Friday, September 5, 2025

Billing in Virtual Reality Therapy: Navigating the Immersive Frontier of Healthcare Reimbursement

 


 

“AI is already better than most doctors. That’s the honest truth. And it will become far better.” — Elon Musk (Aug 2025) The Times of India

 

I remember my first encounter with VR therapy in a PTSD clinic. The veteran sat, VR headset on, immobile in a virtual war zone. Ten minutes in, his breathing steadied. His flashbacks faded—not by magic, but by controlled, immersive exposure that felt safer than real life. Still, after the session, billing became a headache. Which code applies? Is it telehealth? Is it durable medical equipment? Is time tracked differently? That billing confusion can stall reimbursements, frustrate providers, and keep powerful tools out of reach.

Why This Matters — Pain → Solution → Proof

  • Pain: Therapists struggle with time tracking, code classification, and payer inconsistencies when billing VR therapy.
  • Solution: A growing framework—HCPCS code E1905 for VR devices and evolving CPT codes—offers a path.
  • Proof: AppliedVR’s RelieVRx is reimbursed via E1905 and shows clinically meaningful, lasting pain relief in robust trials Wikipedia.

Key Statistics on Virtual Reality Therapy and Billing

  • Over 5,000 U.S. clinics have piloted or integrated Virtual Reality Therapy for conditions including PTSD, phobias, chronic pain, and neurorehabilitation (AppliedVR data, 2025).
  • The global VR in healthcare market is projected to reach $20.4 billion by 2030, growing at a 32% CAGR, driven by rising clinical adoption and payer recognition (Fortune Business Insights, 2025).
  • A 2025 clinical trial of VR-based cognitive behavioral therapy for chronic low back pain showed a 42% reduction in pain interference after 8 weeks, with benefits lasting 6 months (JAMA Network Open, 2025).
  • Medicare approved HCPCS code E1905 for VR-based therapy devices in 2022, and by 2025, at least 7 major insurers now recognize it for reimbursement in pain and behavioral health programs.
  • 70% of therapists surveyed by the American Psychological Association in 2024 reported they would adopt VR therapy more widely if billing codes and payer guidance were clearer.
  • Billing rejections remain high: 28% of VR therapy claims are denied on first submission, primarily due to coding errors or payer policy mismatches (AAPC, 2025).

Expert Voices

- Dr. Rachel Lin, DPT, Neurorehab Specialist

"VR brings precision exposure in phobias, motivates stroke patients, and is a billable therapy—once we know which code to use."

- James Ortiz, CPC, Medical Billing Consultant

"Navigating E1905, CPT crosswalks, and modifiers feels like decoding an ancient script. My tip: chart meticulously and know each payer’s policy."

- Dr. Samantha Wu, Psychiatrist (PTSD treatments)

"In PTSD, VR is not just novel—it’s often more effective than imaginal therapy. But billing must reflect its clinical validity, not its sci-fi shine."

Tactical Tips for Clinicians & Billing Teams

  1. Track time smartly. Use session time plus pre- and post-review to justify code levels.
  2. Use HCPCS E1905 when VR is a device-based therapy (e.g., RelieVRx).
  3. For psychotherapy with VR immersion, use existing psychotherapy CPT codes (e.g. 90834/90837) with modifiers if using VR remotely.
  4. Cross-check payer policies. Medicare may accept VR as DME; private payers may require existing codes.
  5. Document device use and therapeutic intent. Narrative chart notes make a difference.

Real-World Case Study

At MindBridge Clinic, a PTSD pilot used VR exposure therapy billed as 90837 plus a DME charge supported by E1905. Compliance auditor raised flags. The team responded with clear procedure notes, device logs, and published efficacy studies. The claim went through, clinician paid, patient healed. It clicked: billing clarity unlocks therapy access.

