Psyhc Care

Introduction

Revenue Cycle Management (RCM) is a critical aspect of healthcare operations, ensuring that services rendered translate into appropriate reimbursement. While RCM fundamentals—such as eligibility verification, documentation, coding, claims submission, and collections—are consistent across most healthcare domains, the specific processes and challenges vary greatly depending on the type of care provided. This is especially true in behavioral health versus substance abuse treatment.

At a glance, behavioral health and substance abuse treatment fall under the broader umbrella of mental health services. However, the nuances of their treatment models, regulatory frameworks, payer requirements, and clinical structures lead to significant differences in how their respective billing and RCM systems operate. Understanding these differences is vital for clinicians, administrators, and billing specialists who operate within dual-diagnosis programs, integrated health systems, or standalone treatment centers.

This article explores the key differences between behavioral health RCM and substance abuse treatment billing, examining every aspect of the revenue cycle—from intake and documentation to payer policies and compliance regulations. By outlining the unique demands of each, we can clarify how practices can optimize their workflows, reduce claim denials, and ensure financial sustainability.

Foundational Differences: Definitions and Clinical Focus

Behavioral health encompasses a broad range of services including treatment for anxiety, depression, bipolar disorder, schizophrenia, and other psychiatric conditions. These services are typically delivered through outpatient therapy, medication management, and community-based programs. Providers include psychologists, psychiatrists, social workers, and counselors.

In contrast, substance abuse treatment (also known as addiction treatment or SUD treatment) is specialized care focused on individuals with chemical dependency or addictive behaviors. Treatment may be delivered in inpatient rehabilitation centers, residential programs, outpatient detoxification clinics, partial hospitalization programs (PHP), or intensive outpatient programs (IOP).

While the two disciplines often overlap—particularly in dual diagnosis cases—substance abuse treatment is typically more structured and time-intensive, often requiring multi-level care coordination, extended length-of-stay authorizations, and adherence to federally regulated treatment protocols. These clinical distinctions heavily influence how RCM systems are designed and managed for each service type.

Eligibility and Intake: Verification Variances

In behavioral health, eligibility verification often involves confirming the patient’s mental health coverage under private insurance, Medicaid, or Medicare. The process checks for session limits, co-pay amounts, prior authorization requirements for psychiatric evaluations, and limitations on provider types. In most cases, mental health benefits are integrated within the health insurance plan itself, although carve-outs still exist for some payers.

Substance abuse treatment eligibility is more complex. Many insurance plans carve out SUD benefits under separate managed care organizations (MCOs), requiring additional verification steps and communication with third-party payers. Moreover, coverage for detox, residential treatment, or medication-assisted treatment (MAT) may vary significantly by plan and state.

An added complexity in substance abuse billing is the use of single case agreements (SCAs) when patients seek care from out-of-network providers or facilities. These agreements require upfront negotiation with insurers, often involving detailed clinical justifications and projected treatment timelines, which complicates the intake process.

Behavioral health RCM rarely involves SCAs to the same extent. Thus, staff involved in substance abuse intake need more extensive training in payer negotiation, policy interpretation, and benefit articulation than their counterparts in general behavioral health settings.

Authorization Requirements and Utilization Management

Pre-authorizations in behavioral health are commonly required for psychiatric evaluations, psychological testing, and high-frequency psychotherapy. However, once initial approval is granted, many plans allow for ongoing therapy with periodic review or reassessment, especially under value-based or capitated models.

In substance abuse treatment, pre-authorizations are a constant and critical part of RCM. Almost every level of care—whether detox, residential, or IOP—requires not only initial authorization but frequent ongoing reviews. These are often dictated by the American Society of Addiction Medicine (ASAM) criteria, which categorize treatment needs by severity and functional impairment.

Insurance reviewers use ASAM guidelines to determine:

• Level of care authorization
• Length of stay
• Step-down requirements
• Justification for continued treatment

Clinical and billing staff in substance abuse facilities must be well-versed in articulating medical necessity within the ASAM framework. Failure to meet these specific standards can result in premature discharge, retroactive denials, and revenue loss.

Behavioral health RCM, in comparison, is less dependent on repeated, structured utilization reviews and more centered around documentation that supports ongoing medical necessity in a broader sense.

