Avoiding Errors in Mental Health Billing

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mental health billing

Medical billing is the process of submitting charges for medical services to a patient and the patient’s insurer for payment. Since most billings are paid by insurers, billings need to meet industry standards by providing sufficient detail to allow the insurer to verify that the charges are accurate and reasonable.

Medical bills are usually prepared by specialists who review medical records and translate services and procedures into standardized codes that insurance companies recognize. Insurers base payments on the codes. The process of coding can be complex, but medical coders are trained to determine the precise code that describes each procedure or service rendered.

Coding can be even more complex when a patient receives mental health services. While services and procedures that treat physical illnesses and injuries are reasonably standardized, mental health providers are less uniform in treatment approaches. How to label a particular treatment approach may be a matter of opinion. Labels matter less than codes when it comes to being paid, but the selection of a code can lead to billing disputes that cause payments to be delayed or denied.

Codes are also important because an insurance company might cover some mental health services but not others. Using the wrong code and resubmitting the bill with a different code can make an insurance company suspect that it is being billed for a service its policy does not cover. Getting it right the first time maximizes the provider’s opportunity to be paid.

Billers and coders can help a mental health care provider’s cash flow by avoiding errors that delay payment. Here are some of the errors that are most common to mental health billing.

Billing for Excessive Visits

Practitioners want to bill for the work they actually perform, but before they provide services, they should be aware of what insurance will or will not cover. Providers take the risk that patients might not pay bills that insurance does not cover. Billers can help practitioners by recognizing the limits of coverage.

For example, insurers will not typically pay for unlimited visits with a patient. One or two visits per week are fairly standard. An insurer that sees a bill for daily visits might question whether the therapist is billing for reasonable and necessary services.

When a therapist bills for visits with an excessive number of patients during the day, the therapist may be inviting accusations of fraud. Billing for two dozen 45-minute psychotherapy sessions in the same day using the same billing code is an invitation to a billing audit.

Billing Incorrect Time Units 

Closely related to billing for visits that didn’t occur is the problem of billing for longer visits than those that occurred. For example, a psychotherapy session that lasts between 38 and 52 minutes should be billed using the code for a 45-minute session. Rounding up to the code for a 60-minute session will result in excessive billing. An audit will result in claim denials and could trigger a fraud investigation.

Using the Wrong ICD Code

Coders identify the mental health provider’s diagnosis with an International Classification of Diseases (ICD) code. Different patients may be diagnosed with a variety of different mental health conditions. Unless a provider’s practice is very specialized, a provider may treat a patient for an anxiety disorder, treat the next patient for post-traumatic stress disorder, treat the next patient for depression, and so on.

A coder who assigns the same ICD code to each patient billing is doing a disservice to the provider. The failure to use the correct ICD code may be a red flag that triggers a billing audit.

Coders should never be lazy. They should review the medical record thoroughly to understand the provider’s diagnosis. They should then select the ICD code that most closely matches the condition or conditions that the provider describes in the medial records.

Using the Wrong CPT Code

Current procedural terminology (CPT) codes describe the specific mental health services provided. Different codes may describe similar services. For example, in-person psychotherapy sessions and telehealth psychotherapy sessions are described by different codes. Family psychotherapy sessions and non-family group psychotherapy sessions are also described by different codes.

Errors in the assignment of a CPT code can delay the payment of bills. Errors can also result in overbilling or underbilling. While underbilling costs practice money, overbilling associated with upcoding (using a CPT code for a more expensive service than the one that was provided) can lead to audits and fraud investigations. Identifying and using the correct CPT code is essential to accurate mental health billing.

Insufficient Documentation

Insurers, including Medicare and Medicaid, will deny claims that are not supported by adequate documentation. While creating documentation is the provider’s responsibility, billers and coders should recognize that necessary documentation is missing when they review the patient’s chart to prepare a bill.

Inadequate documentation can lead to downcoding. If the documentation does not support a one-hour psychotherapy visit, the insurer may downcode the visit to a 30-minute visit, the shortest visit supported by a CPT code. An appeal from a downcoding may or may not be successful, but the need to appeal means that payment will be delayed and cash flow disrupted.

Documentation errors may include missing notes, insufficient orders, lack of care plans, missing time sheets, and a failure to establish that billed services were actually provided. A biller who flags a problem with documentation can avoid claim denials by asking the provider to correct it.

Billing for Non-Covered Services

Private insurers cover only the mental health services described in a health insurance policy. They might only cover services that they are legally required to cover or they might cover more expansive services. Billing an insurer for uncovered services will result in a claim denial.

Medicare generally covers psychotherapy, diagnostic testing, an annual depression screening, certain medications, and a variety of other forms of therapy (such as electroconvulsive therapy and hypnotherapy). Medicare does not generally cover marriage or pastoral counseling, biofeedback training, adult day health programs, and certain other mental health services.

Providers should be aware of coverage limitations before they decide to provide services. Trying to disguise noncovered services as covered services can be prosecuted as fraud and may jeopardize a provider’s ability to provide Medicare-covered services in the future.