Claim Denials in Psychiatry Billing: Top Causes and Fixes

Mental health service providers ensure that they pay complete attention to their patients so that they do not feel neglected. As it is an essential part of their care. Working in psychiatry medical billing**** demands extra efforts, time, patience, and attention, increasing complications for psychiatrists and mental health professionals. To develop a robust billing process, providers must dedicate their time outside of their busy routines. For that, they need reliable systems and proper record management. 

The limited focus of psychiatric practices due to their busy routine increases the chances of claim denials. Insufficient attention to detail can lead to errors in**** psychiatric billing. For example, the use of wrong codes, missing prior authorizations, and failing to submit claims on time are significant reasons behind claim denials. 

What is psychiatry billing?

Psychiatry billing is the process of managing the financial aspects of mental health services, from a patient’s initial visit to final payment reimbursement. It differs from regular medical billing in that it utilizes a specific set of codes to explain the type of service and the patient’s diagnosis. 

Mental healthcare providers or professional medical billers submit these codes on their behalf for the insurance company’s review. Psychiatry billing management includes ensuring proper reimbursement after a claim is approved. It also involves handling situations where the insurance company pays part of the cost and the patient pays the remaining balance.

Moreover, dealing with challenges such as denials, deductibles, or rejections is also part of the billing process. However, mental healthcare is often unique and a long-term process; therefore, it is sometimes tricky, and even minor mistakes can cause claim denials.

Necessary codes in psychiatric billing

Psychiatry billing utilizes specialized codes that detail the specific service provided and the necessity of the care. These codes help insurance companies understand the level of care and decide on payments. There are various categories of codes, including evaluation and management codes, designed to simplify billing processes for medical billers, insurance companies, and patients. However, using the correct codes is crucial to prevent claim denials and secure timely reimbursement for providers.

Major codes in psychiatry billing

• Evaluation and management codes (E/M) indicate whether an appointment is new or follow-up, such as 99213.
• Psychotherapy codes encompass therapy sessions, detailing their type and duration. For example, 90834 indicates 45-minute sessions.
• Medication management codes for medication review, such as 90863.
• ICD-10 codes that describe a diagnosis, such as depression (F32.1) or anxiety (F41.1).
• Modifiers add details such as telehealth visits or exceptional billing circumstances.
• Place of Service (POS) codes highlight the setting where the care takes place, such as 02 for telehealth and 11 for a clinic.

These codes, together, ensure that psychiatry providers are paid fairly while keeping the billing process transparent and accurate.

Why do claim denials happen in psychiatry billing?

Claim denials are one of the most frustrating problems for psychiatry healthcare providers. It disrupts their cash flow while becoming a significant obstacle to providing optimal care. Unpaid claims significantly increase administrative tasks for psychiatry service providers. Let us understand some common causes behind denials to minimize revenue loss.

Patient eligibility issues

Patient eligibility errors often occur due to data entry mistakes, such as entering an incorrect insurance ID or a spelling error in names. There are some of the most common issues in psychiatry billing. Sometimes, patients are unaware of their insurance coverage due to a job change, an expired plan, or a missed premium payment. For psychiatry healthcare service providers, fixing these errors to resubmit claims is an additional administrative task. 

To avoid this issue in psychiatric billing, practices must verify insurance coverage before each appointment. Moreover, they must utilize automated billing systems to collect patient information and minimize the likelihood of errors.

Lack of credentialing

Insurance companies have their own network and work with specific psychiatry service providers to control costs and ensure quality. Some claims denials occur because the service provider is not part of the insurance company's network. To avoid claim denials, professional medical billers or practices must complete the credentialing process and get approval from the insurance company.

Missing or invalid authorizations

Prior authorization is the process by which insurance companies verify and confirm in advance that the procedure is covered under the patient’s plan. In psychiatry billing, some therapy sessions and evaluations require prior authorizations to ensure payment reimbursement. Missing or invalid authorizations lead to claim denials. In some cases, insurance companies also ask for a referral from the patient’s primary physician. If a practice or medical biller fails to meet the specific conditions of insurance companies or payers, then the chances of denials increase. Therefore, practices must review the requirements before offering services to prevent payment issues.

Service not covered

Some insurance plans do not cover specific therapies, such as couples counseling, or only cover a limited number of sessions. Similarly, sometimes patients’ diagnoses are not covered in the insurance plan. Insurance companies or payers may deny the claims if the services do not meet the plan’s coverage conditions. Therefore, practices must carefully check the patient’s mental health benefits, network requirements, and coverage limits in advance before offering services.

Coding errors

Medical coding in psychiatry billing is complex and needs careful attention. For untrained staff, this often leads to errors and increases the chances of claim denials. Errors in psychiatric coding lead to claim denials because insurance companies cannot clearly understand the treatment. Minor errors, such as mentioning a 60-minute session when it was only 30 minutes, flag a claim. To minimize these errors, practices must train their staff and carefully review their claims before submission.

