Clinical Documentation Improvement: A Key to Mental Health Funding

Accurate documentation is essential to high-quality mental health care, with better documentation supporting stronger care coordination, timely diagnoses, and long-term monitoring.

But with the funding landscape for behavioral health getting more volatile and complex every day, improved documentation is increasingly becoming a crucial element for driving enhanced mental health revenue cycle management (RCM) performance.

Here’s a breakdown of the financial challenges mental health organizations are facing and how clinical documentation improvement is key to securing long-term financial sustainability.

The Uncertain Financial Picture for Mental Health

The National Alliance on Mental Illness estimates that one in five adults in the U.S. — or nearly 60 million people — lives with a mental illness. Yet, despite the prevalence of mental health conditions and the growing need for support, the federal administration is cutting funds to some core programs and payers.

In March 2025, for example, the government started dissolving the Substance Abuse and Mental Health Services Administration (SAMHSA), a national organization designed to support public behavioral health efforts. The administration plans to combine the agency with other agencies, like the Health Resources and Services Administration (HRSA) and National Institute for Occupational Safety and Health (NIOSH), into the new Administration for a Healthy America (AHA). So far, hundreds of SAMHSA employees have been terminated, and future funding cuts are likely to lead to more loss of staff, reports Forbes.

The administration has proposed cuts to more than $11 billion in grant funding connected to mental health and substance use disorder services, says NPR. And the Commonwealth Fund reports that the proposed 2026 federal budget would exacerbate grant and research funding cuts even further.

Then there is the slashing of Medicaid funding included in the One Big Beautiful Bill Act. In addition to establishing more stringent eligibility requirements for Medicaid coverage, the bill cuts Medicaid spending by nearly $326 billion over the next 10 years, causing the number of uninsured Americans to jump to about 5.3 million by 2034, KFF reports.

Since Medicaid is the largest payer for mental health services in the country, these cuts could prove devastating for both people who need behavioral health services and the organizations that serve them.

When combined, these factors — along with potential cuts to certified community behavioral health clinic grant programs, a major behavioral healthcare workforce shortage, and facility closures across the country — put intense financial pressure on organizations. If mental health revenue cycle management teams are going to weather the storm, one area their organizations must prioritize is clinical documentation improvement. Therefore, documentation isn’t simply about compliance. Rather, it becomes a way to capture critical data that influences funding decisions, staffing models, and advocacy for resources.

How Effective Clinical Documentation Strengthens RCM Efforts

Given the volatility and unpredictability of the current moment, why should behavioral health organizations focus efforts on clinical documentation improvement?

Documentation is a cornerstone of RCM. Grant funding programs, federal regulations, state laws, and insurance reimbursement procedures all require accurate and timely documentation to set charges, process payments, and reimburse organizations. Without strong documentation workflows, practices, and results, organizations run the risk of not getting paid on time, not getting paid in full, or not getting paid at all.

Clinical documentation improvement is a systematic process for reviewing medical records for accuracy and completion. Mental health billing and coding teams should use this practice to connect clinical documentation to billing procedures to ensure prompt payment processing.

Documentation is particularly critical in behavioral health care settings, in which staff need to align delivered services with multiple billing codes and diagnosis related groups (DRGs). As AAPC notes, these organizations must accurately assign a client’s primary diagnosis and up to 24 secondary diagnoses. Any errors could result in delayed or inaccurate payment.

Additionally, clinical documentation improvement can help behavioral health organizations:

• Reduce the number of insurance claim denials they receive by ensuring more accurate and aligned coding, and thus an increase in clean claims

• Capture the full scope of care provided to each client

• Support value-based payment models that prioritize care outcomes over volumes

An Advanced EHR: The Foundation for Improved Documentation

Manually improving documentation processes can be taxing for busy behavioral health care organizations. With a top behavioral health electronic health record (EHR), however, providers and staff can automate much of their documentation practices to save time, reduce errors, and ensure the accuracy and completeness of mental health billing and coding.

Core Solutions’ leading Cx360 Enterprise EHR platform, for example, offers integrated solutions for strengthening clinical documentation improvement efforts, such as:

• Automated documentation powered by artificial intelligence (AI). Cx360 Intelligence’s AI-backed tools streamline notetaking for providers and check documentation against customizable rules to ensure they meet reimbursement standards. The AI transcribes verbal notes in real time, providing accurate, structured documentation that aligns with compliance and billing requirements.

• Embedded payer-specific documentation rules. Teams can establish distinct checklists and rules for individual payers. When providers or staff code services to those payers, the system will flag any errors that might lead to payment delays or non-payment.

• Collaboration tools for consistent documentation. Providers across the care continuum can use built-in communication features and customized documentation templates to better ensure accuracy and consistency. For example, collaborative documentation — aka writing or reviewing notes with clients present — has been shown to improve engagement, transparency, and adherence to treatment plans. An advanced EHR can facilitate this practice with shared-screen or portal features.

• Secure access to training materials. Leaders can send clinical documentation improvement resources — like the American Health Information Management Association’s documentation toolkit — through the EHR portal to all associated providers within the continuum to help secure buy-in for and education on improvement processes.

• Enhanced RCM capabilities. Integrated RCM tools allow teams to set and streamline financial workflows, automatically scrub claims for accuracy, access real-time data to support financial success, and empower clients with built-in payment portals.

Alone, these features can support better RCM practices. But when combined, they can transform an organization’s financial foundation — a particularly critical need at this financially strained moment.

Get a closer look at how you can improve clinical documentation with our Cx360 EHR and RCM solutions.