DSM-5, ICD-10, and Denials: Common Psych Diagnosis Errors

DSM and ICDIf my e-mail inbox is any indication, many therapists are getting claim denials as a result of using DSM-5 without understanding how to use the diagnosis codes in it. This is true for both network providers and out of network providers. So here are a few quick tips to help you avoid denials.

 Know Which Code to Use

You should be using the DSM-5 at this point. DSM codes align with codes from the World Health Organization’s International Classification of Diseases (the ICD).

The DSM-5 lists two codes below the name of each diagnosis. The first code (in bold black letters) is from the ICD-Version 9, or ICD-9. The second code (in gray, in parentheses, and starting with a letter) is the new code for that diagnosis from the ICD-10, which we will start using on October 1, 2015.

Don’t put both codes on the claim! Use only the black ICD-9 code for now, then in October use just the gray ICD-10 codes.

Don’t Forget the ICD Indicator

In the upper right hand corner of Box 21 on the CMS-1500 Claim Form you’ll see “ICD-Ind.,” which is asking you to indicate which ICD code set you are using. Between the vertical dashed lines, write “9” to indicate you are using the ICD-9. In October you will write “0,” not “10”, to indicate you are using the ICD-10.

Leave the space to the right of those dashed lines blank. (Don’t see the “ICD-Ind.” on your form? You may be using an old version of the claim form – visit my website to purchase the latest version). If using an invoice/superbill, it may be a good idea to indicate which diagnosis code set you are using.

Be Sure You Use the Full Number of Digits 

A diagnosis like Major Depression may be denied if you don’t put the last digit (ex. you put 296.3 instead of 296.32 or 296.33).  Plans call this “using the highest level of diagnosis specificity.”  ICD-9 codes have 3 to 5 digits;  ICD-10 will have 3 to 7 digits.

Invest in the DSM-5 and Revisit your Diagnoses

The DSM-5 has new diagnoses and different criteria for some old ones. (Visit my website to read an article on DSM-5).  Get trained on the new manual and use it.

Take Diagnosis Seriously 

It is tempting to not be fully transparent when it comes to diagnoses. Many therapists tell me they put down the most innocuous diagnosis possible, such as Adjustment Disorder, even if dealing with a something more severe, such as Major Depression or Substance Abuse.

However, this can cause trouble later if your treatment is reviewed by the insurance plan, and your diagnosis does not match your clinical notes, interventions, or course of treatment. It becomes hard to explain why sessions are being held twice a week, or why treatment has lasted so long. At this point you may wish you had been more truthful up front, so that you could better advocate for your client’s care.

In addition, writing an inaccurate diagnosis (or omitting one) can be insurance fraud, since if the plan was given accurate information they may have made a different reimbursement decision.

And fraud can have some serious penalties, such as jail, fines, and loss of license. If you have concerns about disclosing a diagnosis to the insurance plan, consider openly discussing this with the client, allowing them to make an informed choice about whether to release claims with the accurate diagnosis, or pay out of pocket.

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DSM-5, ICD-10, and Denials: Common Psych Diagnosis Errors

Barbara Griswold, LMFT

Barbara Griswold, LMFT, is a licensed marriage and family therapist and insurance consultant. She is the author of Navigating the Insurance Maze: The Therapist's Complete Guide to Working With Insurance – And Whether You Should. Barbara offers workshops, webinars, and consulting services on insurance, billing, and coding to therapists. She can be found at and


APA Reference
Griswold, B. (2015). DSM-5, ICD-10, and Denials: Common Psych Diagnosis Errors. Psych Central. Retrieved on October 27, 2020, from


Scientifically Reviewed
Last updated: 18 Apr 2015
Last reviewed: By John M. Grohol, Psy.D. on 18 Apr 2015
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