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5 tips for billing psychological testing services

Psychological testing is a critical component of patient assessment and treatment planning. However, accurate billing and compliance with applicable plan, federal and state requirements are essential to avoid claim denials, audits, or reimbursement issues. Providers should take proactive steps to verify benefits, bill correctly, and ensure that appropriate providers render services.

1. Verify plan benefits and authorization requirements

Before providing psychological testing services, always verify the patient’s insurance benefits. Prior authorization may be required for psychological testing to determine medical necessity and allowable testing hours. Make sure to:

• Check plan-specific requirements to confirm if authorization is required.
• Obtain prior authorization if necessary, ensuring approval for the correct number of testing hours.

2. Bill the correct number of units

Each psychological testing procedure code includes specific guidelines for billing. Make sure to:

• Follow the procedure code descriptions to bill the appropriate number of units.
• Ensure time-based codes reflect actual service duration, as many psychological testing codes specify billing in hourly increments.
• Use accurate documentationto support billed services, including test administration, scoring, and interpretation.

3. Ensure the provider conducting testing meets the requirements

Some states or plans may have specific criteria for who can perform and bill for psychological testing. To ensure compliance:

• Confirm the provider’s credentials align with plan requirements, e.g., licensed psychologists, neuropsychologists, or supervised technicians where allowed.
• Use the correct service provider name of the provider who rendered the service or supervised the technician.
• Ensure appropriate supervision if non-licensed staff assist with test administration, following plan and state regulations.

4. Review reimbursement and billing requirements

Review your Magellan reimbursement schedule for covered testing procedure codes.

Become familiar with The American Psychological Association’s 2024 Psychological and Neuropsychological Testing: Billing and Coding Guide (PDF) that provides essential comprehensive billing and coding guidance, including:  

• Recommended test types for specific conditions
• Allowable testing hours per test
• Documentation and coding best practices

5. Follow copayment guidance

Although psychological testing is billed in timed units, generally one copayment applies per date of service.

Key takeaways for providers:

• Verify plan benefits and obtain prior authorization if required.
• Bill the correct number of units based on the procedure code description.
• Ensure the correct provider renders and bills for services.
• Review reimbursement schedule for covered testing procedure codes.
• Follow copayment guidance, i.e. typically one copayment per date of service.

Staying informed about psychological testing requirements and best practices ensures compliance, minimizes claim denials, and supports high-quality patient care. If you have questions about specific policies, consult your provider contract or reach out to your Magellan Network representative for guidance.

Where to find more information about guidelines and authorization for psychological testing:

• Find Magellan’s policy on psychological testing is available in Section 3 of Magellan's National Provider Network Handbook (PDF).
• There may be state or contract specific nuances in the applicable provider handbook supplements.
• Review Magellan’s medical necessity criteria, including Magellan Care Guidelines (PDF), which contain guidelines for psychological testing.
• Access information about requesting authorization for psychological testing.
• If you have additional questions regarding our audit/investigation processes of psychological testing services, contact the SIU via email (SIU@MagellanHealth.com) or via our hotline 1-800-755-0850 (you can remain anonymous).