Behavioral Health Revenue Cycle: Authorization, Billing, and Collections Guide (2026)

Why Behavioral Health Revenue Cycle Is Different

Generic RCM guides treat behavioral health as a footnote. In practice, BH revenue cycle has structural differences that demand specialized workflows, staff training, and technology configuration. Understanding these differences is the prerequisite for reducing the 12% to 15% denial rates that plague BH organizations compared to the 5% to 8% rates seen in general medical practices.

Authorization Intensity

A primary care visit requires zero prior authorization for most payers. A behavioral health treatment episode may require an initial authorization, followed by concurrent reviews every 3 to 14 days depending on the level of care and payer. A single patient in residential SUD treatment might generate 8 to 12 authorization transactions over a 90-day episode. Each transaction is an opportunity for a gap, a denial, or a documentation shortfall. The administrative burden per revenue dollar is dramatically higher than in medical specialties.

Time-Based Billing Complexity

Behavioral health billing is built around time. CPT 90837 requires 53 minutes or more of face-to-face psychotherapy. CPT 90834 covers 38 to 52 minutes. The difference between a $120 reimbursement and a $160 reimbursement hinges on whether the clinician documented 52 or 53 minutes. Add-on code 90833 requires that the psychotherapy time be distinct from the E/M service time. Payers audit these time thresholds aggressively, and documentation that says "approximately 45 minutes" without start/stop times invites recoupment.

High Denial Rates

Industry data consistently shows BH denial rates of 12% to 15%, roughly double the 5% to 8% seen in general medical billing. The drivers are specific to BH: expired or missing authorizations on long treatment episodes, documentation that fails to establish ongoing medical necessity at each concurrent review, group therapy attendance discrepancies, and coordination of benefits issues on patients with both Medicaid and commercial coverage. Each denial in BH tends to involve more complex appeals because the clinical justification requires demonstrating medical necessity for continued care, not just a single procedure.

42 CFR Part 2 Consent Requirements

Substance use disorder treatment records are subject to 42 CFR Part 2, which imposes consent and re-disclosure requirements that go beyond HIPAA. Before a claim containing SUD diagnosis codes can be submitted to a payer, the patient must have a valid Part 2 consent on file. This creates a billing prerequisite that does not exist in any other medical specialty. If consent is revoked or never obtained, the organization faces a choice between not billing at all or submitting claims with non-SUD diagnosis codes, which introduces coding accuracy risk.

Level-of-Care Transitions

BH patients frequently move between levels of care during a single treatment episode: from residential to PHP, from PHP to IOP, from IOP to outpatient. Each transition typically requires a new authorization, a new medical necessity determination, and often a different billing methodology (per-diem vs. per-service). Transitions that are not coordinated between clinical, utilization review, and billing staff create authorization gaps where services are delivered but cannot be billed.

Multi-Payer Complexity

BH organizations commonly serve patients covered by Medicaid, managed Medicaid, commercial managed care, Medicare, Tricare, and EAP programs, each with different authorization requirements, covered services, billing codes, and reimbursement methodologies. A single IOP program might need to bill the same service using different codes for different payers. This payer-specific variability is more pronounced in BH than in most medical specialties because BH benefit carve-outs, utilization management carve-outs, and parity compliance create additional layers of complexity.

Level-of-Care Authorization Workflows

Authorization management is the single most impactful revenue cycle function in behavioral health. Unlike medical authorizations that cover a single procedure or visit, BH authorizations cover time periods and must be renewed through concurrent review before they expire. The gap between an expired authorization and a newly approved one represents unrecoverable revenue.

ASAM Criteria for Substance Use Disorder

Payers that cover SUD treatment increasingly require documentation aligned to ASAM (American Society of Addiction Medicine) criteria for initial and concurrent authorization. ASAM criteria assess six dimensions: acute intoxication/withdrawal potential, biomedical conditions, emotional/behavioral/cognitive conditions, readiness to change, relapse/continued use potential, and recovery/living environment. Initial authorization requires demonstrating that the patient meets criteria for the requested level of care across these dimensions. Concurrent reviews require demonstrating that the patient continues to meet criteria and has not yet achieved sufficient stability to step down.

Medical Necessity for Mental Health

Mental health authorizations are typically based on payer-specific medical necessity criteria rather than a standardized framework like ASAM. Common elements include: documented DSM-5 diagnosis of sufficient severity, functional impairment that prevents the patient from functioning at a lower level of care, an active treatment plan with measurable goals, evidence of progress or a clinical justification for why progress has not yet occurred, and a discharge plan. Each payer may weight these elements differently, making it essential to maintain payer-specific authorization checklists.