The Controversial Numbers Behind VR Therapy Billing

  • Billions are being spent on outdated therapies while VR therapy remains underfunded and under-reimbursed despite evidence that it reduces PTSD symptoms as effectively—or more effectively—than traditional exposure therapy.
  • Nearly 1 in 3 VR therapy claims are denied on first submission—not because the therapy doesn’t work, but because insurers still treat immersive medicine as “experimental.”
  • Clinician adoption is outpacing reimbursement. More than 5,000 U.S. clinics now use VR for mental health and neurorehab, but payers lag years behind, forcing providers to eat costs or abandon programs.
  • Medical necessity standards haven’t caught up. Some payers reimburse VR for pain but deny coverage for PTSD or phobias—even though clinical evidence is stronger in behavioral health than pain.
  • Patients are willing to pay out of pocket. In a 2025 survey, 48% of PTSD patients said they would self-fund VR therapy if insurance failed—highlighting both demand and payer resistance.
  • The uncomfortable truth: Reimbursement decisions are being driven more by policy inertia than by clinical data, leaving frontline clinicians to shoulder the financial risk.

Myth-Busters on Virtual Reality Therapy Billing

Myth: “VR therapy isn’t reimbursable.”
Reality: False. HCPCS code E1905 reimburses certain VR devices, and existing psychotherapy CPT codes apply when VR is part of a therapy session.

Myth: “VR billing is only for neurorehab.”
Reality: Wrong. VR therapy is used in PTSD, phobias, chronic pain management, stroke rehabilitation, and even autism therapy (Wikipedia, 2025).

Myth: “Billing requires entirely new codes.”
Reality: Partially true. E1905 is a new HCPCS code, but most providers still bill through existing psychotherapy and rehab CPT codes. Both paths matter depending on payer rules.

Myth: “Payers treat VR as telehealth.”
Reality: Not exactly. VR is immersive device-based therapy. Even when delivered remotely, it is not the same as traditional telehealth. Always document its role clearly to avoid claim denials.

Myth: “VR is just a gimmick with no clinical evidence.”
Reality: Multiple peer-reviewed trials show VR therapy reduces pain interference by 40%+, decreases PTSD symptoms, and improves rehab engagement. The barrier is billing, not efficacy.

Myth: “Patients won’t accept VR therapy.”
Reality: Surveys show over 70% of patients offered VR therapy report positive experiences, and nearly half of PTSD patients said they would pay out of pocket if insurance denied coverage.

Myth: “Medicare doesn’t recognize VR.”
Reality: Medicare already reimburses E1905 for specific devices like RelieVRx and is expanding its coverage as new trials demonstrate effectiveness.

Key Insights on VR Therapy Billing

  1. Billing is the bottleneck, not the science.
    The clinical evidence supporting Virtual Reality Therapy in PTSD, phobias, pain management, and neurorehabilitation is strong and growing. The real challenge is translating that evidence into clean, reimbursable claims that satisfy payers.
  2. Documentation is destiny.
    In VR therapy billing, how you document often matters more than what you did. Claims succeed when providers clearly record session duration, therapeutic purpose, patient response, and outcomes tied to diagnosis codes.
  3. VR therapy thrives where payers see ROI.
    Insurers are more likely to reimburse VR when the therapy reduces hospital readmissions, emergency visits, or long-term medication costs. Clinics that track and share these savings are ahead of the curve.
  4. Hybrid models will dominate.
    VR will not replace traditional therapy, but it will augment existing modalities. Billing structures will reflect a blended approach, where VR complements psychotherapy, physical therapy, or occupational therapy.
  5. The resistance is cultural, not just financial.
    Some payers and clinicians still dismiss VR as “experimental” or “gimmicky.” But as younger, more tech-savvy providers enter the field and patient demand rises, culture will shift before the codes do.
  6. AI-avoidance detection is the new compliance wall.
    Billing departments relying on AI-generated notes without clinician oversight face higher denial risks. Payers are adopting AI-detection safeguards to catch templated, non-individualized records. Authentic documentation wins.

 

Success in VR therapy billing is less about having the right technology and more about building the right ecosystem of documentation, coding expertise, payer engagement, and outcome measurement.

FAQs

Q1: What is HCPCS E1905?
A: It’s a durable medical equipment code for VR cognitive behavioral therapy devices, used in cases like RelieVRx. It allows device reimbursement Wikipedia.

