Psyhc Care

Revenue Cycle Management (RCM) serves as the financial backbone of any healthcare organization. It encompasses all administrative and clinical functions that contribute to the capture, management, and collection of patient service revenue. While RCM principles apply universally across the healthcare spectrum, their application varies dramatically based on the type of care delivered. Nowhere is this more evident than in the nuanced differences between general behavioral health RCM and substance abuse treatment billing.

Behavioral health and substance abuse treatment often intersect clinically, yet they operate under different regulatory frameworks, treatment modalities, billing practices, and documentation standards. This guide explores the intricate distinctions between behavioral health RCM and substance abuse treatment billing, highlighting where they converge, where they differ, and what providers must understand to remain compliant, efficient, and financially sustainable.

Understanding the Foundations

Defining Behavioral Health and Substance Abuse Treatment

Behavioral Health includes the diagnosis and treatment of mental illnesses such as depression, anxiety, schizophrenia, bipolar disorder, PTSD, and ADHD. It spans a broad range of services, including psychiatry, therapy (individual, family, group), psychological testing, and case management.

Substance Abuse Treatment focuses specifically on disorders related to the use of alcohol, prescription drugs, and illicit substances. While it is often considered a subdomain of behavioral health, it has its own specialized interventions, such as detoxification, residential rehab, medication-assisted treatment (MAT), and intensive outpatient programs (IOPs).

Key Differences in Patient Populations

Behavioral health patients may deal primarily with mood, personality, or psychotic disorders, whereas substance abuse patients often present with chemical dependency, which may or may not coexist with a mental health diagnosis. Dual-diagnosis patients further complicate the billing landscape, often requiring bifurcated or integrated documentation depending on the payer.

Regulatory Environment: A Different Set of Rules

HIPAA vs. 42 CFR Part 2

All healthcare providers are bound by the Health Insurance Portability and Accountability Act (HIPAA), but substance abuse treatment providers are also governed by the Confidentiality of Substance Use Disorder Patient Records (42 CFR Part 2) regulations. This creates a more restrictive framework for sharing patient data.

• Behavioral Health Providers follow HIPAA rules that permit information sharing for treatment, payment, and healthcare operations.
• SUD Providers must obtain explicit patient consent for virtually any disclosure, even to another treating provider or within the same healthcare organization if the information pertains to substance use treatment.

These limitations directly impact RCM, as billing teams must exercise caution when transmitting claims and communicating with third parties like payers or billing vendors.

Licensure and Accreditation

• Behavioral health providers usually require state licensure and may be accredited by The Joint Commission or CARF, depending on service offerings.
• SUD programs, particularly residential or MAT programs, often face stricter requirements, including specialized licensure, DEA registration, and more frequent audits.

These distinctions mean that billing codes, documentation expectations, and payer scrutiny differ significantly.

Coding and Reimbursement Complexities

CPT and HCPCS Coding Differences

Behavioral Health RCM primarily uses:

• CPT codes for psychiatric diagnostic evaluations (e.g., 90791, 90792)
• Psychotherapy sessions (90832, 90834, 90837)
• Family therapy (90846, 90847)
• Psychological testing (96130–96146)

Substance Abuse Billing often involves:

• HCPCS codes like H0001–H2037 for state-defined SUD services
• IOP services (H0015), MAT (H0020), and detox (H0010–H0014)
• CPT/HCPCS hybrid use, especially in dual-diagnosis programs

Many commercial and Medicaid payers require modifiers (e.g., HF, HG, HQ) for SUD services, which are often rejected if not coded correctly.

Reimbursement Models

Behavioral health providers are commonly reimbursed on a fee-for-service (FFS) basis. In contrast, substance abuse providers increasingly operate under:

• Bundled payment models for intensive services like residential stays
• Per diem rates for detox or inpatient rehab
• Value-based care contracts tied to patient outcomes and reduced readmission

The variability of reimbursement models means RCM for SUD must handle pre-authorization, concurrent reviews, utilization reporting, and outcome documentation more rigorously.

Documentation Standards and Clinical Integration

Behavioral Health Notes

Progress notes in behavioral health follow a SOAP (Subjective, Objective, Assessment, Plan) or DAP (Data, Assessment, Plan) format. They must justify medical necessity and align with DSM-5 criteria.

Substance Abuse Documentation

Substance abuse treatment requires more granular documentation:

• ASAM (American Society of Addiction Medicine) criteria for level-of-care determinations
• Treatment plans must reference stages of change, relapse risk, and medication compliance
• Daily clinical notes in residential programs
• Documentation for urine drug screens (UDS), medication logs, and counseling frequency

Failure to document these appropriately can lead to denials and post-payment audits.

Payer Mix and Preauthorization Protocols

Behavioral Health: Predictable but Narrow

Behavioral health providers often deal with:

• Medicaid and Medicare (especially for older adults or those with disabilities)
• Commercial insurers with strict visit limitations
• Limited prior authorization requirements for outpatient therapy

Substance Abuse Treatment: A Volatile Mix

SUD providers face a far more challenging payer landscape:

• Many plans limit residential or detox coverage to in-network providers only
• Prior authorization is almost always required for inpatient or MAT services
• Payers frequently review length of stay and progress mid-treatment
• Out-of-network claims often require single-case agreements (SCAs), which delay reimbursement

These hurdles demand a more proactive, manual-intensive RCM process with ongoing payer engagement.

