10 Proven Steps for Small Practices to Select the Best Psychiatric Billing Services

Small medical practices often struggle with billing, especially in psychiatry, because psychiatry billing isn’t just complicated, it’s a high risk. With over 28% of mental health claims facing denials due to coding errors, authorization gaps, or documentation issues, small practices are losing thousands each year without even realizing it. Choosing the right psychiatric billing services isn’t just about submitting claims but it’s actually about protecting your revenue while staying compliant with time-based CPT codes and adapting to constant payer rule changes.

Whether you’re billing for 90837 with modifier 95 , placing telehealth POS 10 , or handling Medicare’s updates, one wrong code or missed update can trigger cascading claim rejections. And for small practices, there’s little room for error.

This guide breaks down 10 expert-level checks that help small psychiatric practices make informed billing decisions from selecting a vendor with psychiatry-specific coding knowledge to understanding payer-specific MUEs, CARC/RARC denial codes, and LCD documentation triggers.

If your practice is tired of slow reimbursements, denied therapy claims, or billing vendors that don’t get behavioral health, this checklist will help you vet smarter and bill cleaner without the guesswork.

Step 1: Assess Your Practice’s Needs and Goals

Before comparing any psychiatry billing services, start by looking inward at your own practice. Every small practice has unique needs. For example, how many patients do you see in a week? Do you provide therapy sessions, medication management, or specialized treatments like TMS (Transcranial Magnetic Stimulation)? Make a list of what you need from a billing service:

• Volume of claims: A small practice with 50 claims a month might need different support than one with 300 claims.
• Types of services: If you offer special treatments (like TMS or Spravato esketamine therapy), note that these have complex billing rules.
• Current challenges: Identify pain points. Are you facing many claim denials? Long delays in payments? Too much time spent on paperwork?
• Budget and resources: Know your budget for billing help. Also, consider your in-house staff’s skills. (Do you have a biller on staff or will you rely entirely on an outside service?)
  

By clearly understanding your needs, you can find a psychiatry billing service that fits.

Mistake to avoid: Don’t skip this step. Many providers jump to looking at vendors without knowing what they actually require. For instance, if you don’t realize you need help with insurance authorizations, you might choose a service that doesn’t include that – leading to frustration later.

Step 2: Seek Psychiatry-Specific Billing Expertise

Mental health billing is very different from general medical billing. You want a service that specializes in psychiatry medical billing and understands the unique codes and rules for psychiatric care. In my experience, psychiatric billing services with specialized expertise tend to get higher collection rates for practices​.

This is because they know the nuances – from therapy session codes to medication management, and even how mental health parity laws affect claims. For example, treatments like TMS often require special authorization and documentation​

A general billing company might struggle with these, but a specialized psychiatry medical billing service will handle them smoothly.

Pro tip: Ask any prospective billing service about their experience with psychiatry or behavioral health practices. Do they stay updated on mental health billing regulations and CPT code changes? A true specialist will be able to talk about recent changes in psychiatry billing and how they adapt.

✅ Add LCD Guidelines for Medical Necessity

Medicare uses Local Coverage Determinations (LCDs) to decide if services like crisis psychotherapy (90839) are medically necessary. LCD L33626, for example, requires documentation showing urgent risk, like suicidal thoughts. A qualified billing partner reviews documentation to meet LCD standards before claim submission.

Step 3: Verify Experience and Reputation

When it comes to outsourcing your psychiatry medical billing , experience matters. Look for a psychiatry billing company with a proven track record, especially with small practices similar to yours. An experienced company will have seen the common issues and know how to solve them. Here are some ways to check:

• Years in business: How long has the service been providing psychiatric billing services? A company with, say, 10+ years in the field has had time to refine its process.
• Client testimonials or references: Don’t just trust the marketing. Ask for references from other psychiatric clinics or solo psychiatrists. A reputable service should gladly provide contacts or case studies.
• Reputation for success: You might find reviews or hear word-of-mouth feedback. Positive reviews from other small practice providers are a good sign. Look for mentions of reliable payment collection, reducing denials, and good support.
  

Mistake to avoid: Picking a service only because it’s cheap or new. A very low-cost offer is tempting, but if the team is inexperienced in psychiatry medical billing services, you could end up with more headaches. It’s often worth paying a bit more for a well-reviewed expert team that will get you paid faster.

Example: Suppose two psychiatric billing services quote you a price. One has 2 years of experience and little knowledge of mental health; the other has 15 years and multiple psychiatry clinics as clients. Even if the second costs slightly more, their experience can save you money in the long run by avoiding errors. Always verify the company’s track record before making your decision.

✅ Verify Experience and Reputation

Ask if the vendor supports billing for non-physician providers (LCSWs, MFTs, NPs) and whether they can adapt to recent CMS changes that allow direct Medicare billing for these providers as of Jan 2024.

Step 4: Evaluate Technology and EHR Integration

In the digital age, the best psychiatry billing services use modern technology to work efficiently. Check what software and tools the billing service uses. Are they using an up-to-date billing software or still stuck with old-fashioned paper and spreadsheets? A good billing partner should:

• Integrate with your EHR: If you use an electronic health record system (EHR) – and you should, since the best EHR for psychiatry can streamline your notes and coding – the billing service should connect to it. For example, they might integrate with systems like Kareo or AdvancedMD (popular psychiatry EHRs) so that your charges flow directly to billing.
• Tip: If you don’t have an EHR yet, ask if they recommend or work with the best EHR for psychiatry to make billing easier.
• Provide a client portal or dashboard: This lets you check on claims, payments, and reports in real-time. It’s important for transparency.
• Use electronic processes: They should verify insurance electronically and submit claims online for speed and accuracy​.
  

