Incident to billing in mental health: What physicians and other clinicians need to know about compliance and reimbursement

I have seen it time and again in my work with mental health practices: A simple billing mix-up can turn into a nightmare of denials and audits. That’s why getting incident to billing right isn’t just a nice-to-have — it’s a must for keeping your practice afloat. Right now, about 70% of health care billing outfits handle mental health claims, whether from a big clinic or a solo doctor juggling sessions. But those CMS guidelines on incident to? They dictate everything from how your claims sail through to whether you dodge a recoupment bullet.

Why it’s hitting harder these days

Insurers aren’t playing around anymore. Optum and UnitedHealthcare are rolling out these “risk matrices” to identify practices that might trip up on incident to — think of it as a red flag system for audits. And CMS? They have improper incident to payments squarely in their crosshairs for 2025 reviews, which means one sloppy claim could cost you big. We’re talking denials that stack up fast, headaches during credentialing renewals and those dreaded clawbacks that hit months later. It doesn’t matter if you are doing in-person therapy or Zoom follow-ups — the rules apply across the board.

In mental health, where demand is skyrocketing but staffing is tight, ignoring this issue is not an option. I have helped practices recover tens of thousands of dollars after audits, and the common thread? They skipped the basics on supervision or documentation. Get ahead of it, and you will protect your revenue while scaling up.

The basics of incident-to billing

At its core, incident to lets you bill services under a supervising physician’s or qualified nonphysician practitioner’s (NPP) National Provider Identifier (NPI) — as long as it is tied to their overall treatment plan for diagnosis or ongoing care. It sounds straightforward, but the fine print is where most people stumble.

Here’s what you must have:

1. A solid initial plan: Your supervising clinician — the physician or NPP — has to do the first evaluation themselves and lay out the treatment road map. No shortcuts here.

2. Ongoing engagement: They can’t just hand off and vanish. Regular check-ins keep them in the loop on the patient’s progress.

3. The right level of supervision: For most behavioral health work, general supervision does the trick — you are available by phone, but there's no need to hover in the room. It is a relief in busy practices.

4. Stick to established patients: New faces or fresh issues? The supervisor handles those personally. Incident to is follow-up territory only.

5. A locked in team: Everyone delivering services has to be a licensed, contracted employee operating squarely within their state scope — no freelancing outside the lines.

Those providing such services don’t need their own Medicare enrollment if they are billing incident to, which opens doors for therapists and counselors. But nurse practitioners (NPs) or physician assistants (PAs)? They still have to enroll, period. Picture this: A psychiatrist sets up an attention-deficit/hyperactivity disorder (ADHD) medication plan, then a PA takes the reins on adjustments under that umbrella. It is efficient, but only if the stars align on compliance.

Who can do what — and where telehealth fits in

Medicare’s green light covers psychological services under incident to, as long as state laws back it up. But remember, you can’t supervise something outside your wheelhouse. A nurse midwife billing for therapy sessions? That’s a nonstarter — scopes don’t overlap like that.

Telehealth has been a game-changer here, especially post pandemic. Medicare has dialed back to general supervision for remote mental health, meaning your supervising doctor can be states away, just a call from review notes. The big news: Those direct supervision flexibilities via live video? Extended through Jan. 30, 2026, with behavioral health getting ongoing carve-outs even after. It is a lifeline for rural practices or those with hybrid models.

State rules add another layer — check yours religiously. Take New York: Psychiatrists can supervise licensed master social workers or other mental health professionals, but it’s about ensuring qualified oversight, often clocking in at least one hour weekly per supervisee, with no hard cap on total numbers but plenty of emphasis on direct involvement. I have seen practices grind to a halt over mismatched state regulations, so verify before you hire.

Documentation: Your best defense in an audit

Auditors don’t care about good intentions — they want proof in black and white. Your charts need to scream compliance, or you are toast.

Key must-haves:

• The supervising clinician’s initial assessment, history and any labs.
• Signed and dated notes from every visit.
• Their full name and how you looped them in (e.g., “Discussed via secure portal”).
• Clear ties to the plan, such as: “Patient’s anxiety stable; continuing cognitive behavioral therapy per Dr. Lee’s June 12 plan. Dr. Lee signed off today.”
• Status on each issue — better, same or sliding?
• Reviews every few visits, with signatures in under 48 hours.

Commercial payers are copying Medicare’s playbook on this, so one-size-fits-most documentation works wonders. In my experience, templating these elements in your electronic health record saves hours and headaches.

How payers shake it up

Medicare is the gold standard: Bill under the supervisor’s NPI, hit 100% reimbursement if you’re buttoned up — no SA modifier required, just nail the NPIs. Medicaid is patchier — grab that SA modifier for NPs and U7 modifier for PAs in most states, but some flat-out nix incident to and demand own-credential billing.

Commercials? Buckle up — it’s a patchwork

• Aetna: They floated an 85% cut for SA-billed services early in 2025 but walked it back by April, sticking to 100% for compliant setups.
• Cigna: No love for traditional incident to. Expect NPs and PAs to bill under their own NPI with SA, and you will get 85% either way.
• Anthem Blue Cross Blue Shield: If your clinician has an NPI, bill under it — incident to under the boss only if they can’t submit directly. SA modifier mandatory, 85% typical pay.
• UnitedHealthcare: More forgiving — they OK incident to under the supervisor with SA, with full 100% reimbursement when criteria click.

Nailing the billing side

Paperwork is where it all comes together. On a CMS 1500 form for solo setups: Slot the physician into Items 17 and 33, NPIs in 17b and 33a — same person, clean and simple.

In groups: Ordering provider in 17/17b, supervisor’s NPI in 24J, your group’s details in 33. Crystal clear for reviewers.

Telehealth tweaks? Minimal — same incident to rules, and video counts for direct supervision through early 2026. Just document the tech setup to show you met the bar.

Steps to lock it down

Don’t wait for an audit notice. Start with the following:

• Credentialing push: With shortages in mental health, get your NPs and PAs paneled ASAP — they are gold for insurance patients.
• Payer deep dives: Double-check policies before every claim batch. Print and file those PDFs; they are audit armor.
• Note templates: Build in prompts for supervisor nods and plan links — consistency is king.
• State scrub: Hit up your education department for the latest on supervision ratios and scopes.
• Modifier mastery: SA for incident to NPs, AF for psychiatric services and AG elsewhere. They are not rate-killers, just trackers.

Wrapping it up

Incident to billing in mental health is a juggling act — federal rules, state quirks and payer whims. But with audits ramping up and tools like artificial intelligence flagging risks, now’s the time to tighten your game. Invest in credentialing, bulletproof docs and policy checks, and you will not only dodge pitfalls but fuel growth in this booming field. I have watched practices transform from audit weary to revenue strong by nailing these details. Compliance isn’t sexy, but it is the quiet hero keeping doors open.

Olga Khabinskay is director of operations at WCH Service Bureau, a national health care practice management services company that provides billing, coding and credentialing as well as provider technology services. She is also a board member of the Healthcare Business Management Association (HBMA).