Behavioral Health Revenue Cycle Management: Guide to Long-Term Success

Introduction
Chapter 1 Understanding Behavioral Health Revenue Cycle Management
Chapter 2 Behavioral Health Revenue Cycle Management: Compliance & Reimbursement
Chapter 3 Behavioral Health Revenue Cycle Management for VBC & Integrated Care
Chapter 4 Boosting Behavioral Health Revenue Cycle Management Performance
Chapter 5 Smarter Behavioral Health Revenue Cycle Management: Tools and Partners
Conclusion

Introduction

Key Takeaways

Managing billing and insurance for behavioral health is particularly complex, and organizations require the right technology solutions to ensure effective behavioral health revenue cycle management (RCM).
Since detailed documentation is required by billing, insurance, and regulatory organizations, improving documentation practices can help you avoid costly delays and denials.
Analyzing the right data to spot patterns that could be hindering your revenue is essential to improving and establishing strong RCM practices.
An advanced electronic health record (EHR) with integrated RCM capabilities helps behavioral health organizations optimize documentation, denial management, preauthorization processes, workflows, and more for a stronger bottom line.

Behavioral health revenue cycle management (RCM) is uniquely complex, requiring organizations to meet ever-shifting payer rules, complicated coding standards, and intense documentation demands.

On top of that, the field is facing significant challenges like a widespread staffing and provider shortage, so teams are substantially strapped for time and resources.

In this environment, manual or outdated systems just aren’t going to cut it. Effective RCM depends on having advanced technologies — like electronic health records (EHRs) — in place to reduce administrative burden, streamline processes, empower staff, and provide access to game-changing financial data.

By understanding the ins and outs of behavioral health revenue cycle management and relying on the right tech, organizations can not only survive amid economic volatility but thrive over the long term.

According to Precedence Research, the behavioral healthcare market is projected to grow from $89 billion to $165 billion by 2034 — a massive increase in value and demand.

There’s just one problem: Far too many organizations aren’t prepared to handle this drastic influx. Too many use behavioral health revenue cycle management systems that aren’t designed for their specific needs, making it difficult to handle the industry’s unique billing, coding, and documentation complexities.

Solving these pervasive issues requires organizations to first understand their specific RCM needs. Then, they can adopt the right EHR systems to achieve cleaner claims, timelier reimbursement, and improved compliance — all in service of a better, more stable bottom line.

Behavioral Health RCM: Why Specialized Technology Expertise Matters

Diverse service delivery models. A wide range of provider specialties. Continuously evolving requirements.

Managing behavioral health RCM is tough, and it all requires significant time, energy, and resources to manage. But the right partner with the right EHR can help behavioral health organizations better overcome these hurdles. Here’s a look at six top RCM challenges and how the right EHR will help.

6 Common RCM Challenges and How the Right EHR Can Address Them

Complex Coding for Behavioral Health

Behavioral healthcare involves a number of services — from prevention to diagnosis to treatment and intervention — and organizations must apply unique billing codes for each. Those coding standards include:
- ICD-10 medical codes, which represent diagnoses
- Current Procedural Terminology (CPT) codes that represent the services performed, including nuances for time-based and add-on services
- Healthcare Common Procedure Coding System (HCPCS) codes, which cover services, products, and supplies not covered by CPT codes, such as ambulance services or medications
Each of these coding standards include multiple categories based on where and how the services are delivered. EHRs with integrated behavioral health RCM capabilities automatically assess assigned codes against custom checks to better ensure accuracy before submission.
Complicated Insurance Verification Processes

Behavioral healthcare providers frequently partner with other professionals, like primary care physicians, psychiatrists, and case managers, which adds complexity to insurance processes.

With the right EHR, organizations can define payer-specific rules and workflows to help ensure verification procedures align with state, insurer, and health plan requirements.
Frequent Claim Denials

KFF research reveals that problems like incomplete documentation and ineligible coverage contribute to why 19% of all in-network claims were denied in 2023. That same year, 22% of mental health care coverage was denied. This data reflects ACA marketplace plans, but similar patterns occur across commercial payers.

Behavioral health RCM engines use custom-built workflows and insurer integrations to give teams real-time access to clients’ insurance details. The systems also check eligibility to minimize denials and workflow bottlenecks.
Payer Nuances and Changes

Legislative changes to Medicaid — which is the largest payer for mental health care services — are posing complications for many organizations. And because Medicaid has different billing requirements than most commercial insurers, these changes are making navigating payer nuances even more challenging.

Advanced EHRs, however, enable teams to set tailored workflows and payer-specific rules to ensure alignment with each insurer’s requirements. Teams no longer have to manually keep up with Medicaid and other insurance changes, relieving their administrative burden while improving claim approval rates and reducing denials and rejections.
Regulatory and Compliance Challenges

Compliance guidelines change frequently, meaning behavioral health organizations must regularly update their protocols to keep pace.

Offering embedded compliance trackers that automatically update to address new requirements, advanced EHRs with behavioral health RCM features help organizations ensure all regulatory tasks are completed accurately and on time including documentation tied to medical necessity and treatment plan reviews.
Behavioral Health Credentialing Delays

According to an HRSA report, 60% of psychologists aren’t accepting new clients and more than 120 million Americans live in mental health provider shortage areas. What does this mean? Organizations are struggling to retain and license staff, and too many clients aren’t receiving the services they need.

EHRs take the admin burden off staff and providers, giving them more time to obtain the right credentials without disrupting care delivery. The best systems also automate billing, reimbursement, and insurance verification, easing staff’s workload and freeing up more of their time to maintain continuity of care and consistent client-provider relationships.

Generating stable revenue is far from a given in behavioral health, so organizations must not only leverage their time and resources effectively, but consider how manually handling compliance, billing, reimbursement, and RCM can negatively impact cash flow.

