How to Improve Revenue Cycle Management Success in Behavioral Health

According to the Research Triangle Institute’s 2024 behavioral health parity report, the complexity of insurance and billing procedures in the field negatively impacts clients and organizations alike.

Clients, the report says, go out of network more for behavioral health services than for any other medical specialty — and they pay more because of it. Meanwhile, behavioral health providers are generally reimbursed less than other medical specialties.

Managing this combination of factors, along with complex billing codes, high rates of claim denials, and complicated compliance regulations, puts intense pressure on organizations to carefully consider how to improve revenue cycle management (RCM).

After all, strong RCM capabilities can determine whether an organization faces financial instability or achieves an improved bottom line.

What Makes Behavioral Health RCM Unique — And Uniquely Challenging

In a 2024 poll from the Medical Group Management Association, 60% of providers said that the rate of insurance denials rose that year. That’s a staggering figure, especially given that denial rates in behavioral health have historically been higher than other medical specialties. While 30% of mental health claims were denied in 2023, for example, only 19% of claims in other medical specialties were rejected.

But high claim denial rates aren't the only reason billing and RCM are particularly complex in behavioral health. Providers in the industry must also contend with:

• Increased client financial responsibility. One study found that Medicaid — the largest payer for behavioral health services — reimburses at rates 40% lower than cash payments. Combined with high denial rates, this often shifts more financial burden to clients, putting timely, accurate, and complete payment at risk for organizations.

• Convoluted and varied billing requirements. Organizations must juggle multiple billing and coding guidelines that align with federal, state, and local regulations, leaving them open to increased errors that could delay payment and reimbursement.

• Shifting compliance requirements. Regulatory requirements are constantly evolving as organizations take on new models of care and the industry works to account for new privacy laws, social determinants of health, client needs, and changing payer demands and expectations.

• Strict payer requirements. Each insurance payer requires detailed documentation and has other stipulations for submitted behavioral health claims, requiring organizations to stay current on rules or risk denials and, potentially, fees and loss of revenue.

• Increased caseloads. Behavioral health providers often face high caseloads and administrative demands, and extensive documentation or billing requirements can reduce face-to-face clinical time. Over time this contributes to burnout, turnover, and diminished care quality, further complicating RCM success.

Combined, these factors create extensive challenges for behavioral health organizations and RCM teams looking for how to improve revenue cycle management, making it difficult to navigate the evolving billing landscape and avoid costly errors, denials, or delays.

8 Behavioral Health RCM Best Practices

Despite these complexities and challenges, there are steps organizations can take to improve their revenue cycle management capabilities and performance. Here are eight RCM best practices organizations should adopt that can help drive higher reimbursement rates, minimize compliance risks, and secure long-term financial success.

1. Empower Clients With Advanced Technologies

Billing complexities do not have to weigh down clients. With the right technology, they can take charge of their financial responsibilities.

Implement a top-tier electronic health record (EHR) with an integrated billing portal and real-time payment plans. These features enable clients to easily access their billing requirements, update their insurance details, and find transparent information about the cost of services. When clients have financial clarity and manageable payment options, it reduces stress and strengthens therapeutic engagement.

2. Create Payer-Specific Workflows

Nearly half (49.7%) of all claim denials are due to front-end errors, such as inaccurate client details, insurance verification, or eligibility, according to Revco Solutions. By creating payer-specific workflows in their EHR, organizations can reduce these denials and save valuable staff time.

Advanced EHRs let teams set up custom rules that automatically update when payer requirements change. With these tools, organizations can save critical time managing and meeting unique criteria.

3. Standardize Documentation Practices

For organizations considering how to improve revenue cycle management, standardizing documentation templates is an essential step. Top behavioral health EHRs allow teams to establish templates that ensure every provider across the care continuum produces accurate, consistent documentation.

This is one of the most beneficial RCM best practices when combined with regular audits and EHR-powered compliance tracking. Auditing documentation helps teams identify patterns and minimize errors, while compliance trackers keep everyone accountable for tasks and deadlines.

4. Use Analytics to Immediately Address Claim Denials

The administrative burden of appealing and managing denials costs organizations a collective $7.2 billion each year, according to HIT Consultant.

Behavioral health clinics can significantly reduce these costs by preventing denials and rapidly responding to them when they occur. The key is to look in two directions:

• Backward: Rely on your EHR’s intuitive dashboards and visualizations to spot previous billing delays, claim errors, or reasons for recurring denials.

• Forward: Use predictive analytics to identify which claims are most likely to be rejected, and put systems in place to prevent or proactively address the causes of those rejections.

5. Leverage KPIs

An EHR’s customizable dashboards allow teams to monitor key performance indicators (KPIs), such as:

• Session attendance rates

• Treatment adherence rates

• Claim denial and approval rates

• Coding accuracy rates

• Hospital/facility readmission rates

Using an advanced EHR to monitor these KPIs helps organizations gain a bird’s-eye view of their overarching financial performance and gives them insights for improving RCM practices.

6. Set up Automated Eligibility Verification

Verifying insurance eligibility early and often is one of the essential best practices for how to improve revenue cycle management, as it helps organizations avoid delays and denials. With the right EHR, this process can be automated through real-time eligibility checks.

The system should also have the capability to send alerts for eligibility issues and enable clients to quickly update outdated information through an easy-to-access portal. Together, these capabilities reduce enrollment delays and strengthen overall RCM for behavioral health.

7. Establish Cross-Functional RCM Teams

Providers, staff, and revenue cycle management teams must work together to ensure workflows, documentation, and billing procedures follow RCM best practices. Creating cross-functional teams can help clinical care and RCM staff operate in sync.

This RCM for behavioral health best practice becomes even more important as organizations adopt value-based care models, where close collaboration between clinical and RCM teams drives both improved client outcomes and financial performance. For example, a clinician and billing specialist might review documentation together to ensure the treatment plan reflects both clinical goals and payer requirements. This kind of collaboration not only prevents denials but also builds mutual understanding between teams.

8. Regularly Train Staff

To support effective collaboration, behavioral health care leaders should regularly train all staff using real-world billing scenarios. Doing so empowers team members to spot billing and claim errors that could lead to lost time and money, as well as implement RCM best practices into their day-to-day work to boost efficiency and financial sustainability.

Combining the Power of RCM and an Advanced EHR

RCM best practices are crucial, but their impact multiplies when paired with a robust EHR.

As you consider how to improve revenue cycle management success for your behavioral health organization, put adopting a strong EHR at the top of your list. EHRs with integrated RCM capabilities — such as Core Solutions’ Cx360 Enterprise platform — help enhance revenue cycle performance by scrubbing claims to ensure accuracy, automating workflows, and offering real-time analytics and artificial intelligence (AI)-powered tools for billing efficiency.

With advanced RCM capabilities and a top-tier EHR like the Cx360 EHR, organizations can reduce costly billing errors and secure long-term sustainability.

Contact Core Solutions to learn how our solutions can help you master your RCM.