies. - No Surprises Act (Federal):
Requires all out-of-network providers to give Good Faith Estimates (GFEs) before treatment, clearly showing expected costs. - Good Faith Communication:
DHCS encourages providers to give written explanations of out-of-pocket costs, reimbursement expectations, and payment timelines before beginning care.
Failure to follow these laws can lead to claim rejections or patient disputes, even when services are clinically valid.
The Role of Superbill Reimbursement in CA
A superbill acts as the bridge between private practices and insurance companies. It includes all the details insurance payers need to process a claim — CPT codes, diagnosis (ICD-10) codes, NPI number, service dates, and charges. Submitting accurate superbills helps patients in getting paid faster, avoiding multiple resubmissions and maintaining a postive relationship with their provider.
Many California mental health practices now use billing services like MedStates to automate superbill creation and ensure all claims meet medi-cal payer compliance standards for mental health providers.
How to Bill for Out-of-Network Mental Health Services in CA
Billing for out-of-network mental health services in California requires accuracy, consistency, and a clear understanding of how different insurers process claims. Providers who are not in contract with the payer, every step from superbill creation to payment posting must be handled carefully to ensure patients receive their reimbursements smoothly.
1. Create a Complete and Compliant Superbill
A superbill is the most essential document for out-of-network billing. It serves as an itemized invoice that your patient submits to their insurance company to claim partial reimbursement.
A complete superbill should include:
- Provider and practice details (NPI, Tax ID, address).
- Patient name and date of service.
- CPT code(s) for the session (e.g., 90791 for initial evaluation).
- ICD-10 diagnosis code(s).
- Service charge and payment received.
- Provider signature or digital authentication.
Tip: Use consistent codes and descriptors — insurers often deny claims when CPT or diagnosis codes mismatch across sessions.
2. Help Patients Submit Claims Efficiently
Since patients, not providers, submit superbills to insurance companies for out-of-network reimbursement, clear guidance can make a major difference. Encourage patients to:
- Check their out-of-network mental health benefits before scheduling sessions.
- Keep receipts and superbills organized by date.
- Submit claims within their plan’s filing deadline (typically 90–180 days).
Many providers include a “superbill submission guide” with each invoice, reducing confusion and ensuring faster reimbursement for patients. Adding this small, proactive step strengthens both patient satisfaction and cash flow predictability.
3. Track Payments Using ERA and EOBs
Once the patient’s insurer processes their out-of-network claim, they will issue an Explanation of Benefits (EOB) detailing what was covered, denied, or applied to the deductible. Read our detailed guide on what an EOB is and how it works in medical billing.
If you accept direct payment from the insurer, you will also receive an Electronic Remittance Advice (ERA) for posting and reconciliation.
To maintain accuracy:
- Match ERA data with session notes and payment logs.
- Record adjustments or patient balances promptly.
- Keep a digital copy of each EOB for tax and audit readiness.
Outsourced medical billing companies in the USA can automate this process, ensuring every payment aligns with your CPT coding and patient ledger.
4. Avoid Common Out-of-Network Billing Errors
Even experienced private practitioners in California encounter billing issues like:
- Missing or incorrect diagnosis codes.
- Failure to include NPI or Tax ID.
- CPT mismatch with therapy duration.
- Unclear patient responsibility on superbills.
Double-check every superbill before releasing it. A five-minute review can save weeks of claim reprocessing.
How to Handle Patient Balances in California OON Billing
When it comes to collecting payments from patients, mental health providers in California must balance financial responsibility with compassion and compliance. Even when youare billing out-of-network, ethical billing practices and transparency are non-negotiable — especially under California’s patient protection laws.
1️⃣ Understanding Balance Billing in California
In simple terms, balance billing occurs when a provider bills the patient for the difference between their full fee and what the insurance reimburses. While this is allowed in many private practice settings, California law imposes clear limits to prevent unfair or “surprise” charges.
Key regulations affecting mental health providers:
- California AB 72 – Prohibits surprise billing when an out-of-network provider treats a patient at an in-network facility without notice.
