Improving Reimbursement in Compliance With Mental Health Parity Laws

In 2024, nearly 60 million American adults experienced a mental health condition and 18% of adults had a substance use disorder (SUD), reports Mental Health America. A troubling 8.95% of youth lived with a substance use disorder (SUD), as well.

Yet, despite these growing and pervasive behavioral health needs, not everyone has equal access to the care they need, nor have mental health care clients experienced the same financial coverage as clients in need of other services. 

Fortunately, mental health parity laws have arisen to better ensure fair treatment and reimbursement for behavioral health services. These laws are complex, however, with overlapping federal and state requirements and frequently updated guidelines.  

As such, it’s critical for behavioral health revenue cycle management (RCM) teams to fully understand how mental health parity laws work and what strategies they can put in place to prevent costly noncompliance, reduce payment gaps, and support overall financial health.

What Is Parity in Mental Health? A Look at the MHPAEA

While some parity requirements arose in the 1990s, the landmark Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 was the most concerted effort to protect mental health clients from unfair treatment on the part of health insurance providers. 

MHPAEA primarily focuses on two principal areas, among other stipulations: financial requirements and treatment limitations. Under the law, benefits for behavioral health clients cannot be more restrictive, nor can treatment durations be more limited, than those for physical healthcare. 

It’s important for insurers and behavioral health care providers to keep these details in mind: 

• MHPAEA covers nearly all aspects of behavioral health care, including inpatient care, outpatient care, partial hospitalization, copays, deductibles, and more. The benefits associated with these areas must be aligned with those offered for physical services.
• MHPAEA doesn’t apply directly to small-group health plans, though some requirements are consistent with guidelines outlined in the Affordable Care Act, which do apply to small groups.
• Plans that work directly with State Medicaid programs are required to stay compliant with MHPAEA.
• Insurers and providers must follow the stronger mental health parity laws in place, whether at the state or federal level. 

Additional Requirements in the 2024 Update  

In 2024, the Biden administration put out the finalized version of MHPAEA, which added some rules and clarified others. Among other details, this newer iteration requires plans and issuers to: 

• collect and evaluate data related to benefits, non-quantitative treatment limitations (NQTLs), and material differences between behavioral and physical healthcare;
• conduct comparative analyses on the impact of NQTLs, reimbursement rates, and prior authorizations across provider networks; and
• avoid using discriminatory data or information that could impact mental health or substance use disorder clients. 

These new requirements now apply to non-federal government health plans as well. Implementation will be phased in throughout 2025 and 2026. 

5 Strategies to Stay Compliant With Mental Health Parity Laws

Failing to comply with MHPAEA can lead to serious financial consequences for behavioral health providers and insurers. If organizations provide the wrong data reporting or inaccurate documentation, they could be at risk of payment delays, claim denials, or changes to their mental health reimbursement plans, which can significantly impact their RCM.

To better ensure compliance, follow these five strategies. 

1. Accurately Document Services 

The Centers for Medicare & Medicaid Services (CMS) notes that, under MHPAEA, organizations must accurately document both services delivered and comparative analyses of the impact of their NQTLs. This documentation must be thorough and demonstrate equal treatment of behavioral and physical healthcare clients.

Since documentation is the key resource the government uses to ensure compliance with mental health parity laws, it’s vital for organizations to record and document their work properly. Many facilities adopt advanced electronic health records (EHRs) that can automate documentation, minimizing the risk of human error. With the right EHR, organizations can create tailored documentation rules and compliance checklists, enabling faster and more accurate alignment with MHPAEA regulations. 

2. Ensure Billing Accuracy 

Charging higher costs for mental health services compared to physical healthcare services — even accidentally — can violate rules for parity in mental health. To maintain compliance, organizations need to assign the right codes in alignment with the services delivered to clients. Those codes include ICD-10 medical codes, Current Procedural Terminology (CPT) codes, and Healthcare Common Procedure Coding System (HCPCS) codes. 

Managing multiple, complex coding standards can be difficult for many organizations, however, leading to inaccurate billing that results not only in delayed payment but potentially noncompliance with mental health parity laws. EHR solutions with RCM capabilities support teams in connecting the right codes to the right services to prevent these costly errors. 

3. Optimize Workflows to Streamline Compliance 

The compliance regulations set to roll out by the end of 2026 will require behavioral health clinics to adjust their practices and mental health reimbursement processes to ensure compliance. Specifically, they’ll need to adapt their workflows, care coordination procedures, and technology usage to ensure effective documentation and client treatment. 

EHRs built for the behavioral health space are designed so that vendors can easily update them as new compliance laws take effect. Organizations can use templated workflows — or create their own — to align their practices with compliance regulations. Moreover, they can use the EHR to verify coverage criteria, set custom rules for visit limits, and align their billing procedures with pre-authorization criteria.

4. Consistently Review Claim Denials 

With new mental health parity laws in effect, claims can be denied for parity-related issues. Inaccurate documentation or billing codes can signal noncompliance, causing claims to be rejected or delayed. 

To avoid noncompliance penalties, organizations must create regular checkpoints for reviewing claim denials and addressing parity violations — either by appealing denial decisions or enhancing workflows to prevent disparate treatment for behavioral health clients, such as shorter visit limits, higher costs, or more restrictive benefits. 

Top behavioral health EHRs empower teams to build review intervals into their regular workflows. Real-time notifications alert team members to complete compliance-related tasks, and workflow engines move tasks along to the next appropriate team member after the previous task is completed. With the support of an EHR, organizations can stay on top of denial reviews and immediately address parity issues should they arise.

5. Train Staff 

Adjusting workflows, enhancing documentation, reviewing claim denials — it all adds up to changes in your staff’s day-to-day work. To help ensure smooth adoption of expanded compliance-related practices, organizational leaders need to build in time to effectively train staff and providers on new administrative duties, reporting requirements, documentation templates, and workflows. 

Training should account for each staff member’s role in compliance-related activities and should include various types of training (e.g., visual, text-based, hands-on) to align with different learning styles.  

Enhancing Behavioral Health RCM 

Behavioral health organizations need the right technologies to drive better revenue cycle management performance and more accurate and complete mental health reimbursement, particularly as mental health parity laws evolve. Core Solution’s Cx360 platform is tailor-made to adapt to new changes, giving organizations the tools they need to quickly adopt new documentation protocols and workflows and optimize their compliance processes with artificial intelligence. 

By using Cx360 to align practices, policies, and documentation with laws about parity in mental health, organizations can simplify their billing processes, maintain compliance, and enhance their overall financial sustainability. 

Reach out today to discuss how Core Solutions’ standard and AI-enhanced RCM solutions can help you achieve compliance and optimize your reimbursement.