Behavioral Health Revenue Analytics & KPIs: Targeting the Best Metrics

Many behavioral health organizations are adopting the whole-person care model, which further complicates RCM. The model demands closer collaboration between providers, more sophisticated billing processes, and greater coordination around issues including staffing, communication, and client engagement — all of which have implications for a facility’s bottom line.

Tracking the right behavioral health revenue analytics can help leaders turn intuition into actionable insights, uncover performance gaps, and drive data-based decision-making.

Here’s a list of key performance indicators (KPIs) that can give you a clearer picture of your organization’s RCM and clinical capabilities.

1. Key Metrics for Session-Based and Time-Driven Billing

Behavioral health organizations often adopt a variety of payment models. A 2022 study of 44 practices found that 88% use a fee-for-service model, 63% use pay-for-performance incentives, and 31% rely on grant funding. Each of these models and funding sources comes with unique coding requirements, insurance verification procedures, and documentation guidelines.

Additionally, required behavioral health metrics like session duration or appointment frequency are notoriously difficult to standardize and measure across settings. To effectively account for the unique qualities of session-based and time-driven billing models, behavioral health organizations should regularly measure the following:

Average Session Length

Therapeutic session lengths vary and impact behavioral health revenue cycle management in different ways. Organizations should record and analyze the average session length both within specific therapeutic modalities and across modalities.

Average session length = Total hours of all sessions in a particular period / Number of sessions within that period

Average Appointments per Clinician

Burnout is a pervasive issue in the behavioral health workforce, so it’s critical to analyze the number of appointments each provider takes on in a given period. Doing so can help organizations identify and address overburdened workloads that could be impacting both clinical care delivery and revenue.

Appointments per clinician = Total number of appointments in a particular period / Number of clinicians actively seeing clients in that period

No-Show Rates

When a client fails to show up for a scheduled appointment, the organization loses not only the revenue they would have gained from that appointment, but also the costs associated with preparing for the appointment. This behavioral health revenue analytics KPI can help you pinpoint that revenue loss.

No-show rate = (Total number of no-show appointments in a particular period / Number of scheduled appointments) X 100

2. Critical KPIs for Documentation and Data Quality

Under fee-for-service models, payment hinges on complete, precise documentation that aligns with the services delivered. In value-based care, the stakes are even higher: documentation directly impacts reimbursement, care quality, and outcomes.

Therefore, no matter the model they employ, behavioral health organizations should analyze these documentation-related metrics:

Documentation Completeness Rate

This metric allows organizations to address incomplete documents, which can prevent noncompliance fees, delayed payments, or rejected or denied claims.

Documentation completeness rate = Total number of documents created in a particular period / Number of incomplete documents in that period

Time Spent per Note

Writing and reviewing session notes is a time-consuming process that strains providers’ workloads. Analyzing this metric helps behavioral health organizations identify how much time providers spend on client notes and connect that number to the effectiveness and timeliness of their care delivery.

Time spent per note = Total minutes spent on notes by a clinician in a particular period / Number of note sessions conducted in that period

3. Top Measures to Track Access to Care and Client Engagement

The Centers for Disease Control and Prevention (CDC) note three levels of stigma that are all-too-common in behavioral health:

To measure how stigma impacts clients and revenue cycles, organizations should analyze these metrics:

Average Referral-to-First-Session Time

This metric enables organizations to identify delays in initiating care, which ties into some service-level agreements for commercial payers.

Average referral-to-first-session time = Total time between referral and first session in a particular period / Number of clients who initiated a first session after a referral in that period

Missed Appointment Rate

Missed appointments often lead to revenue loss, wasted resources, and negative client experiences and outcomes. Measuring this behavioral health revenue analytics KPI can give you a clearer view of the total cost and impact of missed appointments.

Missed appointment rate = (Number of missed appointments during that period / Total number of scheduled appointments in a particular period) X 100

Client Acuity Distribution

One of the most important behavioral health revenue analytics, client acuity distribution refers to the proportion of clients with varying levels of severity of specific conditions. By measuring this KPI, organizations can prioritize resources more effectively and ensure clients receive the timely care they need. This analysis also informs staffing ratios, supervision needs, and clinical triage protocols.

Client acuity is generally determined by organizing clients into four categories:

Stable
Moderate risk of needing additional services
Complex needs
High risk of needing additional services

Using an EHR to Standardize Behavioral Health KPIs

Manually collecting and analyzing these behavioral health revenue analytics would strain most organizations and likely result in missed observations and opportunities. Advanced EHRs offer embedded analytics, giving organizations timely, deep insight into their performance and freeing staff up to focus on high-quality care delivery.

Navigating Medicaid Billing for IDD Services and Its Impact on RCM

More than a third (35%) of all people with disabilities rely on Medicaid for medical care, reports KFF. Yet, navigating Medicaid billing codes, compliance protocols, and documentation requirements is incredibly complex for behavioral health organizations — especially amid a shifting federal funding landscape.

An EHR, however, can streamline these required practices, making it far easier for providers of behavioral health and IDD services (intellectual and developmental disability) to manage administrative hurdles.

The Realities of Managing Medicaid in IDD Care

KFF reports several key facts about the widespread usage of Medicaid in the U.S.:

Behavioral health providers, therefore, must coordinate frequently with providers of IDD services and other professionals to submit accurate data for Medicaid billing. Doing so manually increases the risk of documentation errors and significant billing delays or even loss of revenue.

Common IDD Medicaid Billing Challenges — and How an EHR Can Help

Billing codes, reimbursement rates, and service eligibility vary from state to state, as do income thresholds for eligibility. States also tend to layer their own requirements on top of federal guidelines. Only 33 states covered mobile crisis teams, according to the U.S. Department of Health and Human Services, and only 12 covered hotline services. This lack of consistency creates an added challenge for IDD services providers when submitting clean, timely claims.