- Federal No Surprises Act (NSA) – Requires providers to issue Good Faith Estimates (GFEs) before delivering care to self-pay or out-of-network patients.
- California Department of Managed Health Care (DMHC) – Enforces rules ensuring patients receive transparent fee disclosures for all behavioral health services.
For solo or small-group practices, these rules mean you can balance bill, but only with:
- Prior written disclosure of rates and coverage gaps.
- A signed Good Faith Estimate or informed consent.
- Documentation that the patient voluntarily chose an out-of-network provider.
Example: A psychologist offering virtual therapy to a Los Angeles client can charge their private rate if the client was informed up front that the session is not covered in-network — and agreed in writing.
2️⃣ Establishing a Patient Payment Policy That Builds Trust
Your billing process should make payment expectations clear from the first contact. This doesn’t just protect your revenue — it reduces misunderstandings that damage patient relationships.
Key elements of an effective mental health payment policy:
- Provide written fee schedules and payment options before the first session.
- Include Good Faith Estimate forms for self-pay clients.
- Offer multiple payment methods (credit card, HSA, online portal).
- Use automated reminders and digital receipts to maintain professionalism.
A concise, clear policy is your best protection against complaints or disputes. It also supports compliance if a payer ever questions your billing practices.
Tip: Document every discussion related to cost, coverage, or reimbursement — even if the patient pays in full at the time of service.
3️⃣ Communicating About Costs with Empathy
Money conversations can be uncomfortable in therapy, but patients appreciate honesty. Explaining insurance reimbursement limits early fosters trust and avoids confusion later.
When discussing fees:
- Avoid jargon; use patient-friendly language like “insurance may cover part of this fee.”
- Reinforce that your goal is accessibility, not profit.
- Be proactive about reimbursement — offer a superbill or instructions for claim submission right after payment.
4️⃣ Legal Documentation and Recordkeeping
To stay compliant with both California and federal regulations, always:
- Retain signed Good Faith Estimates for at least three years.
- Keep documentation of all payment discussions and consent forms.
- Store all billing communication securely under HIPAA.
- Ensure that any billing staff or outsourced team follows DMHC and HHS guidance for surprise billing compliance.
This recordkeeping not only meets audit requirements — it demonstrates professionalism and transparency to patients and insurers alike.
5️⃣ When to Seek Billing Support
If managing compliance, patient communication, and documentation is overwhelming, outsourcing may be the most practical path. Experienced billing teams understand the nuances of California’s behavioral health payment laws, from balance billing to Good Faith Estimate tracking. They ensure that your patient payment processes stay compliant, ethical, and efficient.
Our Professional Billing Services for California Private Practices
Billing for independent therapists and behavioral health providers in California is the most time-consuming and frustrating part of running a private practice. From handling superbills to managing unpaid balances and insurance follow-ups, the process can easily overwhelm clinical teams — and limit growth. That’s where professional mental health billing companies in California make the difference. A specialized billing service brings expertise, automation, and compliance knowledge tailored to the state’s payer environment — ensuring your practice gets paid faster, cleaner, and with less stress.
1. Comprehensive Support for Out-of-Network and Private Pay Clients
2. Reducing Denials and Accelerating Reimbursements
3. Streamlining Administrative Workflows
4. Improving Financial Transparency and Reporting
5. Strengthening Patient Trust Through Ethical Billing
6. Turning Billing from a Burden into a Business Advantage
For California’s private mental health providers, billing no longer has to be a barrier to growth. With patient protections tightening and payer rules evolving, managing out-of-network mental health billing in California demands precision, compliance, and consistency. At MedStates, we help independent therapists, psychologists, and behavioral health groups in California simplify their entire billing process — from verifying benefits and managing superbills to posting payments and resolving denials. Our local expertise, data-driven approach, and commitment to ethical billing make us one of the most trusted mental health billing companies in California. Ready to streamline your revenue cycle and focus on care?
👉 Contact MedStates — Your California partner for accurate, compliant, and stress-free behavioral health billing.