Coding Differences: CPT vs. H0010–H2037 Codes

Behavioral health billing primarily relies on Current Procedural Terminology (CPT) codes, which are standardized by the American Medical Association. Common codes include:

• 90791 (Psychiatric Diagnostic Evaluation)
• 90834 (Individual Therapy, 45 minutes)
• 90837 (Individual Therapy, 60 minutes)
• 90853 (Group Therapy)
• 99213/99214 (Medication Management with E/M codes)

Substance abuse treatment billing, however, utilizes HCPCS Level II codes, particularly in facility-based settings or under Medicaid. These codes include:

• H0001 (Alcohol and/or drug assessment)
• H0010 (Alcohol and/or drug detoxification, residential)
• H0015 (Intensive outpatient services)
• H2036 (Residential treatment, per diem)
• T1006 (Family education and counseling)

These codes differ not only in structure but in billing methodology. CPT codes often reflect time-based sessions or service complexity, while substance abuse treatment codes are typically per diem (daily rates) and represent bundled services such as therapy, meals, housing, nursing, and case management.

This makes billing in substance abuse treatment more akin to hospital billing, whereas behavioral health coding aligns with individual provider reimbursement. Each approach requires a different knowledge base for coding staff and different documentation strategies from clinicians.

Documentation and Clinical Record Standards

In behavioral health, documentation standards typically follow the SOAP (Subjective, Objective, Assessment, Plan) or DAP (Data, Assessment, Plan) formats. Notes are written after each session and must demonstrate medical necessity, progress, and treatment plan updates. However, there is often flexibility in how notes are structured and reviewed.

In substance abuse treatment, documentation is far more rigorous and prescriptive. For example:

• Treatment plans must be individualized, measurable, and updated weekly.
• Group therapy notes must identify each participant, the group focus, the therapeutic modality, and individual responses.
• ASAM-based assessments must be updated regularly and submitted to payers for continued stay approvals.
• Discharge summaries must include comprehensive transition planning, relapse prevention strategies, and referrals.

Moreover, documentation in substance abuse care must often satisfy state licensure standards, CARF or Joint Commission accreditation guidelines, and grantor reporting requirements—in addition to insurance audits. This multi-layered compliance obligation dramatically increases the burden on clinicians and administrators, making RCM education and documentation audits essential in these settings.

Claim Submission and Billing Cycles

Behavioral health claims are usually submitted on the CMS-1500 form using CPT codes for professional services. These are processed similarly to standard outpatient medical claims and are typically reimbursed within 14–30 days by most payers if clean.

Substance abuse treatment claims—especially those for residential or detox programs—are submitted using the UB-04 form (also called CMS-1450), which is designed for institutional billing. This format supports per diem and bundled billing and requires:

• Revenue codes (e.g., 1001 for residential)
• Service units (number of days)
• Specific payer taxonomy codes
• Attending provider and facility information

In terms of billing cycles, behavioral health claims are often billed weekly or monthly, depending on session frequency. In contrast, substance abuse facilities frequently batch claims for a full week of services or bill only after full completion of the episode of care—particularly for Medicaid or grant-funded patients.

This delay between service delivery and reimbursement makes cash flow management more challenging in substance abuse settings, necessitating stronger financial forecasting and accounts receivable tracking.

Denials and Appeals: Common Pitfalls

Behavioral health claims are most commonly denied for reasons such as:

• Invalid CPT codes or code mismatches
• Missing documentation of medical necessity
• Provider credentialing issues
• Authorization lapse

Substance abuse treatment claims face all these issues—and more. Denials often arise from:

• Failure to adhere to ASAM criteria
• Incomplete documentation of level-of-care justification
• Delayed submission of ongoing review documentation
• Misalignment between clinical documentation and billing codes

Appeals in behavioral health RCM usually involve a brief narrative, additional documentation, and perhaps clarification of session purpose. In substance abuse treatment, appeals often require full treatment plan reviews, peer-to-peer discussions, and resubmission of multiple weeks’ worth of group and individual notes. Therefore, SUD treatment programs must invest in dedicated utilization review (UR) staff and legal support for appeals.

Compliance and Regulatory Oversight

Behavioral health providers must comply with HIPAA, HITECH, payer contracts, and any applicable state licensing rules. While audits do occur, enforcement tends to focus on medical necessity, documentation compliance, and fraud prevention in coding.

Substance abuse treatment facilities operate under an even more complex web of regulation. In addition to HIPAA and HITECH, these providers must adhere to:

• 42 CFR Part 2: A federal regulation that imposes stricter confidentiality standards for SUD records than general HIPAA laws.
• State licensure mandates: Which often include clinical supervision ratios, staffing requirements, and documentation formats.
• Grantor conditions: Especially for facilities receiving SAMHSA, block grants, or state funding, which include outcome reporting, census data, and financial tracking.

