Complete Guide to Mental Health Billing

Mental health services are essential for the well-being and emotional healing of so many. These services and treatments span a wide range of clinical settings and therapeutic interventions. However, billing for mental health services can often hinder the treatment process if there are coding errors, inaccurate or inefficient documentation and pre-authorization issues.

One or more of these problems — and many other variables — can make it difficult for mental and behavioral health providers to operate their practice efficiently. A lot of time and energy goes into filing a claim with medical billing for mental health services, taking away time from patients. Learning more about the behavioral health billing process can make it easier for you to spend more time and energy on your patients and less on inconvenient discrepancies. Consider this a crash course on mental health billing for dummies.

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Table of Contents

Types of Covered Mental Health Services

It's important to know the types of covered mental health services for your patients who may have varying insurance or medical coverage. For example, some insurance will only cover mental health services by specific providers, such as physicians, psychiatrists, clinical psychologists and clinical social workers. Additionally, some independent mental healthcare providers can only diagnose the patient with a mental disorder because insurance will not cover the actual treatment.

If you are part of a private practice, then physicians' and psychiatrists' diagnosis and treatment of the mental disorder will most likely be covered by insurance. These services are often some method of counseling, including a general form of:

  • Family medical psychotherapy: If a family member has a certain condition, diagnosis or other mental health issues, immediate family members or caregivers receive therapy sessions to learn about their condition and how to take care of them. This service can occur with or without the patient present and is sometimes considered for payment.
  • Group psychotherapy: Several patients are chosen as a group to get treated interactively to help change behavior patterns. If their diagnoses are treatable, they should be covered by medical insurance.
  • Psychiatric therapeutic services: This is a form of individual therapy with a patient who can communicate and understand interactive questions and treatment from a provider. This therapy can include treating patterns of behavior, emotional disturbances and examinations.
  • Psychiatric diagnostic review: Also known as a psychiatric diagnostic interview examination, this mental health service collects a patient's medical and mental health history. A provider will also have the patient undergo a mental health status exam and evaluate their willingness and ability to respond to treatment.

The Role of Medical Record Documentation

The Role of Medical Record Documentation

Private practice billing services must include proper documentation. Everything transpiring between a patient and the mental healthcare provider should be in the medical record. But why is mental health documentation important? A patient's medical record determines what is billed for the mental health service, which means that all required information must be adequately documented. This medical record will help support the diagnosis and procedure code that is billed to insurance.

Essentially, an incomplete or inaccurate medical record would reflect that medical and mental health services are unnecessary for the patient. This error often results in insurance companies not paying for the service, making it difficult for behavioral health providers to do their job and patients to get the treatment they need. Proper note-writing and documentation also play a huge role as a communication tool used between mental health providers and professionals.

When you have accurate, up-to-date medical record documentation, the risk of challenges to treatment and administrative litigation and penalties is reduced. Some of the essential things that need to be documented in these clinical records include:

  • Patient's reason for seeking treatment and mental health or medical history
  • Past and present diagnoses and test results
  • Physical exam, assessment and clinical impression
  • Identification of factors that bring a health risk
  • Plan of care for the patient
  • Patient's progress and response to treatment
  • Any revisions of the diagnosis
  • Date and identity of mental health provider

It's no secret that documentation can be a hassle. You may even think to yourself, "Why do I need to write mental health notes?" Consider all valuable and relevant information insurance companies may need to confirm your reimbursement. In addition, note writing will help you stay more organized with your patient notes if you see a large number of clients regularly.

Diagnosis Coding

Diagnosis Coding definition

Diagnosis coding allows mental health professionals to identify different treatments, diagnoses or actions given to the patient. Diagnosis coding is documented to make it easier to categorize different mental disorders or diagnostic evaluations during therapy. These codes are essential for the billing process concerning insurance. Insurance companies need to see that the patient has a clear diagnosis that is medically necessary and qualifiable for covered mental health insurance.

These codes are also known as ICD codes, or the International Classification of Diseases, which are the required code set for billing purposes. The codes contain criteria for mental health disorders and conditions that are relevant to psychological use. CPT codes also contain E/M codes — Evaluation and Management codes — which are also often used.