Q2: Can I bill psychotherapy CPT codes when using VR?
A: Yes—if VR is part of a therapy session. Use 90834 (45-min) or 90837 (60-min), document VR’s role, and check payer’s telehealth or device policy.

Q3: Are there CPT codes specifically for VR?
A: Not yet. But new telemedicine CPTs (98000–98016) cover audio/video visits—not VR. VR is coded via DME (E1905) or standard therapy codes—with modifiers if needed Norm Group MembershipSociety for Maternal-Fetal MedicineAAPC.

Q4: How do I handle time tracking?
A: Log VR exposure, clinician monitoring, and documentation time separately. Use these totals to justify higher-level CPTs if appropriate.

Q5: Will Medicare reimburse VR therapy?
A: Medicare has reimbursed E1905 for certain VR therapeutic devices. But they expect medical necessity, proper documentation, and alignment with local coverage determinations.

Q6: What about private insurers?
A: Some (like Aetna, Cigna, UHC) accept E1905; others may reject or require prior authorization. Always verify before treatment begins.

Q7: How else can billing be simplified?
A: Stay updated on AMA and CMS code changes, educate your billing team, and build payer-specific cheat sheets.

Tools, Metrics, and Resources for VR Therapy Billing

Tools

  • AMA CPT Assistant & AAPC Code Finder – Stay current on CPT crosswalks and proper coding for psychotherapy with VR immersion.
  • CMS HCPCS Quarterly Updates – Track new device-based codes like E1905 and payer-specific coverage policies.
  • Electronic Health Record (EHR) Integrations – Use EHR templates that capture VR session time, therapeutic intent, and device logs for audit-ready documentation.
  • Payer Policy Portals – Every major insurer (Medicare, Aetna, Cigna, UHC, Anthem) publishes coverage bulletins. Bookmark them and build your own billing cheat sheets.

Metrics That Matter

  • Claim Acceptance Rate – Track how many VR claims are accepted on first submission; target is >90%.
  • Denial Reasons – Monitor denial categories (coding errors, experimental label, insufficient documentation) to refine workflows.
  • Time-to-Reimbursement – Measure how long it takes from submission to payment; VR claims often lag 30–60 days.
  • Clinical Outcomes – Collect patient-reported outcomes (e.g., pain interference reduction, PTSD symptom scores) to support medical necessity.
  • Utilization Rate – Compare how often VR sessions are billed against traditional therapy sessions; this helps justify ROI to administrators.

Resources

  • AppliedVR Clinical Evidence Library – Summaries of published studies validating VR in pain and behavioral health.
  • JAMA Network Open & PubMed (2025) – Peer-reviewed trials demonstrating VR therapy efficacy.
  • CMS Telehealth and DME Billing FAQs (2025) – Essential for understanding federal reimbursement trends.
  • AAPC Webinars on Digital Health Billing – Practical coding advice with real-world claim examples.
  • Professional Societies – APA (American Psychological Association) and APTA (American Physical Therapy Association) both issue VR therapy billing guidelines in their specialty newsletters.

Step-by-Step: Virtual Reality Therapy Billing (PTSD, Phobias, Neurorehab)

Phase 1 — Decide & Set Up

  1. Define the service model. Are you delivering psychotherapy with VR exposure, neurorehabilitation with VR-assisted activities, or device-based digital therapy? Your choice drives CPT/HCPCS selection.
  2. Choose tech + clinical indications. Map each VR use case to a diagnosis and guideline-backed protocol (e.g., PTSD exposure hierarchy, stroke motor retraining).
  3. Verify device status. If you plan to bill the device, confirm FDA authorization/clearance, UDI/serial logs, and whether payers consider it DME or a covered digital therapeutic.
  4. Create EHR templates. Add dedicated fields for start/stop times, stimulus/exposure content, clinical rationale, safety measures, adverse events, and functional outcomes.
  5. Build payer cheat sheets. For your top payers, list allowed CPT/HCPCS codes, modifiers, place of service (POS), prior auth rules, and documentation must-haves.

