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5 Crucial Steps for Optimizing Behavioral Health Practice Revenue Cycle Management

| October 30, 2023

5 Crucial Steps for Optimizing Behavioral Health Practice Revenue Cycle Management

Revenue cycle management (RCM) is a massive challenge for any healthcare organization to tackle, but behavioral health practices face even greater hurdles on the path to success. Unlike many medical specialties, behavioral health is a complex niche with variable payer involvement and unstandardized billing practices. In addition to the challenge of getting your practice paid, the added layer of billing and reimbursement complexity further disrupts cash flow and stunts practice growth.

Common Sources of Revenue Loss in Behavioral Health

Even with an expert in-house team, your revenue cycle is still vulnerable to hidden gaps and process inefficiencies. For any practice, it’s critical to aim your RCM processes at addressing major revenue blockers. In behavioral health, RCM disruptions boil down to these three challenges:

  • Insurance complexities. Coverage for behavioral health services is a relatively new phenomenon. The federal mental health parity law, requiring health insurance companies to provide the same level of coverage for behavioral health, was passed relatively recently in 2008.1 The rapid shift in payer policy as a result left little time to construct a standardized approach to billing, coding, and reimbursements. These terms are left up to individual payers to decide, putting the onus on in-house RCM teams to sift through each payer’s requirements and bill accordingly.
  • High self-pay rates. Six years after the mental health parity law was passed, only 4% of patients were aware of the new policy, despite 27% of survey respondents utilizing behavioral health services.2 Many patients still use self-pay options due to challenges with insurance and/or self-pay-only practices. One study found that, from 2007 to 2016, the percentage of outpatient psychiatrist visits using self-pay increased from 18.5% to 26.7%.3 Even with new legislation, patients still pay out of pocket for these services due to unfavorable practice and insurance regulations.
  • Regulatory changes. The mental health parity law still undergoes regular evaluation and updates to ensure full industry compliance. In addition to shifting coding requirements and fee schedules common to all providers, behavioral health practices must also stay on top of updates to insurance regulations. For example, the Centers for Medicare and Medicaid Services (CMS) is currently adapting coverage requirements to charge appropriate rates for care and include a more comprehensive scope of behavioral health services.

Successful Behavioral Health RCM: A Step-by-Step Overview

A healthy revenue cycle is key to a strong bottom line. In light of the many challenges facing behavioral health practices, your revenue cycle must master these key elements in order to boost profitability:

  1. Patient pre-authorization and verification. The RCM process begins with patient eligibility verification to ensure that patients have the necessary level of coverage for their planned care. Likewise, obtaining pre-authorizations is crucial to prevent claim denials later in the process. These efforts should be completed before the patient visit to avoid any surprise payments or billing complications.
  1. Accurate documentation and coding. Documentation, coding, and billing go hand in hand, and they all need to be accurate for full reimbursement. Clinicians must provide thorough documentation of each patient encounter, including assessments, treatment plans, and progress notes, in order to enable the RCM team to assign codes and bill insurance properly.
  1. Claim submission and tracking. Once documentation and coding are complete, claims are submitted to payers for evaluation and reimbursement. Timely and accurate submission is critical to expediting the reimbursement process and keeping your A/R low. RCM and medical billing software can streamline this step, helping your team track claim status, identify rejections, and resubmit clean claims.
  1. Payment posting and reconciliation. After claims are processed, your team will receive payments and denials from respective payers. Payment posting involves matching payments to corresponding claims, reconciling discrepancies, and determining underpayments or overpayments. Your team should immediately review and appeal any denials to ensure maximum reimbursement.
  1. Healthcare analytics and reporting. Your practice can benefit immensely from business intelligence and healthcare analytics reporting. Leverage specialized software to analyze financial performance, extrapolate trends, and make data-driven business decisions to optimize practice management. 

Why You Should Consider an Outsourced Solution

Behavioral health RCM is complicated, but it doesn’t have to take a toll on your team — or your bottom line. Med USA’s end-to-end RCM solution and highly specialized behavioral health experts handle everything from charge posting and patient contact to reimbursement and payer management. On average, our clients see an 18% increase in payments on average, with one behavioral health practice reporting a 49% increase in year-over-year revenue.

Ready to Discover the Difference of a Specialized Behavioral Health RCM Solution?

Talk to a Med USA representative today!


  1. The Mental Health Parity and Addiction Equity Act (MHPAEA). (2023, September 6). U.S. Centers for Medicare & Medicaid Services. 
  2. 2014 Mental Health Parity Survey. (2014). American Psychological Association. 
  3. Benjenk, I. & Chen, J. (2020). Trends in Self-payment for Outpatient Psychiatrist Visits. JAMA Psychiatry 77(12), 1305-1307.