Initial vs. Concurrent Review

Initial authorization is obtained before or at the start of treatment and typically covers a defined number of days or sessions. Concurrent review (also called continued stay review) is the process of requesting additional authorized days or sessions before the current authorization expires. The concurrent review process is where most BH authorization failures occur because it requires clinical staff to compile updated documentation, submit the review request on time, and follow up on payer decisions, all while continuing to deliver care. A missed concurrent review deadline can result in days or weeks of unbillable services.

Authorization Gap Management

When an authorization expires before a concurrent review is approved, the organization enters an authorization gap. Services delivered during a gap are typically denied and cannot be billed retroactively. Gap management requires: tracking authorization end dates in a centralized system, initiating concurrent reviews 7 to 10 business days before expiration, escalating pending reviews that have not been approved within 3 business days of expiration, and having a clinical protocol for what happens if the gap cannot be avoided (e.g., documenting the clinical necessity for continued services while the review is pending).

Authorization Period Reference

Level of Care	Typical Auth Period	Common Payer Requirements	Denial Risk
Inpatient/Residential (ASAM 3.5-3.7)	3-7 days initial, 3-7 day concurrent reviews	ASAM dimensional assessment, medical necessity per all 6 dimensions, detox protocol if applicable, 24-hour nursing documentation	High. Short auth windows and frequent concurrent reviews create gap risk. Payers push to step down quickly.
Partial Hospitalization (PHP)	5-7 days initial, 5-7 day concurrent reviews	Minimum 20 hours/week structured programming, physician oversight documentation, medical necessity for hospital-level intensity without overnight stay	Moderate-High. Payers frequently deny PHP as not medically necessary when documentation does not differentiate from IOP intensity.
Intensive Outpatient (IOP)	7-14 days initial, 7-14 day concurrent reviews	Minimum 9 hours/week (typically 3 hours/day, 3 days/week), documented group and individual therapy components, measurable treatment goals	Moderate. Longer auth periods reduce gap risk but concurrent review documentation must show continued need.
Outpatient (Individual/Group)	10-20 sessions or 90-day periods	DSM-5 diagnosis, treatment plan with measurable goals, session notes documenting progress or clinical justification for continued treatment	Low-Moderate. Session-based auths are simpler but long-term patients often hit session limits requiring re-authorization.
Medication-Assisted Treatment (MAT)	30-90 day periods	OUD diagnosis, medication protocol documentation, counseling component verification, PDMP check documentation	Low. Longer auth periods and parity protections reduce denial frequency, but step therapy requirements can create initial barriers.

Billing by Service Type

Behavioral health billing spans a wide range of service types, each with distinct codes, time requirements, documentation rules, and payer-specific variations. The complexity is compounded by the fact that multiple service types are often delivered to the same patient on the same day within structured programs like IOP and PHP. Understanding the coding and documentation requirements for each service type is essential for clean claim submission.

Individual Therapy (90834, 90837)

Individual psychotherapy is billed using CPT 90834 (38-52 minutes) or 90837 (53 minutes or more). These are face-to-face time codes, meaning only direct patient contact counts toward the time threshold. Documentation time, care coordination, and treatment planning do not count. The distinction between 90834 and 90837 is the most common BH coding audit target.

• Time documentation: Record start and stop times for the face-to-face psychotherapy portion. Statements like "45-minute session" are insufficient; payers require "psychotherapy from 10:00 AM to 10:53 AM" or equivalent specificity. If the session runs 52 minutes, it is 90834. If it runs 53 minutes, it is 90837.
• Medical necessity per session: Each session note must document the presenting issue, interventions used, patient response, and progress toward treatment plan goals. Boilerplate or copy-forward documentation is an audit red flag.
• Modifier considerations: When individual therapy is delivered on the same day as a psychiatric evaluation or E/M service, modifier -25 (significant, separately identifiable E/M) or proper use of add-on code 90833 is required. Incorrect modifier use is a top-5 BH denial category.
• Telehealth: Append modifier -95 or place of service 10 (telehealth in patient home) per payer requirements. Some payers still require GT modifier. Verify payer-specific telehealth billing rules quarterly.

Group Therapy (90853)

Group psychotherapy (CPT 90853) is billed per patient per session. It does not have a time-based threshold like individual therapy, but most payers expect a minimum of 45 to 60 minutes. The revenue cycle challenges with group therapy are census validation, rendering provider rules, and attendance documentation.