An advanced EHR can help, easing multiple challenges such as:

Complying With Federal and State Documentation Requirements

Organizations need precise, real-time documentation to meet IDD Medicaid billing requirements. Documentation must include key details — service type, location, and start and end times — as well as thorough descriptions of the services delivered and how they align with care plans.

EHRs streamline documentation processes and help teams minimize errors. Solutions backed by artificial intelligence (AI), like ambient documentation tools, can record notes and provide immediate summaries for quick access to relevant billing information. These solutions help providers save time and avoid claims delays and denials that impact their RCM.

Submitting the Right IDD Billing Codes

IDD services and behavioral health organizations must accurately match each delivered service to the right billing code across multiple coding standards that shift depending on the state and payer.

Coding is complex and often impacts client satisfaction, payment delays, and claim denials. EHRs with integrated RCM solutions can verify billing codes and align each code with each payer’s requirements. Using custom checks or templated checklists, teams can better ensure codes are accurate before submission.

Accounting for the Complexity of IDD Services

IDD services providers often work collaboratively with primary care physicians, residential habilitation facilities, transportation services, community-based support systems, and day programs to support the intertwining physical, mental, and emotional needs of their clients.

While essential, this level of care coordination adds complexity to billing procedures. With evidence-based workflows and secure communications features, EHRs enable teams across the continuum to effectively work together and collect accurate billing-related information.

EVV and the Evolution of Medicaid Requirements

Electronic visit verification (EVV) was initially designed to reduce fraud, improve care oversight, and help ensure Medicaid enrollees received the services they’re billed for. It also supports the broader move toward value-based care by electronically verifying key details of services rendered by personal care providers or home healthcare providers.

Medicaid’s EVV program requires providers to accurately log service details or risk financial penalties. EHRs offer integrated compliance checkers, custom workflows, and secure checklists to ensure the accuracy of EVV information. Advanced systems can also streamline data sharing with state aggregators.

Millions of Americans use insurance coverage every day to access the care they need. Yet, payer systems remain complicated, posing challenges for providers and clients alike.

In fact, an American Psychological Association (APA) survey found that 82% of psychologists experience incorrect reimbursement rates, 62% encounter preauthorization issues, and 52% are concerned about insurance-related payment delays.

These delays and denials often cause cash flow problems for organizations, while hindering clients’ abilities to receive timely, affordable care. Fortunately, the right EHR can help organizations ensure quick, accurate claims that can boost compliance rates and support more effective behavioral health revenue cycle management.

Improving Reimbursement in Compliance With Mental Health Parity Laws

Mental Health America reports that about 60 million adults in the U.S. experienced a mental health condition in 2024, and 18% had a substance use disorder (SUD). Mental health parity laws were created to ensure everyone — regardless of their income, identity, or background — has access to the care they need.

These laws are complex, with overlapping federal and state requirements and frequently updated guidelines. To prevent costly noncompliance fees and reduce payment gaps, it’s crucial for RCM teams to understand how mental health parity laws work.

What Is Parity in Mental Health? A Look at the MHPAEA

The 2008 Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 was enacted to protect mental health clients from unfair treatment on the part of health insurance providers. Under the law, benefits for behavioral health clients cannot be more restrictive, nor can treatment durations be more limited, than those for physical healthcare.

MHPAEA covers nearly all aspects of behavioral health care. Plans that work directly with State Medicaid programs are required to stay compliant with MHPAEA. Insurers and providers must follow the stronger mental health parity laws in place, whether at the state or federal level.

Additional Requirements in the 2024 Update

The Biden administration finalized the MHPAEA in 2024, requiring plans and issuers to collect and evaluate data related to benefits, non-quantitative treatment limitations (NQTLs), and material differences between behavioral and physical healthcare. Issuers must also avoid using discriminatory data and conduct comparative analyses on the impact of reimbursement rates and prior authorizations across networks.

5 Strategies to Stay Compliant With Mental Health Parity Laws

If providers or insurers don’t comply with MHPAEA regulations, they could incur serious financial consequences. Here are five strategies to achieve improved compliance:

1. Accurately Document Services

The government primarily reviews documentation to evaluate compliance with mental health parity laws, making accurate documentation essential for behavioral health organizations. With an advanced EHR, organizations can create bespoke documentation rules and compliance checklists to stay on top of and aligned with regulations and ensure every progress note supports the billed service and treatment goals.

Documentation should also demonstrate that authorization requirements, medical necessity criteria, and care management protocols applied to behavioral health are not more restrictive than those used for comparable medical or surgical services.

3. Optimize Workflows to Streamline Compliance

The Biden administration’s additional compliance regulations are set to roll out by the end of 2026, so organizations need to start adjusting their RCM practices, workflows, care coordination procedures, and technology usage now. An EHR can assist in this process by automatically updating compliance checklists as new laws take effect. Organizations can also use the EHR to verify coverage criteria, set custom rules for visit limits, and align their billing procedures with pre-authorization criteria.

4. Consistently Review Claim Denials

Parity laws mean that claims can be denied for parity-related issues, causing rejections or costly delays. Top EHRs empower teams to build intervals into their regular workflows to review claim denials and address parity violations, either by appealing denial decisions or enhancing workflows to prevent disparate treatment for behavioral health clients, such as shorter visit limits, higher costs, or more restrictive benefits.

EHRs also notify team members to complete compliance-related tasks, enabling organizations to stay ahead and immediately address parity issues should they arise.

Denial Management for Behavioral Health: Strategies That Work

Strengthening claim denial management for behavioral health can help organizations prevent delayed payments, reduce administrative burden, and minimize client costs. Doing so can mean the difference between financial instability and viability.

Common Causes of Claim Denials

According to the Wall Street Journal, 19% of all medical claims were denied in 2023, yet 30% of mental health claims were rejected. Denials are often the result of one or more of the following common issues:

Non-covered services. The APA reports that of the mental health care providers who accept insurance, 52% have never been in-network with commercial payers, making it difficult for clinics to verify coverage.