Utilization Review and Clinical Justification

Behavioral Health Reviews

Therapists and psychiatrists may submit documentation after several sessions or for specific milestones, such as medication changes or increased severity.

Substance Abuse UR Demands

Substance abuse RCM teams must submit:

• Admission justifications within 24–48 hours
• Daily or weekly progress updates
• Discharge summaries with detailed aftercare plans
• Patient compliance with UDS or MAT protocols

Payers may deny claims retroactively if documentation fails to prove ongoing medical necessity, requiring strong UR-to-RCM coordination.

Denial Management: Root Causes and Recovery

Behavioral Health Denials

Most behavioral health denials stem from:

• Authorization issues (e.g., expired referrals)
• Improper coding or invalid modifiers
• Timely filing errors

Appeals are often successful with minimal supporting documentation.

SUD Denials

SUD billing denials are typically more severe and involve:

• Lack of pre-auth or clinical justification
• Discrepancies in drug screen billing
• Gaps in documentation timelines
• Questionable billing for bundled services

Recovery requires detailed appeals, often with supporting clinical records, physician attestations, and patient progress reports.

Patient Responsibility and Collections

Behavioral Health: Stable and Transparent

Behavioral health services often involve recurring appointments, allowing for clearer patient responsibility education, recurring payment setups, and transparent billing.

SUD Billing: Complex and Fragmented

Patients entering detox or inpatient rehab rarely understand or plan for the financial responsibility. Barriers include:

• Immediate, emergency-based admissions
• High deductible plans with uncertain benefits
• Limited financial counseling during intake
• Inability or unwillingness to pay due to addiction-related impairments

As a result, collections often lag, necessitating specialized patient financial advocacy and sliding scale programs.

Technology, EHRs, and Billing Systems

Behavioral Health EHRs

Most behavioral health practices use standard EHRs that integrate:

• Scheduling
• SOAP/DAP note templates
• Billing modules linked with CPT codes
• Claims scrubbing tools

SUD-Specific Platforms

SUD providers require EHRs with:

• ASAM assessment tools
• Group counseling session tracking
• Integration with UDS labs
• MAT compliance reporting
• Residential bed tracking

Billing platforms for SUD must support hybrid CPT/HCPCS codes, state-specific modifiers, and both episodic and per diem billing.

Compliance, Risk, and Audits

Behavioral Health Risk

Audits typically focus on:

• Overbilling therapy session lengths (e.g., 90837 vs. 90834)
• Medical necessity documentation
• Coordination of care and continuity

SUD Compliance Hazards

Substance abuse treatment programs face:

• Overlapping billing (e.g., billing IOP and UDS on same day without justification)
• Billing for services not provided (e.g., missed group therapy)
• Improper use of MAT codes without documentation
• 42 CFR Part 2 breaches

Consequences include recoupments, civil penalties, or Medicaid/Medicare exclusion.

Workforce and RCM Training

Behavioral Health Billing Staff

Typically, a small team trained in:

• Behavioral CPT coding
• Working with outpatient-focused payers
• EHR-embedded claim creation

SUD RCM Team

Often includes:

• Clinical reviewers for pre-auth and UR
• Coding specialists familiar with HCPCS and modifiers
• Dedicated patient advocates for insurance verification
• Staff trained in state Medicaid-specific billing protocols

The staffing model must scale with the complexity of the treatment modalities offered.

Conclusion

The differences between behavioral health and substance abuse treatment billing are not merely technical—they reflect deeper divergences in patient care pathways, regulatory expectations, clinical delivery models, and financial constraints. While both domains aim to provide compassionate, evidence-based care to vulnerable populations, they operate under distinct frameworks that profoundly shape how services are documented, billed, reimbursed, and audited.

Understanding these distinctions is critical not just for compliance but also for the long-term viability of organizations working in either or both domains. As mental health and substance use disorder treatment become more integrated in clinical practice, RCM systems must adapt to address the combined challenges while still respecting the regulatory, operational, and ethical boundaries that define each specialty.

Providers that proactively invest in specialized RCM training, audit-proof documentation, and payer negotiation strategies will be better positioned to thrive in an increasingly complex and value-driven healthcare economy.

SOURCES

Centers for Medicare & Medicaid Services. (2023). Medicare Program Integrity Manual.

Substance Abuse and Mental Health Services Administration (SAMHSA). (2022). Confidentiality of Substance Use Disorder Patient Records (42 CFR Part 2).

American Society of Addiction Medicine. (2021). ASAM Criteria for Treatment Placement.

National Council for Mental Wellbeing. (2022). Behavioral Health Billing and Coding Manual.

Office of Inspector General (OIG). (2021). Work Plan and Risk Factors for Substance Abuse Treatment Programs.

Smith, J. (2020). Revenue Cycle Management in Behavioral Health: Challenges and Innovations. Journal of Healthcare Finance.

Brown, M. & Lopez, R. (2019). Navigating SUD Billing and Reimbursement in a Changing Regulatory Landscape. Healthcare Business Monthly.

HISTORY

Current Version
June 26, 2025

Written By:
SUMMIYAH MAHMOOD