• Census validation: Claims for 90853 must match group attendance records. If a group session log shows 8 participants but only 6 have corresponding 90853 claims, or if 10 claims are submitted but the log shows only 8 attendees, auditors will flag the discrepancy. Your billing system must validate group claims against attendance rosters before claim release.
• Minimum participant requirements: While CPT does not define a minimum group size, many payers require at least 2 patients (some require 3 or 4) to be present for the session to qualify as group therapy rather than individual therapy. Sessions with fewer than the payer-required minimum must be rebilled as individual therapy codes.
• Rendering provider: The provider who facilitates the group must be credentialed with the payer and must be the rendering provider on all claims for that group session. Co-facilitated groups require clear documentation of which provider is the rendering provider for billing purposes. Some payers do not allow both co-facilitators to bill for the same group session.
• Documentation: Each patient in the group must have an individualized progress note documenting their participation, response, and relevance to their treatment plan. A single group note that does not address each patient individually is insufficient and will not withstand audit.

Intensive Outpatient Program (IOP)

IOP billing methodology varies significantly by payer and is one of the most error-prone areas in BH revenue cycle. The two primary codes are H0015 (Alcohol and/or drug services; intensive outpatient) and S9480 (Intensive outpatient psychiatric services). Revenue code 0906 is used on institutional claims.

• Per-diem vs. per-service: Per-diem billing submits a single daily rate covering all services delivered that day. Per-service billing itemizes each component (group therapy, individual therapy, psychoeducation). Payer contracts dictate which model to use. Billing per-service when the contract specifies per-diem will result in denials or recoupment.
• H0015 vs. S9480: H0015 is primarily used for SUD IOP. S9480 is used for mental health IOP. Some payers accept either; others are strict about which code maps to which diagnosis. Verify per payer.
• Program structure requirements: Most payers require a minimum of 9 hours per week of structured programming, typically delivered as 3 hours per day, 3 days per week. Falling below minimum hours can invalidate the IOP level of care and result in retroactive denials for the entire episode.
• Attendance tracking: IOP billing requires documentation that the patient attended the scheduled programming. Partial attendance days must be handled according to payer rules. Some payers pro-rate per-diem payments for partial days; others deny the entire day if the minimum hours were not met.

Partial Hospitalization Program (PHP)

PHP represents the highest-intensity outpatient level of care and is billed on institutional claims (UB-04) using revenue codes 0912 (PHP, psychiatric) and 0913 (PHP, chemical dependency). PHP billing requires demonstrating that the patient needs hospital-level care intensity without an overnight stay.

• Revenue codes and claim type: PHP is billed on CMS-1450 (UB-04) institutional claims, not on CMS-1500 professional claims. Revenue codes 0912 and 0913 are used with the corresponding HCPCS code. Organizations that bill PHP on professional claims will receive automatic rejections.
• Medical necessity documentation: PHP medical necessity must demonstrate that the patient requires the intensity and structure of a hospital-based program. This means documenting why IOP is insufficient: risk of decompensation, active symptom severity, need for daily medical or psychiatric monitoring, or safety concerns that require a structured environment during the day.
• Minimum hours: Most payers require a minimum of 20 hours per week of structured clinical programming for PHP. This typically translates to 5 to 6 hours per day, 4 to 5 days per week. Daily schedules must be documented and available for audit.
• Physician oversight: PHP requires active physician involvement in the treatment plan, not just an initial psychiatric evaluation. Payers look for documentation of physician review at least weekly, medication management as clinically indicated, and physician sign-off on treatment plan updates.

Residential and Inpatient Treatment

Residential treatment (ASAM levels 3.1 through 3.7) and inpatient psychiatric care are billed on per-diem rates that cover room, board, and clinical services. The billing challenges center on ASAM level alignment, room and board versus clinical service separation, and the high frequency of concurrent review.

• Per-diem rate structure: Residential per-diem rates are negotiated per payer contract and are expected to cover all clinical services delivered during the day. Separately billing for individual therapy or group therapy sessions on top of the per-diem rate is typically not allowed unless the contract explicitly permits it. Verify contract terms for each payer.
• ASAM level alignment: SUD residential claims must align with the ASAM level authorized. If the patient is authorized for ASAM 3.5 (clinically managed high-intensity residential) but the facility is only licensed for ASAM 3.1 (clinically managed low-intensity residential), the claim will be denied. Ensure facility licensure, authorization level, and billing codes are consistent.
• Room and board vs. clinical: For patients with Medicaid as the payer, the Institution for Mental Disease (IMD) exclusion may apply to facilities with more than 16 beds. Room and board may need to be separated from clinical charges in some billing configurations. The Medicaid IMD exclusion waiver status varies by state and significantly impacts revenue for larger residential facilities.
• Concurrent review frequency: Residential and inpatient authorizations are reviewed every 3 to 7 days. The clinical team must produce updated documentation for each review that demonstrates ongoing medical necessity and progress toward discharge criteria. This is the most documentation-intensive authorization process in behavioral health.

