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If you’re new to mental health billing, you may feel overwhelmed, uncertain, or anxious about the process. Don’t worry; that’s normal! Most mental health experts aren’t trained to navigate the medical billing landscape. After all, billing is closer to business administration and finance than it is to healthcare disciplines.

Nevertheless, behavioral health practices across the nation manage to learn best billing practices and keep the revenue cycle churning, and you can, too. Here’s what every therapist should know before launching into the world of billing.

The revenue cycle for mental health billing

What is a “revenue cycle?” Quite simply, it means the process of making money, from securing a new paying client to getting the check in your bank account. There’s plenty to know about this cycle, but for now, here’s an overview of the basic steps.

1. Intake Information

Good billing practices begin the moment you initiate a new patient record.

Why? Because most bills that are rejected by the insurance company are felled by simple mistakes: a misspelled name, a typo in the patient’s insurance ID number, a blank field, etc. To create what the billing world calls a “clean” or mistake-free claim, you’ll need meticulous accuracy on information such as:

  • Patient’s full legal name
  • Date of birth
  • Current address
  • Insurance member ID number

When incorrect information or typos sneak into the initial patient records, those mistakes will appear on every bill until you realize there’s a problem. Since behavioral health providers see patients repeatedly, you may have multiple bills to correct and re-file thanks to one careless moment at the beginning.

So check and double-check new patient information for accuracy. You should also check their insurance coverage for mental health services right away. Affirming coverage ahead of time is one easy method to save hassles down the road.

2. Patient Copay

Collect the patient’s copay at the time of the visit whenever possible. The odds of obtaining that payment shrink once your patient has left the facility. In addition, billing for multiple copays at a later date may add up to an unexpectedly large price tag that the patient isn’t prepared to cover in a lump sum.

In short, you’ll receive more money and avoid unpleasant surprises by getting the copay out of the way up front.

3. Create and Submit Your Claim

The CMS-1500 is the industry-standard form for filing claims. In addition to the patient’s identifying information and insurance, the form will ask for data on your treatments and your practice, such as when and where the service took place, what diagnostic or service codes apply, your tax ID, etc. A clean claim is formatted correctly, contains accurate information, and is free of mistakes or typos.

You will either create this form electronically, fill it out in hard copy, or turn the entire process over to a third-party biller.

  • If you use billing software in-house, your software may generate claims in the correct format and pull relevant patient information automatically from your records, depending on how well-integrated the system is. With EHR billing, you might submit claims directly from your software, or through a claims portal provided by the payer or clearinghouse.
  • Hard copy claims are becoming less common as more insurance companies abandon them for digital. Check the policy of any company or clearinghouse before you snail-mail a paper claim.
  • For third-party billing, you’ll need a secure way for billers to access your claims information. One method is to give billers login privileges with the secure, HIPAA-compliant software you already use at your practice. Whatever solution you choose, it is your responsibility to maintain the security of all patient records.

4. Monitor Claims Progress

Once claims are sent, make sure they progress through the system. Payers and clearinghouses will allow you to track electronically-submitted claims on a user dashboard. Your billing software may offer claims-tracking features, too. Third-party billing services should provide you with regular status reports.

EFT (electronic funds transfer) services help you keep abreast of your claims by delivering payment quickly upon approval, so you can check unpaid items off your list faster.

Pay special attention to aging claims, those that aren’t being processed within the typical timeframe. You may need to prompt a clearinghouse or payer to identify why it’s stalled and how soon it can be resolved.

5. Manage Denials and Appeals

Insurance companies reject claims for any number of reasons. Some involve coverage issues, others are easy fixes, like outdated or missing information.

Clearinghouses screen for incorrect content and discrepancies before a claim ever reaches the insurance company, so your claim may be rejected by the clearinghouse first. Usually, you can fix it and resubmit. To check whether the claim is hung up at the clearinghouse or with the payer, check your clearinghouse software for a claim rejection. If the claim has passed the clearinghouse checkpoint, you will need to call the payer to determine why there is a delay in payment.