Incomplete documentation

Incomplete documentation is another common reason for denied claims in psychiatry billing. Insurance companies need clear records to verify the authenticity and necessity of the medical treatment. Missing documents make a claim suspicious and unnecessary. Moreover, if the documents do not support progress notes or treatment plans, then the chances of claim denials increase significantly.

Duplicate claims

When practices submit the same claim more than once, a duplicate claim error occurs. Such an error often occurs because of an insufficient tracking system or resubmission of claims without verification. Insurance companies deny these claims while flagging them as duplicates. To deal with such a situation, psychiatrists must use effective tracking systems that simplify regular verification of claim status before submission.

Timely filing issues

Insurance companies give providers a specific time window to submit claims. If a practice fails to submit a claim before the deadline, the insurance companies will deny the claim. However, time frames for claim submission vary from one insurance company to another. Therefore, it becomes significantly challenging for practices to adhere to the guidelines of different insurance companies. Missing deadlines places a heavy shadow over reimbursements, as late claims are almost always denied.

To avoid this error, providers must promptly submit claims while effectively using the advanced systems to monitor deadlines. It keeps practices informed about each company’s filing requirements. 

Psychiatric billing challenges

Psychiatric billing requires a systematic approach and established procedures. To manage it, psychiatry practices need to understand psychiatry coding, train their staff, and spare dedicated time to manage the psychiatry practice billing system. Here are the key challenges that practices often face:

• Difficulty in understanding complex coding.
• Managing, compiling, and arranging essential documents of an individual patient before claim submission.
• Adhering to compliance and regulatory rules such as HIPAA.
• Dealing with insurance restrictions that lead to claims denials, such as prior authorizations, visit limits, and non-covered services.
• Overcoming late submissions is a common challenge for psychiatry practices. As insurance companies strictly enforce deadlines, missing those results in automatic denials.
• Telehealth services require specific modifiers and place-of-service codes. Dealing with substance use disorder (SUD) treatment services becomes more challenging for practices. These have special confidentiality requirements under federal law.
• Practices must follow the proper methods for grouping treatments. Some insurance companies pay a fixed amount for a group of treatments instead of paying separately for each service. Maintaining accuracy becomes a significant challenge for practices to avoid denials.
• Some patients have two or more insurance plans. The challenge for practices is figuring out which insurance pays first and then correctly billing the other plan.
• Telehealth licensing is a big challenge for practices. Providers must be licensed in the state where the patient resides. Without it, insurance will not cover the claim.

Comprehensive strategies to mitigate common claim denials

Outsourcing psychiatry billing is a good solution for psychiatry specialists. It significantly reduces their operational costs, reduces administrative burden, and minimizes the chances of a claim. Moreover, experts and trained billing specialists handle tasks with more precision and complete responsibility. The professional service saves practices from payment delays, allowing them to focus more on patient care. Moreover, the following strategies can help practices to mitigate claim denials:

Ensure proper documentation

Maintain session notes and record essential information, including diagnosis, progress, and the time spent with patients. Justify treatment procedures in your notes and state the patient’s condition in the official diagnosis code.

Smarter coding

Stay up-to-date with the latest CPT/ICD-10 codes to ensure compliance with regulatory rules. Ensure accuracy in psychiatry coding and avoid vague diagnoses. Moreover, practices must know the correct procedures for bundling treatments.

Comply with insurance rules

Do not skip insurance eligibility checks and verifying benefits before offering services. Get prior authorizations when necessary and check coverage of each insurance plan. These steps save practices from claim denials. Maintain up-to-date credentials before providing services and carefully manage multiple insurance companies.

Adopt best administrative practices

Develop a robust organizational structure to manage psychiatric billing effectively. Relying on traditional methods can cost your healthcare business hefty losses. Leverage the advanced technology to automate administrative tasks and minimize the chances of errors. Use billing software that is specially designed for psychiatry. Moreover, the use of the advanced billing software also notifies you of the deadlines, saving you from skipping them.

Handle denials with care

Identify the reason behind claim denials and carefully read the denial code. Fix errors immediately and resubmit within the time. Provide essential supporting documents, if required.

Outsource Psychiatry Billing

Partner with a reliable medical billing services provider to streamline routine operations and reduce the burden of administrative tasks. They offer you expert services who have extensive experience in handling claims and have a deep understanding of coding details. Moreover, they also help you to maintain compliance with regulatory rules and fulfill the requirements of insurance companies. They offer advanced billing solutions that save your IT infrastructure and operational costs. Speeding reimbursements, reducing errors, and helping practices to focus on patient care are the primary purposes of their services.

Conclusion 

In psychiatric billing, practices face various challenges, including understanding complex coding and managing bundled services. Some minor mistakes can lead to claim denials, resulting in significant losses for psychiatry healthcare providers. They must outsource billing to ensure meticulous documentation, accurate coding, and proactive insurance management. The professional billing services help them maintain financial stability and support the growth of their business.