Medication Management (90833, 99213-99215)

Psychiatric medication management visits are billed using E/M codes (99213, 99214, 99215) with or without add-on code 90833 for psychotherapy delivered during the same visit. The coding depends on whether the visit includes a psychotherapy component.

• E/M only (no psychotherapy): Bill the appropriate E/M level based on medical decision-making complexity or total time. For psychiatry, 99214 is the most common level for established patient medication management visits.
• E/M plus psychotherapy add-on: When the psychiatrist or psychiatric NP delivers psychotherapy (16 minutes or more) during the same visit as medication management, bill the E/M code plus 90833 as an add-on. The psychotherapy time must be documented separately from the E/M time. Do not use modifier -25 with 90833; it is already an add-on code.
• BH modifier requirements: Some payers require modifier -HB (specialist mental health) or -HO (master's level clinician) on behavioral health E/M claims. Verify payer-specific modifier requirements; submitting without the required modifier results in denials, while adding unnecessary modifiers can also trigger rejections.
• Collaborative care codes (99492-99494): For organizations using the collaborative care model, these codes cover psychiatric consultation delivered through a primary care setting. They are billed by the primary care practice, not the consulting psychiatrist, and are time-based monthly codes.

MAT/OTP Billing

Medication-Assisted Treatment (MAT) and Opioid Treatment Program (OTP) billing present unique challenges because of the bundled payment structure and the distinction between office-based opioid treatment (OBOT) and certified OTP settings.

• OTP bundled billing: Certified OTPs bill Medicare using HCPCS codes G2067-G2080, which bundle the medication (methadone), dispensing, substance use counseling, individual and group therapy, toxicology testing, and intake activities into weekly episode-based payments. The bundled rate means that individual services cannot be billed separately.
• Office-based buprenorphine/naltrexone: Office-based prescribing of buprenorphine or naltrexone is billed using standard E/M codes for the visit plus the appropriate medication code (J0570 for buprenorphine, J2315 for naltrexone). The medication may be buy-and-bill or covered through pharmacy benefit depending on payer and formulation.
• Counseling component: Many payers require documented counseling as a condition of MAT coverage. The counseling can be delivered by the prescriber or a separate behavioral health provider, but it must be documented in the treatment record. Claims for MAT medication without corresponding counseling documentation may be denied on audit.
• PDMP compliance: Most states require prescribers to check the Prescription Drug Monitoring Program (PDMP) before prescribing controlled substances for MAT. While PDMP compliance is primarily a clinical requirement, some payers are beginning to require documentation of PDMP checks as a condition of payment.

Psychological Testing (96130-96139)

Psychological and neuropsychological testing codes were restructured in 2019 to separate the professional (interpretation) component from the technician (administration and scoring) component. Accurate time tracking is critical for compliant billing.

• 96130/96131: Psychological testing evaluation services by a psychologist, including integration of patient data, interpretation, and clinical decision-making. 96130 is the first hour; 96131 is each additional hour. These codes cover the professional interpretation and report writing, not the test administration.
• 96136/96137: Test administration and scoring by a psychologist. 96136 is the first 30 minutes; 96137 is each additional 30 minutes. Use these when the psychologist personally administers the tests.
• 96138/96139: Test administration and scoring by a technician under psychologist supervision. 96138 is the first 30 minutes; 96139 is each additional 30 minutes. The supervising psychologist bills interpretation under 96130/96131.
• Time tracking: Each testing code requires documented start and stop times for the activity. Time spent on interpretation (96130/96131) must be tracked separately from time spent on administration (96136-96139). Payers are increasingly auditing testing claims for time documentation accuracy and medical necessity.
• Authorization: Psychological testing almost always requires prior authorization. The authorization request must specify the tests to be administered, estimated time, and clinical justification. Post-authorization, the actual time and tests delivered must align with what was authorized.

42 CFR Part 2 and Revenue Cycle Impact

42 CFR Part 2 is a federal regulation that protects the confidentiality of substance use disorder treatment records. While Part 2 is primarily a privacy regulation, it has direct and significant revenue cycle implications that BH organizations must operationalize into their billing workflows.

Consent Before Claims Submission

Part 2 requires patient consent before any disclosure that identifies a person as having or having had a substance use disorder. A claim submitted to an insurance company that contains SUD diagnosis codes (F10-F19 ICD-10 range) constitutes a disclosure. This means a valid Part 2 consent must be on file before the claim is released. The consent must specifically name the payer or category of payers that will receive the information, and must describe the purpose of the disclosure.