Challenge proving medical necessity. Demonstrating medical necessity can be difficult in behavioral health, so claim denials are all too common.

Lack of eligibility. Eligibility rules for payers like Medicaid shift often, and submitting a claim for a non-eligible client can lead to resource-intensive and costly denials.

Coding errors. Incorrect coding or incomplete documentation is a surefire path to denials or eventual clawbacks.

Preauthorization challenges. In 2023, commercial insurers denied 3.2 million preauthorization requests and 26% of people seeking mental health care have faced preauthorization barriers, according to KFF.

Automated denials. One study found that preauthorization denial rates rose up to 108% when insurers used artificial intelligence (AI) tools to review claims.

Strategies for Handling Denials of Behavioral Health Claims

From preventing claim denials to quickly addressing them when they do occur, an advanced EHR can help ensure that denial management for behavioral health remains an always-on and comprehensive process. An EHR can help by:

A New York City-based study found that more than 75% of practices that adopted value-based care saw fewer hospital readmissions, higher post-discharge follow-up rates, and more than $200 million in cost savings.

This study is just one indication that value-based care — a model that prioritizes service outcomes over volumes — can work well. And as more organizations adopt the model, they’re more equipped to deliver the coordinated, whole-person care their clients need.

Adapting to the value-based care model, however, requires strong behavioral health revenue cycle management — and the technology solutions that can support it.

Mental Health Billing and RCM: Succeeding in Value-Based Care Models

The shift to a value-based care model is as important as it is urgent, though it presents challenges for mental health billing and RCM processes. Organizations need to prepare now for this rapidly approaching future.

What Is Behavioral Health Value-Based Care?

Value-based care is both a care delivery and a payment model that typically results in lower readmission rates, fewer barriers to care access, and better treatment adherence for clients.

There are several key principles behind behavioral health value-based care models:

Outcomes, not volume: The model rewards providers based on measurable improvements in client outcomes. If a client shows improvement on the GAD-7 anxiety assessment, for example, the provider is paid for that outcome.

Holistic, individualized care: The model values each client’s unique needs, individualizes treatment plans, and focuses on delivering high-quality care at every step.

Care coordination: Providers collaborate frequently with other care specialties to reduce costly, avoidable emergency situations and account for the overlap between psychical and mental health needs.

Long-term outcomes and incentives: Organizations submit data on key outcome factors to demonstrate how they’re driving measurable improvements in client health and wellness.

Meeting Value-Based Care Requirements: Roadblocks and Solutions

Many payer claims systems and mental health billing processes are still built around the fee-for-service model, making the shift to value-based care more difficult. Here are three common mental health billing challenges for behavioral health value-based care, along with solutions to overcome them.

Tracking Outcome Data Within Complex Care Dynamics

Behavioral health typically involves:
- Multiple client visits over a long period
- Intense coordination with other providers
- Integrated work with services like care homes or home health aides
The complexity of this work makes it tough for organizations to accurately track outcome data. Many Medicaid programs, for example, require behavioral health providers to report on Healthcare Effectiveness Data and Information Set (HEDIS) measures such as seven-day follow-up after hospitalization for a mental illness, which requires coordination across inpatient, outpatient, and community-based providers.

A top-tier EHR offers several features that can help, including:
- Clinically validated assessments that providers can use to measure relevant outcomes data
- Advanced analytics with real-time outcomes tracking
- Intelligent, intuitive dashboard and permissions-based access for coordinated providers
Adjusting to Outcome-Based Clinical Documentation

Research shows that behavioral health providers are spending up to 13.5 hours per week on documentation, as they must continually reassess client-reported outcome measures. An EHR can help these organizations transition to value-based documentation processes with:
- Cross-team collaboration tools that help providers across the care continuum align on outcome-based documentation
- AI-powered solutions that automate and streamline documentation processes
- Outcome-focused workflows that help providers accurately document client notes
Using the Right Mental Health Billing Codes

The value-based care model will require organizations to shift to outcome-driven coding practices. A strong EHR assists in this process with:
- Customizable and rule-based coding checklists that ensure providers align codes with the actual services delivered, while linking outcomes data to reporting dashboards as required in value-based care models
- Notifications of incorrect billing codes to prevent errors
- Automation that can streamline coding, for example, session-based psychotherapy (e.g., 90832, 90834, 90837), interactive complexity (90785), and crisis interventions (H2011).

Aligning Mental Health RCM With Quality and Outcomes Goals

In behavioral health and mental health RCM, financial and clinical work is inextricably linked. As care quality increases, a 2023 study found, so does a hospital’s profitability.

As more organizations shift to a value-based care model — which McKinsey projects will cover 90 million people by 2027 — that link will become even stronger.

The Importance of Staff Collaboration in Mental Health Reimbursement

Since providers are reimbursed based on measurable improvements in client outcomes under the value-based care model, there’s a tight connection between an organization’s quality of care delivery and their revenue. To strengthen the alliance between clinical and mental health RCM teams, organizations should:

How to Align RCM Activities With Quality Metrics

Here are five steps organizations can take to align their mental health RCM and clinical quality metrics, particularly within a value-based approach.