ICD codes were set by the World Health Organization (WHO). They can also identify related health problems and are used with CPT codes for billing insurance. ICD codes are listed in The Diagnostic and Statistical Manual of Mental Disorders (Fifth Edition), generally known as the DSM-5, which gives therapists and psychiatrists the correct codes for billing.

For mental health services, such as psychotherapy, there are some common diagnosis codes, such as:

  • F32.1 Major depressive disorder, single episode, mild
  • F41.9 Anxiety disorder, unspecified
  • F41.1 Generalized anxiety disorder
  • F41.1 Generalized anxiety disorder
  • F42 Obsessive­-compulsive disorder
  • F32.1 Agoraphobia with panic disorder

The list of codes that mental and behavioral healthcare providers must know is essential for billing purposes and services. For instance, if a psychiatrist or therapist makes an error and documents the wrong code, a patient may not receive proper treatment. In addition, it would be a time-consuming hassle to fix the mistake and ensure that the patient is receiving an accurate, automatic diagnosis code for insurance billing and mental health services.

Why Mental Health Billing Can Be Complicated

Why Mental Health Billing Can Be Complicated

There are many different mental health treatments and services with varying restraints that can make medical billing difficult. To break it down, let's compare it to routine checkups at a doctor for your physical health. In this case, most exams are pretty standard and similar. The doctor will usually perform the same exams and tests for many patients, such as checking blood pressure, height, weight, listening to your heart or getting blood samples.

When these services are billed to health insurance, it is often a simple task because routine checkups are frequently under one general charge. For mental and behavioral health services, this is not always the case. There is a wide range of factors that contribute to the differences in these services. The length of a session, the location of services, the therapeutic approach, the age of the patient and their willingness to participate can all affect coding and billing.

This is a reason why mental health billing becomes complicated for providers, as it's challenging to offer standardized treatment for all patients — making billing just as complex. Insurance companies have attempted to standardize billing for mental and behavioral health services to minimize payment in terms of the length of treatment, the number of treatments and the maximum number of covered treatments.

Many health insurance plans also require pre-authorization, which means that patients must get permission before receiving coverage for some mental health services. This procedure can prolong insurance billing and prevent a patient from receiving the treatment they need. Mental healthcare providers can also become frustrated with medical billing because of the lack of resources. Many private practices are small and have limited administrative support to help with the task of medical billing — which can lead to unintentional errors and overworked physicians and therapists.

Tips for Mental Health Billing

Tips for Mental Health Billing

When learning how to bill for therapy services, there is always room for improvement and efficiency. Some elements can speed up insurance billing and ensure a reduction in documentation errors — benefitting mental health providers and patients alike. Consider these mental health billing tips that can help make the process smoother.

  • Pre-authorize to save time: While pre-authorization is not often necessary for initial or basic mental health sessions, many patients might have health plans that require it for lengthy or multiple-session cases. Always check if pre-authorization is required before working with a new client, especially in a therapy session that is considered non-standard.
  • Update patient information regularly: Your patient's insurance coverage should always be up-to-date and accurate, but their personal information is just as important. You should ensure that this is done every year, if not more often. If a patient has a change in address, marital status or any other changes, you should be aware so you can make accurate claims.
  • File claims on time: Clients or patients might have submission requirements that require claims to be submitted by a specific date or within a period of time. If you fail to meet this requirement, you won't be paid for the service because your claim will be denied. Consider creating a billing schedule in your practice, such as a specific date every month, to confirm that all claims are submitted on time to the insurance carrier.
  • Identify inaccuracies: If you have had claims denied in the past, you know how frustrating and time-consuming it can be. Check the reason for denial provided by your insurance company to see how you can rectify the issue and submit an accurate claim. Looking at your denied insurance claims can also help you identify patterns in your billing process that can be improved. You should also ensure that you fix the issues for the resubmission within the given window of the insurance carrier.