Re-Disclosure Restrictions

Part 2 prohibits re-disclosure of SUD treatment information. This means that when a payer receives a claim with SUD information, the payer cannot share that information with other entities (such as a pharmacy benefit manager or a health information exchange) without obtaining a separate consent. From a revenue cycle perspective, this can complicate coordination of benefits inquiries, subrogation requests, and payer-to-payer communications during the claims process.

What Can and Cannot Appear on Claims

• With valid consent: SUD diagnosis codes (F10-F19), SUD-specific procedure codes (H0001-H0050 range), facility name (even if the name identifies it as an SUD program), and clinical information required for authorization.
• Without valid consent: No SUD-identifying information can appear on the claim. Some organizations bill these encounters using general behavioral health codes (e.g., F41.9 anxiety, F32.9 depression) when a co-occurring MH diagnosis is present and clinically accurate. This approach carries coding compliance risk and must be reviewed by compliance counsel.
• Never on claims regardless of consent: Detailed treatment notes, group therapy participant lists, or any information beyond what is required for payment should not be transmitted with claims even when consent is in place.

EHR Configuration for Part 2 Compliance

• Consent tracking module: The EHR must track Part 2 consent status per patient, including consent date, expiration date (if applicable), named recipients, and revocation status.
• Claim release gate: Configure a hard stop in the billing workflow that checks Part 2 consent status before any claim containing F10-F19 diagnosis codes can be released to the clearinghouse.
• Segmented records: SUD treatment records should be segmented from general medical records within the EHR so that Part 2-protected information is not inadvertently disclosed through health information exchange, patient portal access, or payer data feeds.
• Audit trail: Maintain an auditable log of all Part 2 consent status changes and all disclosures made under Part 2 consent, including claims submissions.

BH-Specific Denial Patterns

While all healthcare organizations deal with denials, the denial patterns in behavioral health are structurally different from those in medical billing. Understanding the specific denial categories, their root causes, and prevention strategies is essential for reducing the BH denial rate from the industry average of 12% to 15% down to a target of 8% or below.

Denial Reason	Frequency	Root Cause	Prevention
No authorization or expired authorization	25-30% of BH denials	Concurrent review not submitted before auth expiration; missed authorization for new level of care after transition; authorization obtained for wrong service type or date range	Centralized auth tracking dashboard with automated alerts at 80% utilization and 5-day/3-day/1-day expiration warnings. Dedicated utilization review staff with daily auth expiration reviews.
Medical necessity not established	20-25% of BH denials	Clinical documentation does not address payer-specific medical necessity criteria; ASAM dimensional assessment incomplete; treatment plan goals vague or not measurable; progress notes do not demonstrate continued need	Payer-specific documentation templates aligned to known medical necessity criteria. Clinical documentation training focused on medical necessity language. Pre-submission clinical review for high-value services.
Service not covered at level of care	10-15% of BH denials	Patient stepped down to IOP but claims still billed at PHP rate; service code does not match authorized level of care; facility not contracted for the billed level of care with the specific payer	Automated level-of-care validation in billing system that cross-references current authorization, patient status, and payer contract before claim release.
Group therapy attendance discrepancies	8-12% of BH denials	Claims submitted for patients who did not attend group; group attendance roster does not match billing records; minimum group size not met; rendering provider on claim does not match group facilitator	Electronic group attendance tracking integrated with billing. Automated validation that group claims match attendance rosters. Minimum census checks before group billing is released.
Missing or incomplete documentation	10-15% of BH denials	Session notes not completed before billing; treatment plan expired or not updated; required assessments missing; time documentation insufficient for time-based codes	Documentation completion checks in billing workflow. Claims held until all required documentation is finalized. Clinician documentation compliance dashboards with real-time visibility.
Timely filing exceeded	5-8% of BH denials	Long treatment episodes delay billing; documentation backlogs push claims past filing deadlines; authorization disputes delay initial claim submission; coordination of benefits issues add processing time	Weekly aging reports for unbilled services. Escalation triggers for any service older than 50% of the payer's filing deadline. Parallel processing of authorization disputes and claim preparation.
Coordination of benefits (COB) issues	5-8% of BH denials	Dual-eligible patients with Medicaid and commercial coverage; primary/secondary payer order incorrect; BH carve-out payer not identified; EAP benefits exhausted before commercial coverage activated	Thorough benefits verification at intake identifying all coverage sources. BH carve-out identification as part of eligibility check. COB verification repeated at each level-of-care transition.

Payer-Specific Behavioral Health Rules

One of the most operationally challenging aspects of BH revenue cycle is the variation in rules across payer types. The same IOP program may need to be billed using different codes, different claim types, and different authorization processes depending on the patient's insurance. Maintaining payer-specific billing matrices is not optional; it is a core operational requirement.

