How to Avoid Billing Errors in Mental Health Practices

Are you a mental health practitioner? The main goal of a mental health practitioner is to provide quality care to their client. Taking the administrative burdens along with this can be very overwhelming for you and lead to errors in the billing processes which might impact the revenue cycle of your practice.

Mental health billing is complex, and practitioners face unique challenges related to billing which can be overwhelming. Errors in the billing and coding processes can lead to denial and claim rejection. For a steady cash flow and a healthy revenue cycle, you can outsource medical billing which can benefit you in multiple ways. It reduces the chances of error while ensuring accuracy and efficiency, allowing you to focus solely on providing exceptional care to the client.

Why Mental Health Billing Is Unique:

Mental health billing has some unique complexities in health care practice. These include:

• Mental health care involves varied, individualized treatments and time-based billing, with precise ICD-10 and CPT codes required to reflect session types and lengths accurately.
• Insurers demand detailed records, including treatment plans and session progress, to justify claims and ensure compliance with medical necessity criteria.
• Coverage limits, pre-authorization needs, and telehealth-specific rules create additional complexities, often leading to higher denial rates and audits compared to general medical billing.

A survey by the American Medical Billing Association found that nearly 30% of claims for behavioral health services face delays or rejections due to coding errors or insufficient documentation. 

5 Key Challenges in Mental Health Billing:

Excessive Patient Frequency:

When sessions get more frequent it becomes a concern for the payer and the insurance plan often does not reimburse for regular sessions. Intensive programs are more likely to get reimbursed. Insurance providers frequently scrutinize cases where sessions exceed typical limits, such as weekly visits over several months, unless supported by thorough documentation of medical necessity or aligned with an intensive program.

Overlapping Therapists:

When a patient is treated by more than one therapist it can lead to claim denials or disputes. Communicating with the client about the therapy choices is very essential to avoid overlap. Overlapping therapy claims are a common reason for mental health billing denials, emphasizing the need for clear communication between providers and patients to prevent disputes.

Repetitive or Generic Diagnoses:

Repetitive use of diagnosis codes is a known trigger for audits, underscoring the importance of ensuring diagnoses are well-documented and tailored to individual patient cases.

Risky Code Usage:
Extended therapy codes, such as CPT 90837, are frequently flagged for denial or audit when overused or improperly documented, highlighting the need for accurate time tracking and supporting records.

Incomplete Treatment Documentation:
Missing treatment plans or incomplete notes may result in denials. Comprehensive documentation, including patient signatures and detailed care plans, is critical for compliance and payment. The CMS found that the majority of mental health claim denials in 2022 were due to incomplete or missing documentation. 

Common Billing Mistakes and Their Impact:

Strategies to Improve Mental Health Billing

1. Invoicing Processes

Invoices should be clear, accurate, and sent quickly after services are provided to the patient. Include:

• Client details and service dates.
• Specific treatment descriptions.
• Payment terms and options.

2. Ensure Accurate Coding

• Use the correct ICD-10 codes to reflect diagnoses.
• Match treatments with precise CPT codes, distinguishing between in-person and telehealth services.
• Double-check codes for accuracy to avoid suspicions of upcoding or under coding.

3. Simplify Payment Methods

Provide multiple, easy-to-access payment options, such as:

• Credit cards.
• Health insurance cards.
• Online payment platforms.

Statistics That Highlight the Importance of Accuracy:

What are the best practices for billing mental health services?

1. Conduct Thorough Benefit Verification (VOB)
2. Maintain Accurate Records of Insurance Details
3. Collect Comprehensive Patient Information
4. Stay Updated on Mental Health Billing Codes:
5. Implement a Clear Payment Policy for Patients
6. Maintain Strong Documentation
7. Regularly Review Denied Claims

1. Conduct Thorough Benefit Verification

The benefits verification process ensures both the provider and the patient understand coverage limits, copayments, and out-of-pocket expenses.

Why it Matters:

• Prevents surprises for patients regarding costs.
• Reduces claim rejections and billing disputes.

2. Maintain Accurate Records of Insurance Details

Errors in the patient can lead to billing delays, it is very important to keep detailed information of the patient from the insurance card.

Best Practices:

• Take clear, readable copies of insurance cards.
• Confirm details such as group numbers, policyholder information, and coverage dates.
• Update records annually or whenever patients report changes.

3. Collect Comprehensive Patient Information

Having detailed patient information prevents billing errors and taking details other than insurance details is also very necessary like full legal names, birth dates, addresses, and any secondary insurance information.

Key Information to Gather:

1. Personal Details: Name, DOB, Address, Contact Information.
2. Insurance Details: Policy Number, Group Number
3. Payment History: Outstanding Balances, Copayments

4. Stay Updated on Mental Health Billing Codes:

Mental health billing requires precise coding, as insurers rely heavily on ICD and CPT codes to approve claims. Incorrect codes can delay payments or trigger audits.

Suggestions for Accuracy:

• Regularly train staff on the latest ICD-10 and CPT updates.
• Use separate codes for different services like telehealth vs. in-person therapy.
• Double-check codes for mental health-specific treatments, such as group therapy or diagnostic testing.

5. Implement a Clear Payment Policy for Patients

Patients should understand their financial responsibility before starting therapy. A well-documented payment policy can prevent confusion and improve payment timelines.

Elements to Include in a Payment Policy:

• Accepted payment methods (credit cards, insurance, health savings accounts).
• Terms for copays and outstanding balances.

6. Maintain Strong Documentation

Detailed and accurate documentation supports claims and reduces the risk of denials. Insurers often require thorough records to verify the necessity of mental health treatments.

Tips for Documentation:

• Ensure progress notes align with the services billed.
• Include start and end times for therapy sessions.
• Document treatment plans and outcomes.

7. Regularly Review Denied Claims

Denied claims provide valuable insights into areas of improvement. Establish a routine process to analyze denials and correct recurring issues.

Steps to Manage Denied Claims:

• Identify the reason for denial (e.g., incorrect codes, missing information).
• Appeal claims promptly with the corrected information.
• Adjust internal processes to prevent similar errors in the future.

How CloudRCM Adds  Value to Your Mental Health Billing :

Outsourcing to Cloud RCM a mental health billing company can significantly improve efficiency. These services offer:

• Expert Coding Assistance: Trained professionals ensure accurate use of ICD-10 and CPT codes.
• Credentialing Support: Mental health billing and credentialing services ensure compliance with insurance requirements.
• Cash Flow Management: Timely claims submission and follow-up reduce payment delays.