Why Insurance Keeps Denying Psychedelic Therapy Claims — And What You Can Do About It

 

A four-panel cartoon illustrates a woman’s frustration after her insurance claim for psychedelic integration therapy is denied. In panel 1, she holds a denial notice. In panel 2, she explains the use of CPT code 90837 to her therapist. In panel 3, the therapist notes the use of “psychedelic integration” language and cites insurer rejection for lack of medical necessity. In panel 4, the therapist and woman discuss improving the language and documentation to strengthen the appeal.

Why Insurance Keeps Denying Psychedelic Therapy Claims — And What You Can Do About It

Psychedelic integration therapy is gaining traction in the mental health world, thanks to mounting evidence that substances like psilocybin, ketamine, and MDMA—when paired with professional support—can lead to long-term emotional healing.

But let’s face it—what’s healing for the mind isn’t always easy on the wallet. One of the biggest barriers patients and providers face? Insurance claim denials.

Yes, that dreaded phrase that turns hope into headaches: “Your claim has been denied.”

We’ve all been there—whether it’s a phone call that ends with more confusion than clarity, or an email from your insurer that reads like a rejection letter from Harvard. The emotional toll can be just as frustrating as the financial one.

In this article, we’ll explore the latest patterns behind those denials, the reasons behind them, and what therapists and patients can do to get ahead of the curve.

πŸ“Œ Table of Contents

1. What Is Psychedelic Integration Therapy?

Psychedelic integration therapy is not about tripping in a therapist’s office. It’s a therapeutic approach that helps patients make sense of their psychedelic experiences—whether from legal ketamine clinics, clinical trials, or underground journeys—with the aim of long-term healing.

Most therapists offering this service are licensed psychotherapists, but billing for integration sessions is tricky. While the session itself might look like regular therapy, the psychedelic context can raise red flags for insurers.

Why? Because psychedelics are still Schedule I substances under federal law (except ketamine), which makes insurers nervous. Even if the therapy itself is substance-free, the association can trigger scrutiny.

2. Common CPT Codes & Documentation Pitfalls

Many providers bill integration sessions using generic psychotherapy codes like:

  • 90837 – 60-minute individual psychotherapy
  • 90834 – 45-minute individual psychotherapy
  • 90832 – 30-minute session

So far, so good—until documentation comes into play.

Words like “psychedelic,” “trip,” “journey,” “plant medicine,” or even “MDMA-assisted” in progress notes can be red flags. Claims may be denied not because the service was medically unnecessary, but because the insurer perceives it as out of scope or experimental.

I once heard from a therapist in Portland who noted, “I only mentioned ‘integration of ayahuasca visions’ once—and the claim got rejected faster than I could say 'clinical relevance.’” It’s not about deception, but understanding the language insurers understand.

Insurers also dislike vagueness. Phrases like “explored spiritual insights from psilocybin use” are often seen as non-medical. Instead, notes should emphasize clinically recognized language: emotional processing, trauma integration, or cognitive reframing.

Bottom line: therapists must document what they actually did, but in a way that matches medical necessity language.

3. Top Reasons Insurance Denies These Claims

Let’s dig into the weeds: why exactly are these claims being denied?

Through interviews with therapists, review of EOBs (Explanation of Benefits), and legal documentation, several key patterns emerge:

❌ “Experimental or Investigational” Classification

Even though integration therapy does not involve administering drugs, many insurers bundle it under the same umbrella as psychedelic treatment. If your note hints at integrating an MDMA session—even from a clinical trial—the insurer may flag it as experimental and outside of coverage.

❌ Lack of ICD-10 Diagnostic Alignment

Billing codes like 90837 require a corresponding diagnosis that meets medical necessity criteria. Therapists using vague or informal diagnostic language, or omitting it altogether, risk automatic denial. Documentation must link each session to a valid diagnosis like PTSD (F43.10), MDD (F33.1), or GAD (F41.1).

❌ Use of Trigger Terms in Documentation

Words like “ceremony,” “ayahuasca,” or “plant medicine” in session notes can immediately raise red flags. While transparency is important, your language must align with clinical models, not shamanic terminology—at least when it comes to insurance paperwork.

❌ Lack of Licensure Matching the Billed Code

Claims submitted by coaches or non-licensed practitioners—even with extensive training—are often flat-out denied. Only licensed mental health professionals can bill psychotherapy codes under most commercial plans.

4. Regional Trends & Legal Gray Zones

Insurance claim patterns aren’t uniform across the U.S. Let’s break down how geography plays a surprisingly large role.

🌎 West Coast – High Volume, High Scrutiny

States like California, Oregon, and Colorado see the most psychedelic therapy claims—but also the most aggressive denials. Why? Because of the large volume of clinics and heightened insurer risk aversion due to evolving local laws.

🌎 East Coast – Conservative Carriers

In states like New York or Massachusetts, many insurers require pre-authorization and detailed care plans. Even if integration therapy is accepted, they may cap the number of reimbursable sessions.

🌎 Midwest & South – Education Lag

Many providers in these areas report denial not due to policy but due to misunderstanding. Some claims are denied simply because a reviewer doesn’t understand what integration therapy is.

5. What Can Providers and Patients Do?

If you’re a therapist: get fluent in insurance-friendly language. If you’re a patient: learn how to advocate effectively. Here are practical ways to navigate this murky space:

  • Use precise documentation – Emphasize trauma processing, not psychedelic content.
  • Reference accepted diagnoses – PTSD, depression, anxiety—clearly stated, consistently documented.
  • Provide continuity – Show therapeutic progress across sessions using SOAP (Subjective, Objective, Assessment, Plan) formats.
  • Appeal denials – Don’t give up. Attach a letter of medical necessity and clinical notes that frame the service as psychotherapy, not alternative medicine.
  • Know when to go out-of-network – Sometimes, it’s strategically better to see if reimbursement is possible via OON benefits.

While we're not quite at the point where psilocybin gets its own insurance code (yet), the tides are turning. The best strategy is to blend clinical rigor with compassion—and a pinch of legal savvy.

6. Resources & External References

If you're a provider navigating this maze, or a patient feeling gaslighted by denial letters, you're not alone. The system is complex—but you're not powerless. Here are some resources worth bookmarking:

Keywords: psychedelic therapy insurance, CPT code 90837 denial, psychedelic integration documentation, mental health billing trends, psychedelic medical necessity