Failure to comply with any of these can lead to not only reimbursement denials but also license suspension, disqualification from Medicaid, and civil liability.

Payer Mix and Reimbursement Rates

Behavioral health practices typically rely on private insurance (commercial payers), Medicaid, Medicare, or a combination of these. Payers often reimburse based on a fee-for-service (FFS) model, though some are moving toward value-based care or capitation models.

Substance abuse treatment facilities often have a more complex and less predictable payer mix:

• Many rely heavily on Medicaid Managed Care, which has strict utilization review and documentation requirements.
• Private pay (self-pay) arrangements are more common in high-end residential programs.
• Grants and government subsidies play a substantial role in funding non-profit and public substance abuse treatment.
• Out-of-network billing is more prevalent, often requiring upfront negotiation and cash-based payment prior to claim submission.

Additionally, reimbursement rates for substance abuse treatment are often inconsistent across payers and programs. For example, the daily rate for residential care may vary by hundreds of dollars depending on state Medicaid policy or the specific insurance contract.

Role of Technology and RCM Software

Behavioral health practices increasingly use EHR systems with integrated billing capabilities. These platforms support note-taking, CPT code selection, eligibility verification, and direct claim submission.

Substance abuse treatment programs require more sophisticated platforms. Ideal systems must:

• Track ASAM levels and generate review templates
• Manage per diem billing formats
• Integrate census data with clinical and billing operations
• Automate UR reminders and documentation audits

Some EHRs also include grant reporting features and 42 CFR Part 2 compliance protocols, making them indispensable for integrated addiction treatment centers. However, the cost and complexity of these systems often exceed what a standard behavioral health clinic would require.

Staffing Needs and Workflow Design

Behavioral health practices may rely on a small billing team—often one or two billers who manage claims, denials, and credentialing. In solo or small-group practices, clinicians often handle their own billing through software or third-party services.

Substance abuse facilities require more extensive staffing for RCM:

• Utilization Review Specialists to coordinate authorizations
• Clinical Documentation Reviewers to audit notes and plans
• Revenue Cycle Managers to oversee compliance and workflow
• Financial Counselors to manage upfront patient cost estimates

These roles reflect the administrative intensity of SUD billing and its dependence on detailed, time-sensitive communication with payers.

Conclusion

While behavioral health and substance abuse treatment share the common goal of improving mental health and quality of life, their RCM infrastructures are fundamentally different. From the codes used to the payer expectations, documentation burdens, compliance standards, and billing cycles—every layer of the revenue cycle reflects the unique demands of these clinical domains.

Understanding these differences is crucial for practices that operate across both arenas or wish to expand into new services. Effective training, appropriate technology adoption, and robust workflow design tailored to the specific needs of each treatment type are the keys to long-term sustainability and financial success.

Clinicians, administrators, and billers must collaborate across disciplines to ensure that each aspect of care—from intake to reimbursement—meets the exacting standards set by payers and regulators. Only then can mental health and addiction treatment centers continue delivering life-changing care in an environment of ever-increasing administrative complexity.

SOURCES

Buchanan, J. P., & Miller, S. D. (2023). Revenue Cycle Management in Addiction Treatment Facilities: Challenges and Solutions. Journal of Substance Abuse Treatment, 150, 108–116.

Collins, R. T., & Bailey, M. D. (2022). RCM for Behavioral Health vs. Substance Abuse: A Comparative Review. Journal of Behavioral Health Services & Research, 49(2), 243–255.

Nelson, T. A., & Grant, L. E. (2021). Clinical Documentation and RCM Compliance in Dual Diagnosis Settings. Psychiatric Clinics of North America, 44(3), 421–437.

Stein, M. D., & Freeman, S. M. (2024). The Role of ASAM Criteria in Utilization Review and Billing for Substance Abuse Treatment. American Journal of Managed Care, 30(4), 201–208.

Davis, E. H., & Chou, C. F. (2023). 42 CFR Part 2 Compliance and Its Financial Implications. Healthcare Financial Management Journal, 77(3), 38–47.

Robinson, M. E., & Fisher, J. L. (2020). Understanding HCPCS and CPT Code Structures in Behavioral Health and Addiction Treatment. Journal of Mental Health Administration, 51(1), 75–83.

HISTORY

Current Version
June, 25, 2025

Written By
BARIRA MEHMOOD