Insurance companies require good documentation to reimburse for services. But even if you have a completely cash based practice, you need good documentation. Learn all the reasons why good documentation is important for a successful practice.

When I started my practice, I was unsure how much documentation was required. A friend of mine told me that I didn’t have to document anything. She said that someone in private practice told her that it is her business and she can run it how she likes. I was a little suspicious of this advice and I’m glad I didn’t follow it. It just isn’t true. Just because it is my business, doesn’t mean I can do anything I want. I still have to have a license, keep accounting books and pay taxes. So why wouldn’t I still have to document everything?

The truth is that if you take insurance, you have to document. All insurance companies require documentation. If an insurance panel has credentialed you and you accept money from them for seeing clients, they can audit your records. They have this right to protect themselves from fraud. Without documentation, therapists could claim to see the client and receive payment fraudulently. The insurance can ask for payments back and they can suspend or terminate your credentialing. This is why you never bill for no-show clients. If you didn’t see them, you don’t bill for it. Insurance companies and the law call this fraud.

If you are audited and there are not progress notes for sessions that were billed, the insurance company can ask you to return the payment for those sessions.

While you do need to document, you don’t have to obsessively worry about it. You won’t have that many clients from each insurance so they are unlikely to take the time to audit you. I have a colleague who was only audited once in 20 years and that was after the death of a client. I have yet to be audited but I figure it will probably happen at some point.

Even if you have a cash based business, there are still reasons to document. Check out the following list for some reasons to keep good documentation.

Why do you need Good Documentation?

  1. Verify you are doing your job
  2. Track progress
  3. Justify interventions
  4. Make it clear why clients are in therapy
  5. Protect yourself from lawsuits
  6. Disprove harm to client
  7. Justify terminating clients
  8. Disprove abandonment
  9. Requests for medical records or evaluation letters
  10. HIPAA compliance

Your documentation needs to be done carefully. The insurance companies and clients want to know they are getting what they paid for. They are paying for a professional service and they expect quality. Progress notes must show the progress the client is making. They have to be goal oriented. Treatment plan goals need to be specific and time oriented. They want you to use evidenced based treatments. They should show that sessions are structured and that they accomplish something. We aren’t being paid to just listen to clients complain about their lives. They want to know you are doing something.

Don’t panic if your documentation isn’t perfect though. No therapist can be perfect. When insurance companies audit clinicians, the auditors are being paid to find something that can be improved. If you look hard enough, you’re bound to find something. As long as documentation isn’t blatantly missing, they will most likely tell you how you can improve. Make the adjustment they ask for and the next audit will go smoother. I’ve also found that different auditors sometimes want things different ways. You can always clarify if one auditor tells you to do something one way and another one says something different. We deal with subjective concepts so they can be interpreted different ways.

Even if you don’t take insurance reimbursement, there is always the chance a client could claim you did something wrong. You can be the best therapist in the world and still a client could perceive something you did as unethical or unprofessional. We deal with people who have mental illnesses. Their perception can be irrational at times. Good documentation will back up your actions and protect you from lawsuits. A simple termination of a client who has canceled appointments and not been to therapy in a month can be interpreted as abandonment by the client.

There are also many incidents that can arise when clients may request their records or a letter for another professional. Clients sometimes ask for proof of therapy or portions of their records for their probation officer, a disability claim, their lawyer, court, etc. If you fail to keep good records, it can be difficult to provide this. I think it would look unprofessional if you couldn’t provide at least some documentation of what has occurred.

Every medical health provider needs to be HIPAA compliant. This means having some documentation that you have explained a client’s rights and the responsibilities of the provider. Without documentation, there is no way to be sure a provider is HIPAA compliant.

While documentation can take up a lot of time and isn’t much fun to do, it is a necessary part of professional therapy. Keeping good records of client progress and your observations can save you a lot of time and frustration in the long run. If you manage documentation well, it can be done in between sessions while it is fresh in your mind. Treatment plans can be updated with the client. And you can spend an hour a week reviewing all charts to be sure everything is in order.