Revenue Cycle Management for Behavioral Health

The new year will be here before you know it. Now is a great time to re-evaluate your RCM strategy. Have you selected the right RCM option for your facility? Are you sure you’re getting paid for all of your services? Do you want to keep your billing services in-house, choose an outsourced solution, or maybe you want to stick your toe in the water and try a hybrid approach to billing? Here are some things you need to think about as you decide what option is best for your agency.

Revenue cycle management (RCM) is a massive challenge for behavioral health providers. Traditionally, most substance use clinics and behavioral health centers relied on self-pay as their source of revenue–patients simply paid their bills as they came due and insurance companies were not involved. As third-party payers became the norm, many facilities simply tacked on a software system to help, with little regard to best practices for billing. These makeshift solutions were rarely satisfactory–RCM continues to remain a challenge and universal issues are experienced by facilities of all sizes across the United States.

Behavioral health and addiction treatment is a complex space that is relatively unknown to both third-party payers and RCM experts. Billing services are largely unstandardized, with each payer doing its own thing. Contracts may not be clearly defined. Neither Medicare nor private insurance companies seem to fully understand the various treatment options or exactly how they should be paid. Some states have stepped in to create clear guidelines, but many have not. Even in states with clearer guidance, insurance companies traditionally find reasons not to pay claims. The most common reason is some sort of error in the submitted claim.

In general, the larger a behavioral health business is, the more problems tend to grow exponentially. For example, even if you have no difficulties in one state, you may have trouble when you expand to another. The more payer types you have, the more complex your RCM issues will be. Self-pay is typically the easiest, but Medicaid, Medicare, and each private insurer all have their own unique rules, requirements, and guidelines. And these guidelines are not always easy to follow.

Behavioral health and substance abuse facilities have three basic options when it comes to RCM. Which to choose depends largely on the particulars of your business model.

In-house Billing

An in-house billing model does not use outsourced revenue cycle management at all. Instead, these matters are handled by a team of in-house staff members. In-house billing may be possible if you have a small, finite group of payers, or if you cover just one region in a single state. If you choose this model, it’s important to remember that there are three separate parts to RCM: collection, credentialing, and contracting. You need people on your team who are experts in each of these areas, not just good accountants.

Insurance denials fall into three buckets: 

  • Providers who were not properly credentialed
  • Submitted claims that are not perfectly clean when they are sent off for payment
  • Billing for a service not specified in the payor contract

You need to have enough resources for your team to hyper focus on meeting the ever changing guidelines, as well as a strong behavioral health EHR billing system that removes most of the human factor. If you do not have these two things, you should consider off-loading your billing to an outsourced billing company with expertise specific to behavioral health.

Outsourced Billing

Since RCM is so complex, is it better to simply outsource your billing? In many cases, yes. A great deal of specialized knowledge is required for behavioral health RCM, so it’s likely that third party vendors will become a booming industry over the next few years. Many facilities have come to realize that their in-house teams don’t have the specific training needed to code correctly or understand payer requirements to maximize revenue.

However, not all RCM vendors are created equal. Behavioral health and substance use treatment facilities must choose a vendor that has specific knowledge and experience in the behavioral health field–one that understands how RCM works within this space. Experience in other health fields does not easily translate to behavioral health, because behavioral health does not have the same clear-cut guidelines as other health fields.

Here is a list of items that can be easily handled by a skilled behavioral health billing service:

  • Checking eligibility
  • Submitting and resubmitting claims
  • Working rejections and denials
  • Posting payments
  • Working accounts receivable (A/R)
  • Preparing and sending client statements
  • Handling audit and compliance issues

A Hybrid Model

Some facilities choose a hybrid model that incorporates the best of both the in-house and outsourcing models. If you choose this format, you will need a strong electronics records setup that can sync verification of benefits to the patient’s insurance records, as well as ensure that all claims go out clean. If you have a strong team, you may also be able to handle credentialing and contracting in-house as part of your core operations. However, you will almost always want to outsource management of claim denials. Experts in RCM denial management know who to talk to, what questions to ask, and even which words to use when speaking with the insurance company to increase your chances of approval.

Note that if you don’t have a strong in-house team for credentialing and contracting, it’s better to outsource. Too often, this job falls on clinicians, taking away valuable time that could instead be used on providing the best possible care.

Some agencies prefer to offload some of their more routine or complex billing tasks to an outsourced billing service when they consider a hybrid model approach:

  • Eligibility claims processing
  • Rejection management
  • Roll-ups
  • Unbundled services
  • A/R management
  • Client statements
  • Auditing and compliance

RCM and Value-based Care

Ultimately, RCM goes hand in hand with value-based care. RCM, in tandem with a behavioral health EHR (electronic health record) system, can provide the streamlined documentation you need. However, implementing value-based care isn’t easy. Many practitioners and payers agree that it is the best solution. Others disagree, while still others are unsure exactly what this type of care means.

Even among those who agree with its implementation, it has been tough to establish definitions and standards for value-based care. Infrequency of emergency room visits is a good indicator that substance use treatment is working, but how do you define success? How do you determine whether one treatment is better than another?

Numerous clinical measures have been implemented with varying degrees of success, but the reality is that there is still a long way to go. Addiction still faces a stigma, and it’s possible that we won’t fully achieve value-based care until substance use disorders are viewed in the same light as physical health medical conditions such as diabetes or heart disease.

Revenue cycle management is a near-universal headache for behavioral health and substance use facilities. The sheer complexity of their billing issues, along with a lack of clear guidelines for value-based care, make it virtually impossible for most facilities to manage their RCM entirely in-house. It’s generally best to outsource some or all of your RCM to a vendor that specializes in RCM for behavioral health.

About the author: As an accomplished executive, Brett McGennis has led several organizations through operational and cultural transformations over the last 15 years. A commitment to people-first leadership and transparency have been the cornerstones of his success. Mr. McGennis began his healthcare career as the CEO at Accessible Recovery services, a 10 unit physician owned OBOT practice in Western PA (acquired by Crossroads Treatment Centers in 2018). Using both acquisition and de novos vehicles, he grew the CTC platform to 96 clinics covering 10 states, and largely focused on insured patients, bringing them accessible and convenient care that was covered by a variety of payors. While unintended, RCM has become a key focus of his attention as he looks to build a new patient centered practice in the behavioral health sector.

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