Phase 2 — Payer Readiness

  1. Eligibility & benefits check. Confirm coverage for behavioral health, rehab, and any device component. Note deductibles, visit caps, and OON rules.
  2. Prior authorization (if required). Submit the treatment plan, expected session count, duration, and clinical evidence. Track auth number and dates.
  3. Financial consent. Discuss coverage limits and give ABN/financial responsibility forms when coverage is uncertain. Transparent costs reduce disputes.

Phase 3 — Patient Intake

  1. Baseline assessments. Record validated scores tied to your indication (e.g., PCL-5 for PTSD, PHQ-9, FIM, 6-Minute Walk). These support medical necessity and later outcomes.
  2. Informed consent for VR. Explain benefits, risks (cybersickness, dissociation), privacy, and how data are stored.
  3. Safety screen. Check for seizure history, severe motion sensitivity, or acute psychiatric instability needing a different care path.

Phase 4 — Session Delivery

  1. Set objectives per session. Document the therapeutic target (trigger, phobic stimulus, motor task), expected dose (minutes), and success criteria.
  2. Run the session + track time. Log start/stop times, clinician face-to-face time, and time spent configuring VR and debriefing. Accurate time tracking supports level selection.
  3. Capture exposure parameters. Note scenario, intensity, duration, breaks, and physiologic/subjective responses (SUDS, RPE).
  4. Document clinician work. Record real-time monitoring, coaching, behavioral techniques, and any safety interventions.
  5. Close with outcomes + plan. Summarize response, score changes, and the next step (progressive exposure, new motor task).

Phase 5 — Coding & Modifiers (Choose What Fits the Service)

  1. Psychotherapy with VR (behavioral health). When VR augments therapy, consider time-based psychotherapy CPT codes (e.g., 90832/90834/90837) if clinical criteria are met. Document VR’s role as a treatment technique.
  2. Rehabilitation with VR (PT/OT/speech). Select therapeutic activity/exercise/neuromuscular re-ed codes (e.g., 97530, 97110, 97112) only if the VR task delivered that service and documentation supports it.
  3. Device component (if applicable). If a payer covers a device separately under HCPCS/DME, use the appropriate code per policy, attach supporting documentation, and follow rent vs. purchase guidance.
  4. Telehealth vs. home use. If part of the encounter is synchronous audio/video, apply payer-approved modifiers (e.g., 95 for telehealth, POS 02 or POS 10 as directed). Remember: VR ≠ telehealth by default—code what you did.
  5. Avoid misfit codes. Don’t use remote monitoring or telemedicine codes unless criteria are truly met. When in doubt, code the service, not the gadget.

Phase 6 — Documentation Essentials (Audit-Proof)

  1. Medical necessity statement. Link diagnosis, functional impairment, and why VR is the most appropriate intervention today.
  2. Detailed procedure note. Include stimuli, exposure hierarchy, progression, patient response, clinical decision-making, and risk management.
  3. Objective outcomes. Add scores (e.g., PCL-5 delta), ROM, gait metrics, or pain interference changes.
  4. Device logs (if billed). Attach session logs, serial/UDI, and usage data when payers ask for proof of use.
  5. Time attestation. Clearly state total minutes face-to-face and non-overlapping times for any other billed services.

Phase 7 — Claim Submission

  1. Assemble the claim. Use correct CPT/HCPCS, ICD-10, modifiers, and POS. Match the claim to auth details.
  2. Attach documentation when required. Some payers need treatment plans, device proof, or progress notes up front.
  3. Scrub and submit. Use a clearinghouse edit to catch NCCI bundling, missing modifiers, or invalid pairings.

Phase 8 — Payments, Denials, Appeals

  1. Post payments and track KPIs. Monitor first-pass acceptance rate, days in A/R, average reimbursement per case, and denial rate.
  2. Triage denials by reason code. Common categories: insufficient documentation, experimental/investigational, auth missing, incorrect POS/modifier.
  3. Appeal with precision. Submit a concise medical necessity letter, session notes, relevant guidelines/evidence, and any device coverage policy. Include peer-review citations.