Integrate EHR and RCM Systems

Achieving interoperability can be difficult for organizations that contract with multiple payers or partners. But an EHR can forge better integrations and help teams work together to manage:
- Clinical data and its relationship to medical billing timeliness and accuracy
- Reimbursement and payment tracking, as related to service delivery dates, locations, and types
- Claim denial rates and their connection to delivered services and medical coding
Top EHRs consolidate clinical and RCM data in a single central system, enabling more efficient integration and collaboration.
Establish Aligned KPIs

Aligning on the right KPIs ensures teams can see clearly how client outcomes relate to mental health RCM. A 2021 study found that when surgeons understand their KPIs, for example, they’re more likely to see how their performance in the operating room impacts the organization’s revenue. For behavioral health, this knowledge enables providers to connect the dots between their work and their organization’s bottom line.
Standardize Workflows

Standardized workflows are vital to effective collaboration, and top EHRs offer evidence-based workflow templates, as well as task notification systems that automatically route tasks to the appropriate team member. This level of integration and workflow automation holds clinical and RCM staff accountable for the roles they play in collaborative decision-making, client management, and revenue generation.
Ensure Accurate Documentation and Coding

Inaccurate billing codes and documentation impact clinical work and often lead to claim denials and revenue loss. One study found that manual coding processes lead to an average three-month backlog and a wide range of coding accuracy.

Backed by AI-powered tools, top EHRs support:
- Ambient dictation
- Efficient documentation
- Accurate, timely, and complete billing coding
Foster a Culture of Continuous Improvement

According to a 2024 study, a culture of continuous improvement can lead to better RCM practices, more effective clinical practices, and innovative revenue-generating ideas. EHRs provide the clear, accurate data to support this kind of culture, enabling teams to monitor quality-linked financial outcomes in near real time.

A 2024 Research Triangle Institute report showed that the complexity of billing procedures in behavioral health negatively impacts both clients and clinics. Clients tend to pay more for these services and go out of network more for behavioral health than for any other specialty. Organizations, on the other hand, get reimbursed from insurance companies less than other specialties.

Preventing these results requires organizations to have strong behavioral health revenue cycle management procedures in place, as doing so can help prevent claim denials, payment delays, or negative client experiences.

How to Improve Revenue Cycle Management Success in Behavioral Health

Strong and effective RCM capabilities can mean the difference between financial instability and an improved bottom line. But too many behavioral health organizations don’t know how to improve revenue cycle management to achieve better results. Here’s a breakdown of the landscape and some useful tips to boost RCM.

What Makes Behavioral Health RCM Unique — And Uniquely Challenging

For decades, denial rates have been higher in behavioral health than in other medical areas. But the Medical Group Management Association (MGMA) found that 60% of providers claimed insurance denials rose even more in 2024.

Providers in the industry must also grapple with:

Increased client financial responsibility. One study found that Medicaid reimburses at rates 40% lower than cash payments, putting more of the financial burden on clients.

Convoluted and varied billing requirements. Federal, state, and local regulations all call for different billing and coding requirements.

Shifting compliance requirements. New care models and client needs cause regulatory requirements to constantly evolve.

Strict payer requirements. Each insurance payer requires specific stipulations, and organizations must keep up or risk losing revenue.

Increased caseloads. Providers are overburdened with high caseloads and administrative demand.

7. Establish Cross-Functional RCM Teams

Cross-functional collaboration is critical to driving improved client outcomes and financial performance, particularly in value-based care models. For example, a clinician and billing specialist might review documentation together to ensure the treatment plan reflects both clinical goals and payer requirements. This kind of collaboration helps prevent denials and builds mutual understanding between teams.

Clinical Documentation Improvement: A Key to Mental Health Funding

Clinical documentation improvement is becoming increasingly important in behavioral health, as payers and regulatory bodies require more and more detailed documentation for billing procedures.

Here’s a breakdown of the financial challenges mental health organizations are facing and how clinical documentation improvement is key to securing long-term financial sustainability.

The Uncertain Financial Picture for Mental Health

Despite one in five U.S. adults living with a mental illness, reports The National Alliance on Mental Illness, core programs that support this kind of healthcare are seeing their financial support reduced. The current federal administration has initiated significant restructuring and funding reductions within the Substance Abuse and Mental Health Services Administration (SAMHSA), including staff reductions and proposed cuts to behavioral health grants, states Forbes. The administration also proposed an $11 billion cut to behavioral health grants and is looking toward more cuts in 2026.

On top of these funding reductions, the One Big Beautiful Bill Act cut Medicaid spending by nearly $326 billion over the next 10 years, KFF reports. Since Medicaid is the largest payer for mental health services in the country, these cuts could prove devastating for both people who need behavioral health services and the organizations that serve them.

These factors combine to form an increasingly volatile and uncertain financial picture for behavioral health, requiring organizations to focus more heavily on clinical documentation improvement as they move forward.

How Effective Clinical Documentation Strengthens RCM Efforts

Documentation is the foundation of effective RCM, as governing organizations and regulatory bodies require accurate and timely documentation to establish charges, process payments, and reimburse organizations.

Clinical documentation improvement is the process of reviewing medical records for accuracy and completion. This systematic process enables teams to link documentation to billing procedures, which is particularly important in the complex billing environment of behavioral health. The process can help organizations:

AI-powered, automated documentation to streamline notetaking and check documentation against custom rules.

Embedded payer-specific documentation rules with specific checklists and error alerts.

Collaboration tools for consistent documentation, better client engagement, and improved provider communication.

Secure access to documentation-focused training materials, resources, and educational toolkits.

Enhanced RCM capabilities for streamlining workflows, automatically scrubbing claims, and providing real-time data to support financial success.

Alone, these features can support better RCM practices. But when combined, they can transform an organization’s financial foundation and clinical documentation improvement — particularly critical needs during this financially strained period.

Behavioral Health Coding Audits: Protect Your RCM and Prevent Denials

No matter how careful and prepared you are, behavioral health coding errors and payer rejections still happen. Payers and regulators heavily scrutinize coding and documentation, so even the smallest inaccuracy can lead to a denial or noncompliance fee.

Behavioral health coding audits can help to better future-proof organizations by preventing costly setbacks and enabling teams to address coding patterns that might be losing them money.

The Power of Routine Coding Reviews

Behavioral health organizations must follow federal laws, state regulations, and commercial payer requirements — all of which have unique coding, billing, and documentation needs.

