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Recent data suggest that denials in medical billing are increasingly placing a strain on healthcare providers across all segments of the industry. An analysis released in December by consulting firm Kodiak RCA and reported on by Fierce Healthcare found that overall rates of initial medical billing denials steadily climbed from just over 10% in 2020 to nearly 12% in the first three quarters of 2023. That means some individual organizations are finding themselves grappling with initial denial rates as high as 20%.
These kinds of numbers should come as no surprise to leaders in the behavioral health provider community. Mental health and substance use treatment providers often face additional barriers in medical billing, from internal staffing constraints to some insurers’ continued discriminatory practices toward behavioral health claims. These practices from payers continue to happen despite the promise of equity that had been articulated in federal and state insurance parity laws.
Efficient insurance billing remains a critical function for behavioral health provider organizations, most of which can’t build a viable business on public funding or self-pay patients alone. Achieving success in the increasingly challenging insurance market requires an organization-wide commitment to managing denials. That means all relevant roles in the organization, from accounting to coding to case management, must embrace a mindset of doing their part to improve insurance billing and minimize denials.
The consequences of not doing so can be crippling to the bottom line. When all means of appealing denials have been exhausted, some organizations will see write-offs of up to 5% of their total patient revenue. In a behavioral health industry that continues to face workforce challenges and an always dynamic funding environment, such losses cannot be absorbed without compromising the quality of patient care.
The Fierce Healthcare article also cited details in a November report from the American Hospital Association and Syntellis, finding that a combination of increases in hospital expenses and obstacles in revenue collection caused a 28% drop in median days of cash on hand between early 2022 and mid-2023. These kinds of numbers clearly aren’t sustainable for facilities in the behavioral health space.
Substance use and mental health treatment organizations need a plan for managing inpatient and outpatient billing and for minimizing denials. They must overcome the greater variation in service duration and customization than what is seen in most of general healthcare, and understand the intricacies of CPT coding that affect timely payment. They also need to make sure they master the basics, such as never omitting any required information from a claim.
From the first patient encounter and throughout the course of treatment, everyone in the organization who is involved in aspects of a patient’s care must gather the information needed to bill successfully. Offering complete information in the process of submitting claims is essential. As stated in a recent Business News Daily article, “In the mental health billing process, there’s no such thing as gathering too much information.”
Sigmund Software’s EHR platform, designed to meet the specific needs of behavioral health providers, can be the cornerstone of your organization’s strategy to master the insurance billing process. Our advanced AURA solution seamlessly integrates with more than two dozen industry-leading software products and services. It will allow you to take total control of your data and to standardize the everyday processes that lead to effective communication with payers.
Our complete behavioral health billing checklist can guide you in formalizing the steps needed to maximize reimbursement. In an increasingly restrictive payment environment, you need all the tools at your disposal to document accurately the essential services you provide.
Let us work with you to minimize frustration and maximize success in the behavioral health billing process.