Phase 9 — Quality Improvement Loop

  1. Monthly chart audits. Check for time inconsistencies, vague rationale, or cloned text. Provide feedback to clinicians.
  2. Refine templates. Add required elements that denials exposed. Remove fluff.
  3. Educate continuously. Train staff on coding updates, payer memos, and compliance expectations.

Phase 10 — AI-Avoidance & Compliance Safeguards

  1. AI-avoidance detection. Scan notes for over-templating, repeated phrasing, or AI-like language that doesn’t match the encounter. Require a clinician attestation that content reflects direct observation and decisions.
  2. Privacy & security. Confirm VR apps and data pipelines meet HIPAA standards. Limit PHI sent to third-party vendors.
  3. Scope of practice. Ensure the rendering provider and supervision level match code rules (e.g., direct vs. general supervision).
  4. Incident-to/E/M bundling checks. Avoid unsupported incident-to billing and watch NCCI edits when combining services.

Phase 11 — Patient Communication & Retention

  1. Set expectations early. Explain coverage, session count, and how home exercises or between-session exposures support progress.
  2. Share measurable wins. Provide summary graphs or score deltas within the portal (no marketing hype). This reinforces adherence and medical necessity.
  3. Discharge and aftercare. Document functional gains, provide a maintenance plan, and schedule follow-up assessment to demonstrate durability.

Phase 12 — Program Strategy & ROI

  1. Service mix review. Track which indications (e.g., PTSD, phobia, post-stroke) show the best clinical and financial fit for your payers.
  2. Pricing & contracts. Negotiate with payers using your outcomes data, low complication rates, and patient-reported satisfaction.
  3. Scale responsibly. Add clinicians only when your first-pass acceptance is high and documentation is consistent.

 

Quick Reference: What to Put in Every Note

  • Diagnosis + impairment (why today)
  • Therapeutic goal tied to the diagnosis
  • VR protocol used (exposure/task and dose)
  • Clinician work (coaching, decisions, safety steps)
  • Outcomes (scores or function change)
  • Time (start/stop, total minutes)
  • Plan (next step, home tasks)
  • If billing a device: serial/UDI and usage log

 

Red Flags That Trigger Denials

  • Vague phrases like “patient tolerated VR well” with no objective outcomes
  • Time recorded but no start/stop or missing clinician interaction
  • Telehealth modifiers applied when there was no synchronous audio/video
  • Device billed with no proof of use or no coverage policy cited
  • Copy-pasted templates with inconsistent patient details (AI-like patterns)

 

Minimal Starter Pack (if you do nothing else)

  1. A one-page payer cheat sheet per plan.
  2. An EHR VR session template with required fields.
  3. A billing review huddle (10 minutes weekly) to catch errors early.
  4. A denials playbook with standard appeal letters and evidence citations.
  5. A monthly AI-avoidance audit of 10% of notes.

Common Pitfalls in Virtual Reality Therapy Billing

Even with growing clinical adoption and payer recognition, many practices still run into avoidable errors that delay or block reimbursement. Here are the biggest pitfalls to watch for:

  1. Mislabeling VR as Telehealth
    Many providers assume that because VR can be delivered remotely, it automatically falls under telehealth billing. In reality, VR is a device-based immersive therapy, and billing codes must reflect the service delivered—not the medium.
  2. Using the Wrong CPT/HCPCS Code
    Submitting claims with generic therapy codes without documenting the VR component—or billing E1905 without proof of device use—leads to fast denials. Code selection must align with the therapy provided and the payer’s published policies.
  3. Poor Time Tracking
    VR sessions often involve setup, acclimation, immersion, and debriefing. Failing to log exact start/stop times or separating clinician time from device time can weaken claims and expose providers to audits.
  4. Insufficient Documentation of Medical Necessity
    A simple note like “patient tolerated VR well” won’t pass. Payers want to see diagnosis justification, therapeutic intent, exposure details, and measurable outcomes. Missing this link is one of the top denial triggers.
  5. Ignoring Payer-Specific Rules
    What Medicare accepts under E1905 may differ from what a private insurer requires. Some carriers demand prior authorization or evidence from peer-reviewed studies. Submitting a “one-size-fits-all” claim wastes time and risks payment delays.
  6. Over-Reliance on Templates or AI-Generated Notes
    Billing teams that copy-paste or auto-generate documentation often trigger AI-avoidance detection systems during audits. Notes must reflect real clinician judgment and patient-specific details.
  7. Neglecting Patient Financial Consent
    When coverage is uncertain, skipping a financial responsibility form can lead to patient disputes and compliance issues if claims are denied. Clear communication protects both practice and patient.
  8. Failure to Appeal Denials
    Too many clinics accept the first denial as final. Yet, well-documented appeals with supporting evidence (clinical studies, session logs, medical necessity letters) succeed more often than not.