Coding audits are when teams analyze a sample of claim submissions to spot bottlenecks or errors. According to the American Medical Association, behavioral health coding audits can help organizations:

Address pervasive coding issues

Defend against clawbacks

Reveal under-documented services and misaligned codes

Strengthen their overall RCM and billing practices

5 Strategies for Coding Audit Success

Follow these steps to get the most out of your coding audit.

Understand Common Problems

Ensure your RCM team is prepared to spot these common red flags during their audit:
- Upcoding, in which providers code for a more severe diagnosis or treatment than their client’s case required.
- Incorrect or vague diagnosis codes that may lead to denials, such as coding generalized anxiety disorder (GAD) as F41.9 (unspecified anxiety disorder) when the clinical record clearly supports F41.1 (GAD).
- Missing or incomplete documentation.
- Mixing outpatient and inpatient codes unnecessarily, including incorrectly mixing professional CPT psychotherapy codes with facility-based revenue codes, or billing both for the same encounter.
- Unspecified or inaccurate service type, like billing individual services for group-therapy service delivery.
- Inaccurate service times, as specific time intervals require distinct CPT codes (for example, codes 90832 or 90833 for sessions 16–37 minutes in length).
Stay Current on Coding Changes

CPT and ICD-10 codes — as well as related regulatory documentation requirements — evolve over time, often on an annual basis. Ensuring that your team stays informed and up to date on these changes is critical. The right EHR solution can streamline this process by automatically updating coding and compliance checklists to reflect current requirements.
Schedule Regular Audits

Make behavioral health coding audits a regular part of your monthly or quarterly schedule. Waiting until payment delays and claim denials add up to solve persistent issues can lead to serious revenue loss and administrative headaches. Instead, empower your team to take an “always-on” approach to auditing.
Fix Documentation Errors and Gaps

Since documentation is such a crucial element of behavioral health coding practices, it’s vital to make this a central part of your auditing processes. Identify persistent errors that could be hindering your RCM and use your EHR’s templates and checklists to prevent those errors from recurring.
Track Denial Patterns

Spotting pervasive reasons for recurring claim denials is another critical auditing step. Look for misaligned codes, errors meeting payer-specific requirements, and incorrect client information. By addressing these high-level patterns, you’ll identify areas where further training is warranted.

Outdated behavioral health revenue cycle management tools are holding too many organizations back. Without the right systems to automate and streamline RCM, behavioral health providers risk losing revenue to claim denials, payment delays, and dissatisfied clients.

But not all EHR platforms are created equal, and choosing an advanced technology solution requires organizations to determine exactly what they need and ask vendors the right questions. Finding the right behavioral health or IDD EHR vendor with the right tech can set organizations up for sustained financial success.

Technology Must-Haves in Behavioral Health Revenue Cycle Solutions

In a challenging and fast-changing landscape, the strength of a behavioral health organization’s RCM capabilities comes down to the strength of their tech stack. Here’s a deep dive into seven must-have behavioral health revenue cycle solutions every organization should adopt to streamline their RCM.

1. Integrated EHR and Billing Systems

Find a strong EHR with integrated RCM capabilities that support:

Unified clinical documentation, including templates for service lines such as ACT, mobile crisis, and therapy.

Insurance eligibility checks against payer-specific lists.

Seamless data flow with billing, audit, and performance insights.

These features can help you gain greater control over your financial processes.

2. Claim-Scrubbing Tools

A 2025 study found that, for the average hospital, a 1% increase in claim denials results in 2% lost revenue. As insurance companies heighten eligibility and preauthorization requirements, claim denials are increasing. Between 2020 and 2023, for example, denials increased by 18%, according to 2025 research.

Claim-scrubbing features compare insurance claims against coding standards to better ensure accuracy and completeness. Look for an EHR with embedded solutions that scrub claims for:

Frequency or duplication (e.g., same-day, same-provider)

NCCI edits

MUEs

Invalid POS or telehealth modifiers

Missing authorization units

Timely filing

Diagnosis-procedure incompatibilities

3. AI-Powered Billing Capabilities

AI tools have taken on greater importance in behavioral health revenue solutions, as they automate repetitive tasks, enhance documentation processes, and help ensure the accuracy of coding and claim submissions.

To truly boost your clinical and RCM capabilities, find an EHR platform with integrated AI-powered solutions that:

Flag higher-risk clients against custom risk scores

Ensure documentation aligns with regulatory and payer requirements

Analyze data to identify patterns that might be impacting RCM and care continuity

4. Compliance and Audit-Readiness Features

Selecting an EHR with embedded compliance trackers is essential to remaining current with ever-evolving regulatory standards. Also, look for a solution with task management features that notify team members of compliance-related task deadlines and route tasks to the next staff member upon completion.

5. Performance and KPI Tracking

The World Economic Forum reports that healthcare organizations spend a collective $1.8 trillion annually on initiatives that don’t actually improve client outcomes. They also underutilize 97% of the data they have access to. A strong KPI strategy can help solve both problems, that same source notes.

Advanced behavioral health EHRs provide intuitive data dashboards with key insights on metrics like denial rates, collection trends, days payments are held in accounts receivable, and more. Tracking these metrics enables organizations to spot and immediately address where they might be losing revenue.

6. Interoperability

Interoperable behavioral health revenue cycle solutions ensure seamless collaboration across all providers within a care continuum, particularly across behavioral health, primary care, and community support providers. Providers — as well as clinical, billing, and administrative teams — can easily work together via their portals to ensure billing details are accurate. Look for a solution that aligns with interoperable data exchange standards such as the Fast Healthcare Interoperability Resources (FHIR) programming API.

7. Telehealth Billing Automation

In 2023, telehealth visits represented more than half (58%) of all mental health visits, according to the Center for Improving Value in Health Care. As such, it’s crucial to select an EHR with both telehealth capabilities and billing features. These solutions can check the accuracy of remote care insurance claims, while empowering clients to actively participate in care and maintain their current billing and payment information in their client portal.