Commercial Managed Care

• BH carve-outs: Many commercial plans carve out behavioral health management to a separate entity (e.g., Optum Behavioral Health, Carelon). Authorization requests and claims must be directed to the carve-out entity, not the medical plan. Submitting to the wrong entity is a common and entirely preventable denial.
• Network adequacy requirements: Commercial plans may limit coverage to in-network BH providers or apply significantly higher cost-sharing for out-of-network services. Verify network status before admitting patients for extended treatment episodes.
• Parity compliance: The Mental Health Parity and Addiction Equity Act requires commercial plans to cover BH services at parity with medical/surgical services. However, utilization management practices (concurrent review frequency, authorization criteria) may still create disparate barriers. Document potential parity violations for advocacy and appeals.
• Common billing codes: Standard CPT/HCPCS codes for professional services; may accept both per-diem and per-service for IOP depending on contract terms.

Medicaid and Managed Medicaid

• State-specific rules: Medicaid BH billing rules vary dramatically by state. Covered services, authorized codes, rate structures, and authorization requirements are all state-specific. Organizations operating in multiple states must maintain separate billing configurations for each state's Medicaid program.
• IMD exclusion: Federal Medicaid law excludes payment for services provided in Institutions for Mental Disease (facilities with more than 16 beds primarily treating mental illness or SUD) for adults ages 22-64. Many states have obtained Section 1115 waivers to allow Medicaid payment for residential SUD treatment in IMDs, but the waiver terms and covered levels of care vary by state.
• Managed Medicaid plans: Most states contract with managed care organizations (MCOs) to administer Medicaid benefits. Each MCO may have different authorization requirements, provider networks, and billing procedures. A state with 5 Medicaid MCOs requires managing 5 different sets of BH billing rules.
• Timely filing: Medicaid timely filing deadlines are typically shorter than commercial payers (90-180 days vs. 365 days). Combined with the documentation complexity of BH services, this creates significant timely filing risk.

Medicare

• Limited BH coverage historically: Medicare has historically provided more limited BH coverage than commercial plans, particularly for SUD services. However, coverage has expanded significantly since 2020, including coverage for OTP services and expanded telehealth for BH.
• 190-day lifetime limit: Medicare imposes a 190-day lifetime limit on inpatient psychiatric hospital services. This limit applies only to freestanding psychiatric hospitals, not to psychiatric units within general hospitals. Track lifetime days used for Medicare beneficiaries in inpatient psychiatric settings.
• OTP bundled payment: Medicare pays OTPs a bundled weekly rate using G-codes (G2067-G2080). This is a unique billing methodology that does not exist for any other payer type. OTPs must maintain separate billing workflows for Medicare OTP patients.
• Incident-to billing: Medicare allows certain BH services to be billed "incident to" a physician's service when provided by non-physician practitioners under direct supervision. This can increase reimbursement but requires meeting strict supervision and documentation requirements.

Tricare

• Tricare authorization: Tricare requires prior authorization for most BH services beyond routine outpatient visits. Authorization is managed through regional contractors. Tricare authorization processes tend to be well-documented but require adherence to military-specific documentation standards.
• Residential treatment: Tricare covers residential treatment for both MH and SUD at authorized facilities. The facility must be Tricare-certified, which is a separate credentialing process from commercial or Medicaid contracting.
• ECHO program: The Extended Care Health Option (ECHO) provides additional BH benefits for family members of active duty service members with qualifying conditions. ECHO billing uses specific Tricare codes and processes.

EAP (Employee Assistance Programs)

• Session limits: EAP benefits typically cover 3 to 8 sessions per issue per year. Billing beyond the EAP session limit requires transitioning to the patient's medical insurance, which may require a separate authorization and verification process.
• No patient cost-sharing: EAP sessions are fully employer-funded with no copay, coinsurance, or deductible. This simplifies patient financial responsibility but requires accurate tracking of session limits.
• Transition to insurance: When EAP sessions are exhausted, the transition to commercial insurance benefits must be managed proactively. The patient needs to be informed of cost-sharing responsibilities, and a new authorization may be required from their commercial plan. Failure to manage this transition results in either unbilled sessions or surprise bills to patients.

Patient Financial Responsibility in Behavioral Health

Patient financial responsibility in BH presents unique challenges that do not exist in acute medical settings. Treatment episodes last weeks or months, creating cumulative cost-sharing that can become financially overwhelming. Copay fatigue, high-deductible plan impact, and the vulnerable clinical state of BH patients require a different approach to financial engagement than a one-time surgical procedure.

