Practice Management Blog

Understanding Why Mental Health Billing is So Complex

Being a mental health practitioner can be exceptionally rewarding, but equally, there are many days when the negatives seem to far outweigh the benefits. It’s difficult to put all your effort into providing exceptional client care when you always seem to need to keep an eye on the bottom line (even when your schedule is full). No matter where you go, you’ll find it’s the same thing: mental health billing is a complex task. Mental health care professionals are at a distinct disadvantage compared to other health providers with the challenges of pre-authorisation, changing insurance policies and funding providers, convoluted billing procedures, and more.

This means that it can be an uphill battle to get reimbursement from clients and insurance companies for services, and it’s estimated that mental health professionals only collect about 85% of the amount they invoice. This puts a lot of pressure on the sustainability of practice because 15% of your total revenue is a lot of money that most practices just can’t afford.

One thing that’s worth keeping in mind is that you’re not alone in this, and there are procedures you can do that will help future-proof your practice. We’re going to unpack some of the reasons that mental health billing is so complicated. Then we’ll take a look at some of the practical steps you can take that will improve your approval rate and have a direct impact on your practice’s bottom line.

What Services Fall Under Mental Health Billing?

The primary professionals that treat mental health conditions include:

  • Psychiatrists;
  • Psychologists;
  • Clinical social workers;
  • Counsellors;
  • Occupational therapists.

Why is Mental Health Billing Complicated?

These are the most common factors that impact mental health billing and make it difficult for mental health professionals to invoice accurately, and receive payment for their work:

1. Multiple Funders

Working as a mental health professional, there are many different entities that may be responsible for settling your client’s account, and often it’s not the client themselves. The sessions could be funded by their employer (due to a work-related incident), by the government, covered by health insurance or by private payment (by the client or a family member).

And the complexities go one step further, because there may be shared responsibility for the invoices based on causality, or possibly a shared responsibility. An example would be a work-related incident that affects a few employees, but only one who, due to pre-existing contributing factors, needs treatment. Here, the employer might be willing to share responsibility, but not cover the full treatment bill, which means the provider will need to work out who is responsible for making payment for each session.

2. Treatment Process

Mental health professionals offer services that are quite different to other healthcare providers and are usually distinctly less tangible, which makes billing a lot more complicated. Instead of a skin check-up or an X-ray, most of the time with a counsellor or psychologist will be spent talking. And, even then, therapy sessions will remain reasonably unstructured so that they can be adapted to the client’s needs.
If you take the example of three people who present with the same symptoms at a mental health practice. There’s a good chance that there may be three different approaches to diagnosis and treatment depending on other factors.

3. Treatment Outcomes

There’s also the added complication that the results aren’t easily measurable. It’s not like with a broken leg where you get X-rays, have a cast fitted, and a couple of weeks later have a healed limb as an outcome. There’s no ‘magic pill’ that will resolve depression, anxiety, or suicidal ideation.

While it is possible to measure improvements, they are still quite subjective, and heavily influenced by personality and background factors, and may fluctuate from day to day. Each client is working off a different baseline in terms of family support, previous mental health history, financial factors and more.

4. Interacting with Insurers and Funders

Payers, regardless of which country you live in and who is responsible for settling the invoice, have a very limited scope for receiving and remitting claims from mental health practices. Often there are conditions that have to be met related to diagnosis, number of treatments, and style of intervention.

In most cases, they will only agree to pay claims if the mental health professional follows their prescribed rules that regulate the duration of the session and the total number of sessions they will cover. And there may even be a discrepancy between what they agree to initially, and what they’re prepared to pay for when you invoice them. For this reason, it is important to always get the agreement in writing before starting with a client.

These nuanced interactions with insurers and funders make it close to impossible to reconcile billing constraints and standardise billing with offering your clients the best level of treatment and care.

5. Staying on Top of Funder Requirements

If you run a solo practice, this can magnify the issues as you will probably be processing your own billing, which creates added pressure to stay on top of changing regulations and billing codes, as well and the billing practices of your clients’ insurance company or the funder responsible for settling the bill. And this is inevitably going to lead to increased rates of disputed invoices.

And that’s without factoring in the submitted invoices that just seem to disappear into the funder’s system without a trace. This leaves your practice more vulnerable to non-payment as you may not know who you should be dealing with at the company, especially if you don’t have a lot of experience with the specific funder.

How Can Mental Health Practice Management Software Help?

For your practice to flourish, you need to be able to bill your clients or funders accurately or claim from insurance where applicable. Billing software that caters to the needs of practices that offer mental health care services can streamline operations, reduce incorrectly formatted invoices, and monitor client outstanding, all at the click of a button. This will help with cash flow and dispute management, as well as ensuring that, at all times, you have a clear picture of what your finances look like while remaining compliant with legal requirements. To do this, the practice management software will need to assist with:

  • Preparing invoices correctly – Your claims need to be prepared right the first time because you want to receive payment as quickly as possible. The software should provide accurate coding for claims and immediately created to reduce the number of rejected or delayed claims.
  • Including all the required information – This includes insurance provider number, patient identifier number, which should all be brought in from the system automatically.
  • An intuitive, easy-to-use interface – The software you choose should be intuitive to use and easy to incorporate into your mental health practice. This will help with selecting the right billing codes and ensure that staff members are equipped to bill quickly and accurately.
  • Billing integrations – The software you use should be able to process credit card payments, online payments with compliant payment gateways, and offer straightforward remittance.

What Other Steps Can You Take?

Here’s a checklist that you, or your practice manager, can follow to ensure that you stay on top of your billing:

  • Check the client’s billing account before each session to ensure that all payments are up-to-date, and there are no rejected invoices or outstanding payments.
  • If the client is not going to settle immediately, always create and issue invoices as soon after the session as possible
  • Keep an up-to-date list of the billing format required by each insurance company or third-party funder.
  • Keep an up-to-date list of the billing codes that can be used for your treatments, these should be updated in your practice management software.
  • Ensure that you limit the total of the bill to match the fee payable by the insurance company where applicable.
  • If preparing insurance claims, always use the right policy number.
  • Check whether pre-approval is needed for the treatment before the first session and that you have this in writing in the case of a dispute.
  • Consider adding an invoice fee for accounts not settled on the day.

Bridging the gap between providing your clients with the best level of care and making sure that you get paid for your work can be a challenge if you are a healthcare professional. Especially when you consider the nature of the work and the complexities of the funding arrangements.

If you’re struggling to stay on top of your accounts receivable, the best way to take out the stress and ensure that you get paid as quickly and easily as possible to identify where the problem areas are. Once you know where the issues lie, you can implement stricter invoicing and remittance protocols, and use practice management software that has been specifically designed to cater to the needs of your mental health practice.

For mental health professionals struggling with complex billing requirements, why not try using a practice management software solution? Power Diary and a few others offer a free trial so you can take the billing software for a spin and see if it’s a solution that would work for your practice. And, if you know a mental health practice owner who is struggling to manage their cash flow despite a full caseload, why not share this article with them. It could help them get their finances in order, freeing them up to better help their clients.

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