Essential Questions To Ask Top Behavioral Health RCM Companies

Demand for behavioral health care is rising, and to meet clients’ needs — while grappling with substantial challenges like provider shortages and intense insurance and billing requirements — organizations need solutions that automate RCM processes.

Here are key considerations to raise with potential behavioral health RCM companies to ensure you find the right technology solution to improve your organization’s RCM and financial performance.

Questions About Behavioral Health RCM Technology Solutions

What kinds of technology integrations do you offer?

Ideal answer: Our RCM capabilities are embedded into a comprehensive EHR, which uses Fast Healthcare Interoperability Resources (FHIR) to ensure smooth interoperability, workflows, and collaboration.

Ask behavioral health RCM companies about their integrations, as an all-in-one solution can help you better manage your clinical, administrative, and RCM needs.

Does your behavioral health technology provide reporting and analytics?

Ideal answer: Using our advanced behavioral health EHR with integrated RCM solutions, you can access an intuitive dashboard with data based on industry-specific KPIs.

Relevant KPIs enable organizations to track and address initiatives that could be wasting time, money, or resources.

Does your technology support telehealth billing?

Ideal answer: Clients can set and attend telehealth visits directly through their easy-to-use EHR portal, while providers can personalize virtual care and improve documentation by automating notetaking during secure Zoom-integrated visits.

Partner with behavioral health RCM companies that offer software with integrated telehealth capabilities, virtual notetaking, and embedded telehealth billing support.

Questions About Staying Current With a Shifting Landscape

How frequently do you update your behavioral health coding libraries and payer rules?

Ideal answer: Our RCM engine is regularly updated to reflect the latest payer and regulatory requirements, preventing inaccuracies that can lead to costly payment delays, denials, or rejections.

Accurate coding is a vital aspect of effective RCM, so search for an EHR with automated solutions that check submissions against up-to-date coding standards.

How do you ensure compliance with payer rules and help prevent claim denials?

Ideal answer: Our advanced EHR comes with integrated compliance tracking solutions.

To avoid claim denials and delays, ensure the software you select includes embedded compliance checklists and claim-scrubbing capabilities.

Can your system support value-based care models and reporting?

Ideal answer: Our EHR supports value-based care by linking clinical outcomes data (e.g., PHQ-9, GAD-7, ASAM scores) to billing and reporting dashboards.

Your selected EHR should include solutions for tracking outcomes and ensuring accurate and complete documentation — essential elements of the value-based care model.

Questions About Support and Service

What experience do you have with behavioral health reimbursement billing processes?

Ideal answer: Our technology is specifically built for behavioral health and IDD, offering key features that these organizations desire and require. Our team has experience with behavioral health reimbursement, such as Medicaid FFS and MCO billing, IDD waiver programs, and crisis/CCBHC funding models.

EHRs built for general healthcare won’t necessarily include the unique features that behavioral health and IDD professionals want and need. To get the most out of your investment, look for behavioral health RCM companies with software designed for behavioral health.

Do you offer coding support or guidance tailored to behavioral health?

Ideal answer: Our team of experts is on hand to support with coding updates, billing, and overall RCM. We have in-depth CPT and HCPCS expertise — including H2019, H0032, 90837, 90846/90847, and 90785 — and we can assist your team in monitoring policy bulletins.

Since coding standards change frequently, it’s important to select an EHR that enables fast, accurate, and up-to-date coding support. These features can help speed up reimbursement, ensure compliance, and stabilize cash flow.

Do you provide dedicated account management and ongoing training?

Ideal answer: Our team is available to help you make the most of your behavioral health EHR investment and continually optimize your RCM capabilities.

Finding a low- or no-code EHR can save your organization considerable time and resources. Select a vendor that provides ongoing, personalized support from experts who can help with onboarding to implementation to usage.

Frequently Asked Questions About Behavioral Health Revenue Cycle Management

Revenue cycle management (RCM) refers to the practices and processes that healthcare organizations use to manage billing, coding, and insurance procedures. Behavioral health revenue cycle management is a particularly complex version of this process because, compared to other medical specialties:

Diagnoses and treatment tend to be more complicated and subjective

Coding and insurance requirements are more stringent

Claim denials are typically more common

Since behavioral health RCM is so complex, organizations benefit from advanced technology solutions that can streamline RCM workflows, denial management processes, insurance verification, preauthorization, and billing procedures.

A top EHR offers:

AI-powered documentation and dictation solutions

Coding and compliance checklists to ensure accuracy and completeness

Advanced data analytics so teams can identify and address patterns that might be hindering their revenue

Outcomes-based tracking to align with value-based care models

Denial management solutions to help avoid costly delays

Combined in one central resource, these solutions help behavioral health organizations improve their RCM and boost their bottom line.

Behavioral health organizations should conduct coding audits monthly or quarterly. Using data analytics from a top EHR can help teams identify and address patterns that are leading to pervasive claim denials or payment delays. By auditing claims regularly, organizations are better equipped to prevent problems from recurring.

Regulatory bodies and insurance companies require detailed documentation for behavioral health services, including:

Service type

Length and location of services delivered

Diagnoses and treatment plans

Exams and assessments

Client history and personal information

Much of the required documentation in behavioral health is subjective, narrative-based, and non-linear, so it can be difficult for providers to ensure accuracy and completeness. With an EHR, providers can use custom checklists to ensure their documentation meets payer-specific requirements and better ensures timely, accurate, and complete payments.

AI-powered solutions that enable ambient dictation, symptom tracking, and documentation can help improve both client care and RCM. These solutions streamline and automate otherwise manual processes, helping behavioral health teams save time and resources.

Core Solutions’ Cx360 Enterprise EHR includes integrated AI tools that provide real-time data, improved documentation practices, and better clinical outcomes.