1. Always Double-Check Each Patient's Insurance

Always Double Check Each Patient's Insurance

As with any mental and behavioral health industry procedure, it doesn't hurt to double-check yourself. If you have had issues with incorrect information in the past leading to claims issues, it's always best to implement double-checking in your practice. Confirming your patient's insurance is one of these areas where you want to be certain. Otherwise, medical billing will only be more difficult. Before sessions with any new or existing patient, ensure that you know their insurance plan and benefits ahead of time.

If you know the available coverage for every patient before you provide services, it will be much easier for you to submit proper claims and minimize frustration for you and your patient. This may take some additional time on your part, but it will be worthwhile when you can avoid common mistakes. If you want to check your patient's coverage, you can perform a verification of benefits (VOB). This procedure will give you a better idea of your patient's insurance plan and provide them with treatment and services accordingly.

Double-checking patient insurance can also help you identify authorization requirements or any changes in their plan or coverage — as many patients may forget to inform you of changes. Verifying this essential component will also help you learn how to bill insurance companies for counseling accurately. Double-checking can lead to more efficient processes in your practice or clinic.

2. Perform a Verification of Benefits

Perform a Verification of Benefits

As mentioned above, the verification of benefits (VOB) is important to confirm a patient's insurance coverage and the service they intend to receive. In this process, you can check your patient's policy for information that won't often be directly on their insurance card. This step is important for making mental health billing easier, because though many patients have active insurance, your services may not be covered as a benefit.

However, regardless of the services you provide, it's always a good idea to check that your patient is covered for the mental health services they need. Performing a VOB can also help you determine the amount that your patient's insurance company will pay for the services they are seeking. To do this, you can call the patient's insurance company provider using their account number to get a better idea of their benefits.

If your practice has an online providers portal, you can also check there to discover and verify a patient's benefits and eligibility for your services. If these options still somehow leave you with unanswered questions or uncertainty, you can always consider using electronic health record (EHR software to do the VOB for you. While this process is not always simple, quick or easy, it's essential to know the coverage and benefits that your patient has.

A VOB can help you avoid rejected claims from the insurance company as well as unpaid bills for the services you provide for your patient.

3. Submit Claims Properly

Submit Claims Properly

As a mental healthcare provider, you can do everything right up until you submit a claim, but all of your hard work will be undone if you don't do it properly. For instance, after you provide a service, you should expect to receive a reimbursement from a claim. However, if you file an incorrect code or accidentally file it to the wrong insurer, you can be denied or run into other billing issues.

When submitting a claim, you must ensure that you do so in the correct billing format based on the insurance company you are filing with. To make this process easier, identify the insurance company's preferred filing method and the window of time they allow for filing claims. You will certainly want to file your claim within that window of time, or you run the risk of a prolonged claims process. To stay ahead of this, you can ask the insurer about their preferences for receiving claim filings when you go through the VOB procedure.

Another tip for submitting claims properly is to familiarize yourself with common claims forms that many insurance companies use, such as the UB-04 form. This form is usually reserved for mental health clinics and specialized health centers for medical billing. The UB-04 and other mental health forms are uploaded on some compliant software programs, making it easier for you to electronically fill out and file the form.

If you follow these guidelines for submitting claims, you can feel confident that your time spent on these processes will be reduced and feel less intimidating.

4. Understand CPT Codes

CPT codes definition

Common Procedural Technology (CPT) codes are also necessary for billing for psychiatrists and other mental health providers who can prescribe medications and provide diagnoses. Now that you know how ICD codes are relevant to insurance billing, CPT codes have a similar role. ICD codes are used primarily for diagnosing a patient, whereas CPT codes are used to support the diagnosis with the necessary medical treatment.

CPT codes are an essential part of the billing process because the correct codes enable you to get paid and steer clear of insurance audits. These codes also document the exact service that your patient received, which determines how much you will be paid. It's important to know what services your practice offers and the codes that are associated with them. Like ICD codes, there are some common CPT codes that mental and behavioral health providers use.