High-Deductible Health Plan Challenges

A patient entering residential SUD treatment in January with a $5,000 deductible faces the full per-diem rate until the deductible is met, potentially $15,000 to $25,000 in the first weeks of treatment. Unlike a scheduled surgery where the patient can financially prepare, BH admissions (particularly SUD and crisis admissions) often occur with no financial planning. Organizations must have a protocol for financial counseling at intake that includes estimating total patient responsibility, presenting payment plan options, and screening for financial assistance eligibility before the patient accumulates a balance they cannot pay.

Copay Fatigue in Long-Term Treatment

A patient in outpatient therapy with a $40 copay attending weekly sessions will pay $2,080 in copays over a year. A patient attending IOP 3 days per week with a $75 copay faces $975 per month. Unlike a primary care patient who sees a physician a few times per year, BH patients accumulate copay obligations rapidly. Point-of-service collection rates decline over time as patients experience copay fatigue. Organizations must balance clinical needs (keeping the patient in treatment) against financial sustainability (collecting obligations). Allowing large unpaid balances to accumulate without a payment plan is a failure that benefits no one.

Payment Plan Design

BH organizations need structured payment plan options that acknowledge the length and unpredictability of treatment episodes. Effective payment plan design includes: setting realistic monthly payment amounts based on the patient's ability to pay, offering automatic payment enrollment at intake, providing clear statements showing insurance payments, adjustments, and the remaining patient balance, and including a financial counselor review at each level-of-care transition to update the payment plan based on the current balance and projected remaining treatment.

Financial Assistance and Sliding Fee Scales

Many BH organizations, particularly those receiving SAMHSA or state funding, are required to offer sliding fee scales based on federal poverty level guidelines. Even organizations not required to offer sliding fees should maintain a financial assistance program to prevent financial barriers from disrupting treatment. The financial assistance application should be integrated into the intake process, not presented after the patient has already accumulated an unmanageable balance.

BH RCM Technology Requirements

General-purpose practice management and billing systems often lack the functionality required for behavioral health revenue cycle operations. When evaluating or configuring technology for BH RCM, these are the capabilities that differentiate systems built for behavioral health from systems adapted from medical billing.

• Authorization tracking with concurrent review management: The system must track authorization periods, authorized units/days, utilization against authorized amounts, and expiration dates. It must generate automated alerts for upcoming concurrent reviews and expiring authorizations. A simple "auth number" field is not sufficient for BH.
• Group session billing automation: The system must support group therapy workflows that capture attendance, validate census against claims, assign rendering providers, enforce minimum participant requirements, and generate individualized claims from a single group session record. Manual group billing is the highest-error-rate process in BH.
• Concurrent review reminders and workflow: Beyond tracking authorization dates, the system should support the concurrent review workflow: generating clinical review packets, tracking submission status, recording payer decisions, and flagging gaps between authorization periods.
• Census-based billing: For residential and PHP programs, billing is driven by census. The system must support daily census recording, admission/discharge/transfer tracking, and the generation of per-diem billing based on census data. Census discrepancies between clinical records and billing must be flagged automatically.
• Level-of-care transition management: When a patient moves between levels of care, the system must update billing codes, authorization references, and claim types automatically. A patient stepping down from residential to PHP should not require manual reconfiguration of every billing parameter.
• 42 CFR Part 2 consent integration: The system must track Part 2 consent status and enforce a hard stop on claim release when consent is missing or expired for SUD-related claims. This is not a nice-to-have; it is a compliance requirement.
• Time-based code validation: For time-based services (individual therapy, psychological testing, medication management add-ons), the system should validate that documented time supports the billed code level. A claim for 90837 with 45 minutes of documented time should be flagged before submission.
• Integrated scheduling and billing: The system should link scheduled appointments to billing, ensuring that no-shows are not billed, cancellations are handled according to policy, and all attended appointments generate charges. Scheduling-to-billing reconciliation should be automated.
• Payer-specific billing rules engine: The system must support different billing configurations per payer, including different codes for the same service, different claim types (professional vs. institutional), different modifier requirements, and different authorization workflows. A single billing configuration applied to all payers will produce denials.

Behavioral Health RCM KPIs

Standard RCM benchmarks do not account for the structural complexity of behavioral health billing. BH organizations should track the standard financial metrics but with BH-specific targets, plus additional metrics that are unique to behavioral health operations.