Glossary of Terms

Behavioral health coding

Regulatory, compliance, and insurance-related standards that align behavioral health services with specific numerical codes. Since behavioral health is particularly complex, organizations must juggle federal, state, and insurance coding standards.

Behavioral health revenue cycle management

Processes that behavioral health organizations use to ensure the accuracy and completeness of coding, documentation, and claim submissions. Effective behavioral health revenue cycle management can help organizations avoid costly errors and drive long-term financial sustainability.

Clinical documentation

Detailed notes regarding client information, diagnoses, treatment plans, and more. Documentation is required and highly scrutinized by billing and insurance companies for reimbursement.

Denial management

The process of addressing pervasive errors that lead to recurring insurance claim denials, such as misaligned coding and delivered services; submissions for ineligible services; client detail mistakes; and inaccurate billing codes.

Electronic health record (EHR)

A robust digital repository of clients’ medical records across all coordinated healthcare settings. Advanced EHRs also include integrated features such as solutions for care coordination, client empowerment, clinical care delivery, operational management, and revenue cycle management.

Mental health parity laws

Federal and state regulations put in place to reduce barriers to accessing mental health services and ensure services, payments, and insurance processes are the same for mental health care and other medical service areas.

Revenue analytics

Data and insights related to an organization’s cash flow, billing processes, insurance claim approvals/denials, and overall financial performance.

Revenue cycle management

Processes through which healthcare organizations manage all things related to billing, medical coding, and insurance reimbursement.

Mike Arevalo-1

Author

Michael Arevalo, Psy.D., PMP

Mike Arevalo, Psy.D., is a licensed clinical psychologist with extensive experience providing evidence-based treatment and integrating clinical best practices in multiple clinical settings, including community mental health organizations, private practice, university counseling centers, and major healthcare systems such as the VA and Kaiser Permanente. He has a deep commitment to advancing behavioral health through digital innovation and data- driven care. He's led efforts to enhance clinical quality, clinician workflows and decision-making, and optimize patient care within digital therapeutics and national provider network groups.

Behavioral Health Revenue Cycle Management: Essential Guide to Long-Term Success

Key Takeaways

Understanding Behavioral Health Revenue Cycle Management

Behavioral Health RCM: Why Specialized Technology Expertise Matters

6 Common RCM Challenges and How the Right EHR Can Address Them

Complex Coding for Behavioral Health

Complicated Insurance Verification Processes

Frequent Claim Denials

Payer Nuances and Changes

Regulatory and Compliance Challenges

Behavioral Health Credentialing Delays

Behavioral Health Revenue Analytics & KPIs: Targeting the Best Metrics

1. Key Metrics for Session-Based and Time-Driven Billing

Average Session Length

Average Appointments per Clinician

No-Show Rates

2. Critical KPIs for Documentation and Data Quality

Documentation Completeness Rate

Time Spent per Note

3. Top Measures to Track Access to Care and Client Engagement

Average Referral-to-First-Session Time

Missed Appointment Rate

Client Acuity Distribution

Using an EHR to Standardize Behavioral Health KPIs

Navigating Medicaid Billing for IDD Services and Its Impact on RCM

The Realities of Managing Medicaid in IDD Care

Common IDD Medicaid Billing Challenges — and How an EHR Can Help

Complying With Federal and State Documentation Requirements

Submitting the Right IDD Billing Codes

Accounting for the Complexity of IDD Services

EVV and the Evolution of Medicaid Requirements

Behavioral Health Revenue Cycle Management: Compliance & Reimbursement

Improving Reimbursement in Compliance With Mental Health Parity Laws

What Is Parity in Mental Health? A Look at the MHPAEA

Additional Requirements in the 2024 Update

5 Strategies to Stay Compliant With Mental Health Parity Laws

1. Accurately Document Services

2. Ensure Coding Accuracy

3. Optimize Workflows to Streamline Compliance

4. Consistently Review Claim Denials

5. Train Staff

Denial Management for Behavioral Health: Strategies That Work

Common Causes of Claim Denials

Strategies for Handling Denials of Behavioral Health Claims

Behavioral Health Revenue Cycle Management for VBC & Integrated Care

Mental Health Billing and RCM: Succeeding in Value-Based Care Models

What Is Behavioral Health Value-Based Care?

Meeting Value-Based Care Requirements: Roadblocks and Solutions

Tracking Outcome Data Within Complex Care Dynamics

Adjusting to Outcome-Based Clinical Documentation

Using the Right Mental Health Billing Codes

Aligning Mental Health RCM With Quality and Outcomes Goals

The Importance of Staff Collaboration in Mental Health Reimbursement

How to Align RCM Activities With Quality Metrics

Integrate EHR and RCM Systems

Establish Aligned KPIs

Standardize Workflows

Ensure Accurate Documentation and Coding

Foster a Culture of Continuous Improvement

Boosting Behavioral Health Revenue Cycle Management Performance

How to Improve Revenue Cycle Management Success in Behavioral Health

What Makes Behavioral Health RCM Unique — And Uniquely Challenging

8 Behavioral Health RCM Best Practices

1. Empower Clients With Advanced Technologies

2. Create Payer-Specific Workflows

3. Standardize Documentation Practices

4. Use Analytics to Immediately Address Claim Denials

5. Leverage KPIs

6. Set up Automated Eligibility Verification

7. Establish Cross-Functional RCM Teams

8. Regularly Train Staff

Clinical Documentation Improvement: A Key to Mental Health Funding

The Uncertain Financial Picture for Mental Health

How Effective Clinical Documentation Strengthens RCM Efforts

An Advanced EHR: The Foundation for Improved Documentation

Behavioral Health Coding Audits: Protect Your RCM and Prevent Denials

The Power of Routine Coding Reviews

5 Strategies for Coding Audit Success

Understand Common Problems

Stay Current on Coding Changes