CPT codes often describe the length of the session or whether or not the patient or family of the patient were present, such as:

  • 90832: Psychotherapy, 30 minutes with the patient
  • 90847: Family or couples psychotherapy, with the patient present
  • 90853: Group Psychotherapy (other than a family group)

As a behavioral health practitioner, billing can get confusing between ICD and CPT codes. However, using an incorrect CPT code, even as an accident, can have significant implications. There are usually two types of mistakes made when using CPT codes:

  • Undercoding: Undercoding is when a CPT code represents a less severe diagnosis or lower-priced treatment than was actually given to a patient. Though this practice is often done intentionally to help save patients money for their services, it is illegal.
  • Upcoding: Upcoding, or overcoding, is also illegal and commonly done to receive higher reimbursement. Upcoding is when a provider uses a code that reflects a more severe diagnosis or higher-priced treatment than is accurate for a patient.

Both undercoding and upcoding can easily result from an untrained employee who doesn't have adequate coding knowledge.

It's critical to know the criteria for CPT codes for medical decision-making and to ensure that you and your practice will avoid these costly mistakes.

5. Outsource Mental Health Billing Services

Behavioral and mental health care professionals have countless responsibilities to juggle. There are many different layers to medical billing and many regulations to adhere to, which can create a barrier between you and your patients. The intricate, repetitive billing processes can deprive you of the time and energy you have to prioritize your clients. In fact, one study found that healthcare professionals spent twice as long on administrative paperwork as they did with patients.

Outsourcing your behavioral health billing can be an ideal solution. This strategy refers to using an outside service or software that helps behavioral health clinicians maximize revenue with minimal effort. Outsourcing can reduce your medical billing workload and enable you to focus on delivering high-quality patient care.

Fortunately, this doesn't mean you'll have less control. Instead, outsourcing provides transparency and allows you to monitor your practice from an automated standpoint. Mental health billing is one of your most important tasks, yet it can be overwhelming and burdensome. Outsourcing these essential functions can reduce the administrative burden on your staff and speed up insurance claims processing. As a result, you may see increased cash flow.

Outsourced mental health billing software can also put less strain on your internal resources, as you won't have to consistently change your processes to remain compliant. Every client and practice is unique, and medical billing standards are ever-evolving. Intuitive billing software makes it easier to customize your operations and maintain ongoing compliance.

For example, you can choose a billing software that allows you to use your current billing system or perform an integration as needed to suit the needs of your practice. This means you can keep your existing clearinghouse or billing service. Alternatively, you can customize your billing process by outsourcing to a third-party partner to optimize your workflow and enhance your revenue cycle management (RCM) processes.

Clinicians can also outsource mental health billing services as part of an existing EHR or practice management system. Instead of spending too much time resolving rejected claims and incorrect coding, you can simplify your system and improve accuracy with mental health billing within an EHR.

Outsourcing an EHR with an integrated billing platform enables you and your staff to streamline various essential tasks, including:

  • Creating superbills, statements and CMS forms.
  • Submitting electronic or paper claims.
  • Tracking authorizations.
  • Auto-posting remittances.
  • Generating reports.
  • Providing self-pay options for patients.
  • Customizing statements.
  • Requesting secondary claim submissions for patients with more than one insurance plan.

The tools in an integrated processing system for medical billing positively impact many different aspects of the revenue cycle, including facilitating faster payments and making bill distribution easier. A comprehensive mental health EHR system empowers you to mix and match resources to meet the communication, billing and administrative needs of your practice.

As a behavioral health professional who deals with billing every day, taking advantage of mental health billing software can help you run your practice in a streamlined and efficient manner and give you more time to focus on your passion for helping patients in need.


How ICANotes Can Help Your Mental Health Billing Process

Ensuring that all components of mental health billing are accurate and on time can be challenging. With ICANotes, you can worry less about getting your documentation right and spend more time with your patients. We offer a solution to the many complexities in the healthcare environment that make your job more difficult. ICANotes is the premier EHR for behavioral health specialty, and we work with all clinical disciplines to deliver an intuitive charting solution for your practice.

Our fully templated EHR offers many different features that can benefit you and your patients, such as patient portals, charting and automatic coding. Whether you work in an inpatient or outpatient setting, ICANotes can simplify your daily processes with our mental health billing solutions. Start your free trial today or request a live demo to see how we can help you get billing right.

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