7 Most Common Psychiatric Facility Billing Issues

Reading Time: 6 Minutes

Psychiatric billing is complicated in nature, demanding detailed attention from providers in order to run smoothly. The balance between caring for patients while simultaneously pulling off a perfect billing process can sound like a far-fetched dream. The problems that your organization faces exist across the industry. Issues like claims management, denials, and patient payments can feel overwhelming at times. The good news is that there are psychiatric billing solutions that can help. With the right tools and technology, providers can spend less time on billing and more time on care.

Most Common Problems with Insurance Psychiatric Billing

1. Incomplete Data

When it comes time to file a claim, documentation is your best friend. Should a claim be filed with an incomplete data set or missing information, it will likely be denied by the payer. The most common forms of incomplete or incorrect information in a claim include service delivery dates or incomplete notes. Sometimes, claims are denied because the patient’s name was incorrectly spelled, or their date of birth was off by a single digit.

Even the smallest form of inaccuracy can result in a denied claim that your practice then has to spend valuable time correcting and resubmitting. It is essential that each of your claims is accurate and includes 100% of the necessary data needed for approval.

2. Incorrect CPT Codes

Incorrect CPT coding is the most common reason for claim denial in 2021. CPT codes are constantly changing. Just when a provider gets used to the most up-to-date set of codes, they are changed, or new ones are added. Not only this, but some providers will accidentally apply the wrong code to a claim that has no reason to be denied.

When a claim is coded incorrectly, the payer must deny it. This means investing more time and energy into correcting denied claims and resubmitting them for psychiatric billing teams. Not an ideal workflow at all. Resubmission is a complex process that requires more administrative time and expertise if a provider hopes to receive payment for that claim.

3. Outdated CPT Codes

Codes are constantly changing in psychiatric billing, causing some providers to apply codes they have grown accustomed to accidentally. Outdated codes are codes that have been retired and replaced with new ones. Filing a claim with an obsolete code will result in a denial.

4. Patient Payment Issues

Patient payments are notoriously difficult to collect. Under the impression that their insurance will cover 100% of the cost of their treatment, clients are generally caught by surprise when they receive a bill in the mail. For some reason, healthcare invoices are not treated the same way a utility bill or rent might be by patients. They do not do their best to pay them right away or right on time. For this reason, many psychiatry practices and facilities struggle to collect on those balances during a time where more and more providers are reliant on them.

5. Payer Requirements

Every payer has different requirements. Depending on how many insurance providers you work with, this can quickly become a formidable set of rules to try and keep up with. Payer requirements might include time frames for when a claim needs to be filed, what to do when a claim is denied, and different windows for claim resubmission. Staying on top of this information is a common struggle for many psychiatric billing teams.

6. Incorrect Application of Modifiers

As discussed above, errors in CPT codes are the most common reason for a denied claim. CPT codes are notorious for being complicated and difficult to keep up with. They are constantly changing, and every provider is responsible for keeping their billing staff trained and up to date on those changes. 

Having a full and comprehensive understanding of CPT codes for substance abuse billing is essential to decreasing denials, increasing clean claims, and maximizing your revenue.

7. Lack of Coverage

Sometimes a client/patient will receive services under the impression that they have coverage when they do not. This is an issue across healthcare but amplified in behavioral health fields.

This could be due to several different variables. For some clients, it happens because they let their coverage lapse, and for others, it is as simple as not understanding what services they are covered to receive. Regardless, lack of coverage forces 100% of the payment to fall into the client’s lap, making it much more challenging to collect.

How a Billing Solution Can Help

The solution to every one of these issues is to find a top-tier psychiatric billing solution for your organization. With the right psychiatric billing tool–and perhaps an expert billing team–your practice or facility can streamline operational efficiency while revenue streams increase. This means more time for patient care and support.

Billing Formats

These solutions can enable a provider to optimize their substance abuse billing and streamline operational efficiency. 

Standard and customized billing formats are the key to helping you stay on top of differing biller requirements. With psychiatric billing software or managed billing services, your internal admin team is no longer responsible for manually keeping track of what payer requirements. Your billing system completes the grunt of the work for you. Now, your organization can get paid on time, every time.

Prior Authorization Management

As we all know, prior authorizations may be necessary for a payer to cover a client’s visit. With a psychiatric billing solution, providers can track and manage prior authorizations throughout the intake, treatment, and billing processes.

Electronic Clearinghouse Management

A clearinghouse functions like a checkpoint for each of your claims. Your billing software connects to the clearing and manages claim submission. The tool will search for and identify errors in your coding process so that you can eliminate denials. If a patient’s name is spelled wrong, it will catch it. If a claim is coded incorrectly, it will alert you. The electronic clearinghouse is the fastest psychiatric billing tool that helps providers improve clean claims and get timely payments.


To minimize the time you spend chasing down payments from patients, psychiatric billing solutions can offer escrow options. This allows patients to make advance cash payments to their accounts before services are offered. Then, later on, providers can pull directly from their escrow when they owe on their visit to settle the balance.

Reporting Tools

Reports are how providers gain a clearer insight into their financials. Billing software will allow you to create in-depth, custom reports for revenue management. There is no limit on what you can track and predict to make data-driven decisions with powerful analytical capabilities.

Psychiatric billing will only grow more complicated with each passing year. Now is the time to adopt a high-functioning psychiatric billing solution that can help you avoid these common struggles, improve accuracy in your claims process, and grow your bottom line without sacrificing patient care.Optimizing billing is key to helping patients get the care they need, growing as an organization, and worrying less about your bottom line. To learn more about Logik’s billing solutions schedule a demo or call,



Related Posts