Metric	Benchmark	BH-Specific Notes
Days in A/R	<40 days	BH A/R runs higher than medical (35 days) due to authorization delays, documentation backlogs, and multi-step concurrent review processes. Target 40 days and drive toward 35 as authorization and documentation workflows mature.
Authorization compliance rate	>98%	Percentage of billed service days/sessions with a valid authorization in place at the time of service. This is the single most important BH-specific metric. Every percentage point below 98% represents direct revenue loss from authorization gap denials.
Group session billing accuracy	>95%	Percentage of group therapy claims that match attendance rosters with the correct rendering provider and meet minimum census requirements. Below 95% indicates a breakdown in the group attendance-to-billing workflow.
Denial rate	<8%	Industry average for BH is 12-15%. Target 8% as an achievable goal with strong authorization tracking, documentation controls, and pre-submission validation. Below 6% represents best-in-class BH performance.
Timely filing compliance	>99%	Timely filing failures are entirely preventable. BH is at higher risk than medical due to long treatment episodes and documentation delays. Monitor unbilled services aging weekly and escalate anything past 50% of the filing deadline.
Net collection rate	>95%	BH net collection rates are typically 2-3 points lower than medical due to higher denial rates and more complex patient financial responsibility. Target 95% and investigate anything below 92%.
Concurrent review submission rate	>99% on time	Percentage of concurrent reviews submitted before the current authorization expires. Late submissions create authorization gaps. This metric is unique to BH and directly drives the authorization compliance rate.
Documentation completion before billing	>98% within 48 hours	Percentage of clinical documentation completed within 48 hours of service delivery. Incomplete documentation is the primary bottleneck that delays BH claim submission and creates timely filing risk.

Frequently Asked Questions

Why is the denial rate higher in behavioral health than in medical specialties?

Behavioral health denial rates run 12% to 15% compared to 5% to 8% for medical specialties because of authorization-intensive treatment episodes, time-based billing complexity, multi-session treatment plans that span weeks or months, group therapy documentation requirements, 42 CFR Part 2 consent gaps, and frequent level-of-care transitions that each require separate authorization. The combination of these factors creates more opportunities for administrative errors per dollar billed. Reducing the BH denial rate to 8% or below requires specific investments in authorization tracking, documentation compliance, and group billing automation that are not necessary in most medical specialties.

How does 42 CFR Part 2 affect claims submission for substance use disorder treatment?

Under 42 CFR Part 2, patient consent is required before any information identifying a person as having a substance use disorder can be disclosed, including on insurance claims. This means organizations must obtain a compliant Part 2 consent form before submitting claims that contain SUD diagnosis codes (F10-F19 range). If consent is not on file or has expired, the claim cannot be submitted as-is. Some organizations use general behavioral health codes on claims for patients who decline Part 2 consent, though this must be done carefully to avoid coding inaccuracy. EHR systems must be configured to flag Part 2 consent status before claim release, with a hard stop that prevents submission of SUD claims without verified consent.

What is the difference between per-diem and per-service billing for IOP programs?

Per-diem billing submits a single daily rate for all IOP services delivered on a given day, typically using revenue code 0906 and HCPCS code S9480 or H0015. Per-service billing itemizes each individual service delivered during the IOP day, such as individual therapy, group therapy, and psychoeducation, using their respective CPT codes. Payer contracts determine which model applies. Medicaid managed care plans in many states require per-diem billing, while some commercial plans allow per-service billing that may yield higher reimbursement. Organizations must verify contract terms for each payer and configure their billing system to apply the correct model per payer. Billing per-service when the contract specifies per-diem, or vice versa, will result in denials or recoupment.

How should behavioral health organizations track authorization expirations across long treatment episodes?

Authorization tracking in behavioral health requires a centralized system that monitors authorized units or days remaining, expiration dates, and upcoming concurrent review deadlines. Best practice is to configure EHR alerts that fire at 80% utilization of authorized units and again at 5 days before expiration. Clinical staff should receive concurrent review reminders 7 to 10 days before the authorization period ends. A dedicated utilization review coordinator or team should own the concurrent review process and maintain a daily dashboard of authorizations expiring within the next 14 days. The goal is zero gap days where services are delivered without a valid authorization. Organizations that rely on manual tracking or individual clinician memory for concurrent reviews will experience authorization gaps and the resulting unrecoverable revenue loss.

Editorial Standards

Last reviewed: February 19, 2026

Methodology

• Authorization workflows and denial patterns sourced from behavioral health revenue cycle operational data and industry benchmarking
• Billing codes and payer-specific rules validated against CMS fee schedules, state Medicaid manuals, and published payer guidelines
• 42 CFR Part 2 compliance requirements sourced from SAMHSA regulatory guidance and HHS Office for Civil Rights publications
• ASAM criteria references validated against published ASAM dimensional assessment framework

Primary Sources

• SAMHSA 42 CFR Part 2 Guidance
• CMS Behavioral Health Billing Guidelines
• ASAM Criteria for SUD Treatment