According to the Research Triangle Institute’s 2024 behavioral health parity report, the complexity of insurance and billing procedures in the field negatively impacts clients and organizations alike.
Clients, the report says, go out of network more for behavioral health services than for any other medical specialty — and they pay more because of it. Meanwhile, behavioral health providers are generally reimbursed less than other medical specialties.
Managing this combination of factors, along with complex billing codes, high rates of claim denials, and complicated compliance regulations, puts intense pressure on organizations to carefully consider how to improve revenue cycle management (RCM).
After all, strong RCM capabilities can determine whether an organization faces financial instability or achieves an improved bottom line.
In a 2024 poll from the Medical Group Management Association, 60% of providers said that the rate of insurance denials rose that year. That trend is especially significant for behavioral health, where denial rates have historically run higher than in other specialties. While 30% of mental health claims were denied in 2023, for example, only 19% of claims in other medical specialties were rejected.
But high claim denial rates aren't the only reason billing and RCM are particularly complex in behavioral health. Providers in the industry must also contend with:
Increased client financial responsibility. One study found that Medicaid — the largest payer for behavioral health services — reimburses at rates 40% lower than cash payments. Combined with high denial rates, this often shifts more financial burden to clients, putting timely, accurate, and complete payment at risk for organizations.
Convoluted and varied billing requirements. Organizations must juggle multiple billing and coding guidelines that align with federal, state, and local regulations, leaving them open to increased errors that could delay payment and reimbursement. Examples include: CCBHC prospective payment requirements, state Medicaid managed care transitions, evolving telehealth billing rules, and others.
Shifting compliance requirements. Regulatory requirements are constantly evolving as organizations take on new models of care and the industry works to account for new privacy laws, social determinants of health, client needs, and changing payer demands and expectations.
Strict payer requirements. Payers vary in prior authorization rules, medical necessity documentation, credentialing and supervision requirements for non-licensed staff, telehealth modifiers, and unit limits. Gaps can lead to denials, and when they surface in post-payment audits, to recoupment.
Increased caseloads. Behavioral health providers often face high caseloads and administrative demands, and extensive documentation or billing requirements can reduce face-to-face clinical time. Over time this is associated with burnout and turnover, which in turn disrupt documentation timeliness and continuity of billing workflows.
Combined, these factors create extensive challenges for behavioral health organizations and RCM teams looking for how to improve revenue cycle management, making it difficult to navigate the evolving billing landscape and avoid costly errors, denials, or delays.
Despite these complexities and challenges, there are steps organizations can take to improve their revenue cycle management capabilities and performance. Here are eight RCM best practices that can help drive higher reimbursement rates, minimize compliance risks, and secure long-term financial success. They’re listed in the order we recommend implementing them, and the section that follows explains why.
Providers, staff, and revenue cycle management teams must work together to ensure workflows, documentation, and billing procedures follow RCM best practices. Creating cross-functional teams helps clinical care and RCM staff operate in sync, and it establishes who is accountable for rolling out each practice that follows.
This RCM for behavioral health best practice becomes even more important as organizations adopt value-based care models, where close collaboration between clinical and RCM teams supports both quality reporting and financial performance. For example, a clinician and billing specialist might review documentation together to confirm that medical necessity, treatment goals, and service linkages are clearly documented in the way payers require. This kind of collaboration prevents denials and builds mutual understanding between teams.
Before changing any workflows, establish a baseline. Your EHR’s customizable dashboards let teams monitor key performance indicators (KPIs), such as:
Session attendance rates
Treatment adherence rates
Claim denial and approval rates
Coding accuracy rates
Hospital/facility readmission rates
Tracking these KPIs from the start gives organizations a bird’s-eye view of their overall financial performance. It also shows where revenue is being lost and whether each practice that follows is working.
Nearly half (49.7%) of all claim denials are due to front-end (or upstream) errors, such as inaccurate client details, insurance verification, or eligibility, according to Revco Solutions. Verifying insurance eligibility early and often is one of the essential best practices for how to improve revenue cycle management, as it helps organizations avoid delays and denials. With your EHR, this process can be automated through real-time eligibility checks.
The system should also have the capability to send alerts for eligibility issues and enable clients to quickly update outdated information through an easy-to-access portal. Together, these capabilities reduce enrollment delays and strengthen overall RCM for behavioral health.
For organizations considering how to improve revenue cycle management, standardizing documentation templates is an essential step. Many behavioral health EHRs allow teams to establish templates that ensure every provider across the care continuum produces accurate, consistent documentation.
This is one of the most beneficial RCM best practices when combined with regular audits and compliance tracking. Auditing documentation helps teams identify patterns and minimize errors, while compliance trackers keep everyone accountable for tasks and deadlines.