After the clearinghouse, your request for coverage must be accepted by the payer. Denials and rejections at this stage should be thoroughly investigated to determine the root cause and potential solutions. Speak with an insurance representative directly for ideas on how to fix and resubmit denied requests. The representative may be able to assist you with the solution that will result in a payment. Sometimes the patient’s plan simply doesn’t cover a particular treatment and there’s little you can do.

6. Get Paid

This is everyone’s favorite step. You’ll receive a check or EFT along with an explanation of benefits to explain the payment amount. If insurance refused to cover the entire cost of services, you’ll have to bill your patient for the difference. This is one reason why checking benefits eligibility for all services up front is critical. If you don’t do it, you could surprise your patient later with an unexpected bill.

Staff and time required for behavioral health billing

While it’s difficult to estimate the exact time commitment for billing at any one practice, a conservative rule of thumb is to assume you need one full-time billing staff member for every four full-time providers. Or, put another way, for every 40 hours spent treating patients, expect to spend at least 10 hours managing the billing process.

For some solo providers, this is a big ask. It may make you rethink the number of patients you can reasonably see in a week. Larger practices will need to carefully consider their budget and the number of full and part-time staff they can afford to hire based on their provider numbers. This is one reason why provider productivity can be so critical; they not only bring in revenue but help cover the cost of the staff needed to support them.

Tools every practice needs to get paid

The tools you use to handle the revenue cycle can make billing more manageable. Unless you outsource all billing to a third party, you should arm yourself with tech and reporting capabilities that smooth the process and position you for success.


Integrated practice management systems can help you auto-generate bills with correct formatting and accurate data. The higher the level of automation, the easier billing will be. For example, software that generates automatic claims after appointments will make your job easier than software that requires providers to initiate every claim.

Your practice management system needs strong security to protect patients’ sensitive information. At the same time, it should be accessible to third-party billers if necessary, and needs to “talk” to payers and clearinghouses to submit claims and receive information about their status.

If you can bill patients for their portion of expenses online, you’re more likely to collect payment. You need a patient portal that notifies patients when an outstanding balance accrues and allows them to pay online. Ideally, your patient portal will be able to store patients’ credit card information for easy, one-click payments.


Reports on submitted, aging, and rejected claims will help you keep track of items to follow up on. These reports allow you to prod your clearinghouse or insurance company for information on bills that have stalled, and they alert you to rejected items that need your attention and resubmission.

Some software solutions include the option to receive alerts on aging or rejected claims, an invaluable feature for busy practices.

Eligibility checking also falls under the category of must-have reporting features. If you can run eligibility checks and reports right through your EHR, you’ll catch coverage problems earlier.

Coding Resources

The more specific your providers and billers can be about services rendered and diagnoses made at clinical encounters, the more you’ll get paid. This requires intimate knowledge of behavioral health coding, as well as access to comprehensive resources on the subject. Start with an updated guide for medical billing and coding.

Keep in mind that codes can differ for telehealth treatment. Ideally, your EHR will have a built-in coding database to help simplify the process. If you have questions, contact the insurance provider directly to see what coding they accept for various telehealth treatments.

Should I bill in-house, or outsource?

Billing for behavioral health can feel like a labyrinth. Many providers turn to third-party services to manage their claims and revenue cycle. Is this a good option for you, or should you hire in-house billers—or, in the case of solo practitioners, handle it yourself?

The answer depends on your individual practice and goals. Outsourced billing might be right for your practice if:

  • You have multiple providers and not enough staff to manage the billing
  • Time constraints prevent you from pursuing and fixing claims denials as much as you’d like
  • You want specialists to maximize your revenue through coding
  • You often miss submission deadlines or feel that your billing is constantly disorganized and behind

On the other hand, in-house billing might be right for your practice if:

  • You/your staff is confident in coding know-how and can maximize revenue without specialized help
  • You employ at least one billing staff member for every four full-time providers
  • You’re pleased with your current revenue and uncertain about budgeting for an outside service
  • You want to maintain full control over the billing process

Lighten your load with a solid EHR

Billing doesn’t have to be scary. The right tools will help you manage it well and get the reimbursement you deserve.

Valant software simplifies your revenue cycle and helps you recover overdue payments sooner. Our fully integrated system trims unnecessary steps from the process, with auto-generation for claims and tracking/reporting on aging bills.

Contact Valant today to learn more about how we can help.