How Does Mental Health Medical Billing Work?
Mental health medical billing is a series of connected steps that begins before the patient receives care and continues until the claim is resolved.
The exact workflow differs between practices, providers and payers, but the overall process generally includes:
Credentialing → Eligibility → Authorization → Service → Claim → Adjudication → Payment → A/R Follow-Up
Understanding this process helps providers identify where billing problems occur.
Step 1: Provider Credentialing
Credentialing establishes a provider's participation with an insurance plan.
Depending on the payer, this can involve enrollment applications, CAQH information, licenses, certifications, practice locations and other documentation.
CAQH describes its Provider Data Portal as a centralized way for providers to maintain information that can be shared with participating health plans.
A credentialing problem can affect the billing process before the first claim is ever submitted.
Step 2: Patient Insurance Verification
The practice verifies the patient's insurance coverage.
The billing team may review:
- Eligibility
- Benefits
- Network participation
- Copay
- Deductible
- Coinsurance
- Authorization requirements
This information helps the practice understand potential coverage issues before services are rendered.
However, eligibility verification does not guarantee payment.
Step 3: Authorization
Some plans require authorization for particular services.
Authorization requirements vary by payer, plan, service and patient circumstances.
The practice should determine whether authorization is required before providing the applicable service whenever possible.
Step 4: The Patient Receives the Service
The provider performs the service and documents it according to applicable clinical, payer and professional requirements.
The billing information should accurately reflect the service actually provided.
Step 5: Claim Creation
The billing team enters the applicable:
- Patient information
- Provider information
- Date of service
- Diagnosis information
- Procedure code
- Modifiers when applicable
- Place of service
- Payer information
The claim is then prepared for submission.
Step 6: Claim Submission
The claim is submitted to the payer, often electronically through a clearinghouse.
A claim can encounter a problem even before it reaches adjudication.
For example, it might be rejected because of missing or invalid claim information.
Rejected claims should be identified and corrected promptly.
Step 7: Insurance Adjudication
The payer processes the claim according to the patient's plan and applicable policies.
The claim may be:
- Paid
- Partially paid
- Denied
- Pended
- Returned for additional information
Step 8: Payment Posting
Once payment information is received, it is posted to the appropriate patient and claim account.
This helps the practice determine:
- Amount paid
- Contractual adjustment
- Patient responsibility
- Remaining insurance balance
- Remaining A/R
Step 9: Denial Management
A denial needs investigation.
For example, the reason could involve:
- Eligibility
- Authorization
- Provider enrollment
- Coding
- Filing deadline
- Documentation
- Medical necessity
- Payer-specific requirements
The correct response depends on the denial reason.
Step 10: A/R Follow-Up
Claims that remain unpaid become part of accounts receivable.
The billing team should monitor aging and prioritize appropriate follow-up.
A Better Way to Think About Billing
Mental health billing isn't one task.
It is a chain.
If the beginning of the chain is weak, problems can appear later.
For example:
Credentialing problem → Claim problem → Denial → Aging A/R → Delayed payment
That's why an effective billing operation needs to look at the entire revenue cycle.
[Learn About Mental Health Revenue Cycle Management →]