Once documentation is consistent, layer payer-specific rules on top of it. By creating payer-specific workflows in their EHR, organizations can reduce denials tied to each payer’s unique requirements and save valuable staff time.
EHRs also let teams set up custom rules that automatically update when payer requirements change. With these tools, organizations can save critical time managing and meeting unique criteria.
The administrative burden of appealing and managing denials costs organizations a collective $7.2 billion each year, according to HIT Consultant.
Behavioral health clinics can significantly reduce these costs by preventing denials and rapidly responding to them when they occur. The key is to look in two directions:
Backward: Rely on your EHR’s intuitive dashboards and visualizations to spot previous billing delays, claim errors, or reasons for recurring denials.
Forward: Use predictive analytics to identify which claims are most likely to be rejected, and put systems in place to prevent or proactively address the causes of those rejections.
Billing complexities do not have to weigh down clients. With the right technology, they can take charge of their financial responsibilities.
Implement an integrated billing portal and real-time payment plans. These features enable clients to easily access their billing requirements, update their insurance details, and find transparent information about the cost of services. Those insurance updates also feed the eligibility checks in practice 3.
Clear cost information and manageable payment options can reduce financial barriers that contribute to missed appointments and disengagement.
To support effective collaboration, behavioral health care leaders should regularly train all staff using real-world billing scenarios. Doing so empowers team members to spot billing and claim errors that could lead to lost time and money, as well as implement RCM best practices into their day-to-day work to boost efficiency and financial sustainability. Rather than treating training as a final step, introduce it alongside each new practice, then reinforce it on a regular schedule.
Knowing how to improve revenue cycle management is one thing, but knowing where to start is another. Trying to adopt all eight RCM best practices at once will likely overwhelm your team and stall the process. A phased approach is better because each practice builds on the ones before it.
Begin by establishing accountability and a baseline with practices 1 and 2. A cross-functional team makes it clear who is responsible for implementing process changes and brings clinical and billing staff together before they set those changes in motion. Setting baseline KPIs follows next because they show where revenue is being lost. This means the team can fix their biggest problems first, and they have a before-and-after picture to prove impact.
Next, prevent denials at the source with practices 3 through 5. Because nearly half of denials start with upstream errors, improving eligibility verification is usually the fastest, highest-impact win. Standardizing documentation follows, then creating payer-specific workflows, which depend on that consistency to work. Automating a process before it’s standardized only leads to faster errors.
When the basics are in place, use clean data to catch remaining denials and extend the benefits to clients with practices 6 and 7. Denial analytics are most useful after upstream errors are reduced, because the remaining denials point to real, fixable patterns. Client-facing tools come after the internal processes they rely on, since a payment portal is only as good as the eligibility and billing data behind it.
Finally, make progress stick with ongoing learning through practice 8. Training is introduced with each new practice and reinforced regularly so new habits hold as staff and payer rules change.
RCM best practices are crucial, but their impact multiplies when paired with the right technology.
As you consider how to improve revenue cycle management success for your behavioral health organization, put adopting a strong EHR at the top of your list.
Cx360 Intelligence: The Intelligent Care Record is purpose-built for behavioral health and IDD organizations. With ethically built AI integrated into the platform rather than bolted on, the Intelligent Care Record helps enhance revenue cycle performance by scrubbing claims to ensure accuracy, automating workflows, and offering real-time analytics, so organizations can reduce costly billing errors and secure long-term sustainability.
Contact Core Solutions to learn how the Intelligent Care Record can help you master your RCM.
Start by forming a cross-functional RCM team that brings clinical and billing staff together, then set baseline KPIs. The team makes it clear who is responsible for each change, and the baseline shows which problems to tackle first and whether later changes are working.
Why are claim denial rates higher in behavioral health?Behavioral health organizations deal with complex billing codes, varied federal, state, and local requirements, and detailed payer documentation rules, all of which leave more room for error. In 2023, 30% of mental health claims were denied, compared with 19% in other medical specialties.
Which RCM best practices prevent the most denials?Upstream practices usually have the biggest impact: automated eligibility verification, standardized documentation, and payer-specific workflows. Because nearly half of denials start with errors in client details, insurance verification, or eligibility, catching problems before a claim is submitted is far more efficient than appealing a denial afterward.
Which KPIs should behavioral health organizations track?Common RCM KPIs include claim denial and approval rates, coding accuracy rates, session attendance rates, treatment adherence rates, and hospital or facility readmission rates. Tracking them from the start gives organizations a baseline for measuring the impact of each RCM best practice.
How does an EHR support RCM for behavioral health?Many of the eight practices depend on EHR capabilities, including real-time eligibility checks, documentation templates, payer-specific rules, claim scrubbing, denial analytics, KPI dashboards, and client billing portals. An EHR with integrated RCM capabilities keeps these functions connected, so clinical and billing data flow into each other instead of living in separate systems.