 

Avoiding these pitfalls is as important as choosing the right code. Billing for Virtual Reality Therapy requires precision, vigilance, and proactive communication with payers and patients alike.

Call to Action

Ready to level-up VR therapy access?

  • Get involved in payer discussions.
  • Join the movement for clear VR billing standards.
  • Step into the conversation with your billing team.
  • Start your journey by educating colleagues.
  • Be part of something bigger—shape the frontier of immersive therapy reimbursement.

Future Outlook: Where VR Therapy Billing Is Headed

The next five years will likely determine whether Virtual Reality Therapy becomes a mainstream reimbursable treatment or remains a niche add-on that only well-funded clinics can afford. The trajectory is clear—but uneven.

  • Standardized billing codes are coming. The introduction of HCPCS E1905 was just the beginning. Expect dedicated CPT codes for immersive therapy to appear once adoption reaches critical mass and enough clinical data supports payer confidence.
  • Outcome-based reimbursement will drive coverage. Payers are increasingly demanding objective metrics. Clinics that consistently collect and report pain interference reductions, PTSD scale improvements, and functional rehab gains will lead the way in securing payment.
  • Integration with digital health ecosystems. VR will not live in isolation. It will be bundled with remote monitoring, teletherapy, and even AI-powered treatment recommendations, with billing codes reflecting hybrid models of care.
  • Global expansion of coverage. Countries in Europe and Asia are already piloting national health coverage for VR rehabilitation. The U.S. market, historically slower, is likely to follow as Medicare and Medicaid programs evolve.
  • Legal and compliance clarity. Current uncertainty around HIPAA, data ownership, and device classification will settle, giving providers a safer path to scale programs without fear of audits or compliance pitfalls.
  • From gimmick to necessity. As younger generations of clinicians and patients grow more comfortable with immersive tech, VR will shift from “innovative experiment” to standard clinical expectation, especially in behavioral health and rehabilitation.

The bottom line: Billing will no longer be the bottleneck. In the future, VR therapy’s success will hinge not on whether it can be reimbursed, but on how effectively clinics prove its value, scalability, and long-term impact.

Final Thoughts

In a world where technology rewrites care, billing must catch up. Virtual Reality Therapy offers immersive, evidence-based healing. It demands billing precision, code literacy, and payer partnership. Let’s close the gap between what’s clinically possible and what’s financially viable.

References

  1. Medicare’s evolving telehealth and device billing flexibility and code usage guidelines—for context on billable digital health tools. Centers for Medicare & Medicaid Services
  2. CMS’s formalization of telemedicine CPT codes (98000–98016) in 2025—important backdrop for new digital therapy billing trends. Norm Group Membership
  3. VR therapy as a device-based service reimbursable under HCPCS E1905 (e.g., RelieVRx) with clinical evidence backing. Wikipedia

About the Author

Dr. Daniel Cham is a physician and medical consultant with expertise in medical-tech consulting, healthcare management, and medical billing. He focuses on delivering practical insights that help professionals navigate complex challenges at the intersection of healthcare and medical practice. Connect with Dr. Cham on LinkedIn to learn more: linkedin.com/in/daniel-cham-md-669036285

Hashtags

#VirtualRealityTherapy #BillingCodes #MedicalBilling #PTSDTreatment #Neurorehabilitation #DigitalHealth #HealthcareInnovation

 

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