Professional insight: Technology can make or break billing. If a billing service can’t integrate with your EHR or lacks proper software, you might end up doing double data entry. That wastes time and can cause errors. On the other hand, a service with solid tech can automatically pull the necessary info from your charts to create accurate claims (for instance, using superbills generated from your EHR​.

Mistake to avoid: Don’t choose a provider with outdated systems. For example, if a billing service cannot work with your computer system and forces you to fax papers, that’s a red flag. The psychiatry billing service you choose should make billing easier , not harder. Compatibility with technology is key – it eliminates data silos between your clinical notes and billing records​.

Step 5: Confirm the Range of Services Offered

Not all psychiatric billing services are equal in what they provide. Some companies handle the entire revenue cycle (from checking a patient’s insurance to following up on unpaid claims), while others only submit basic claims. For a small practice, it’s usually best to find a one-stop solution so you don’t have to do extra work yourself. Make sure to ask what services are included:

• Insurance verification and authorizations: Will they check patient insurance benefits before visits and help get pre-authorizations for treatments? This can prevent denials later.
• Coding and charge entry: Do they have certified medical coders who understand psychiatry codes? Proper coding ensures you bill correctly and legally.
• Claims submission and tracking: This is the core – submitting claims and monitoring them. They should send claims daily or at least several times a week electronically.
• Denial management and appeals: Check if they will actively follow up on denied claims (we cover more on this in Step 6). A good service should not just ignore denials.
• Patient billing and support: Will they send bills to patients for co-pays or services not covered, and handle patient billing questions? Small offices often struggle with calling patients about balances, so this is a helpful service.
• Provider credentialing: Some psychiatry medical billing services also offer credentialing (enrolling you with insurance companies)​. This is valuable if you need to join more insurance networks. For example, adding a new psychiatrist to your practice is much easier if your billing service can handle the paperwork to get them on insurance panels.
  

Tip: Make a checklist of which tasks you want the psychiatric billing services to do. When you talk to a potential vendor, go through the list and confirm if they do each item. If a service doesn’t handle something crucial (like they don’t do psychiatry coding or they won’t call insurance for authorization), you should know that upfront.

✅ Include 2024 CMS Shared Visit Rule

If a psychiatrist and a nurse practitioner both contribute to a visit, new CMS rules say the billing provider must be the one who spent over 50% of total time. This is common in group practices, and billing teams must track time carefully to stay compliant.

Step 6: Investigate Denial Management and Follow-Up

Even with good billing, some insurance claims will be denied or rejected. What sets the best psychiatric billing services apart is how they handle these denials. Don’t be shy about asking a potential billing service: “What is your process for denied claims?” and “How often do you appeal or follow up on denials?” Effective denial management can recover a lot of money that you might otherwise lose.

• A top-notch billing service will review every denial, fix any issues, and resubmit or appeal the claim promptly. According to industry data, over 60% of billing professionals do not resubmit denied claims in time ​ – a mistake that leads to lost revenue. You want a service that is in the other 40%, actively working denials.
• Ask if they track and share denial rates. For example, what percentage of your claims do they typically have denied, and of those, how many do they overturn? While your results may vary, this shows that experienced billers can win many appeals.
• Make sure they handle payer communication. Following up with insurance companies can be time-consuming. A good psychiatry billing service will take that burden off you, calling or using online payer portals to chase every dollar.
  

Insight: Denial management is where many billing services either shine or fail. Many providers assume that “no news is good news,” only to find out that claims were quietly written off by a lazy billing company. Don’t let that happen to you. Choose a service that is transparent about denials and fights for your reimbursements.

Mistake to avoid: Ignoring this aspect during selection. If you don’t ask about denials, you might end up with a service that leaves money on the table. For a small practice, even a few unpaid claims each month can add up and hurt your bottom line.

✅ Mention MUE Limits for Time-Based Psychotherapy Codes

Claims for 90837 (60-minute therapy) are limited to one unit per day by Medicare’s MUE (Medically Unlikely Edits). Submitting more than one unit will automatically be denied, even if the session ran long. A strong billing service will monitor MUEs to avoid such denials.

Step 7: Prioritize Compliance and Security

When outsourcing to a psychiatry billing service , remember that patient data and legal compliance are on the line. You must ensure the billing service follows all healthcare regulations:

• HIPAA compliance: The service will be handling confidential patient health information. They must follow HIPAA, the law that protects patient privacy. Check that the company has strict security measures (encrypted data, secure networks, confidentiality policies)​.
• Coding compliance: They should code ethically and accurately. Upcoding (billing for a higher service than provided) or other improper billing can lead to audits and penalties. A trustworthy psychiatry billing service will have quality checks to make sure billing is correct.
• Knowledge of regulations: Mental health services sometimes have extra rules (like therapy session length requirements or state-specific parity laws). The billing team should be aware of these nuances so they don’t accidentally bill incorrectly.
  

Professional tip: Ask the service how they keep their staff updated on the latest billing rules. Do they train their billers regularly? Given frequent changes in insurance policies and codes, ongoing education is a good sign. For example, new CPT codes or changes for psychiatric evaluations should be promptly adopted by the billing service.

Mistake to avoid: Assuming every billing service is compliant. Unfortunately, not all companies take security seriously. Always verify the company’s privacy and security practices. Your small practice cannot afford a data breach or a compliance violation.

✅Add Payer-Specific Psychiatry Billing Rules

Psychiatry billing services should stay updated on each payer’s rules. For example, some state Medicaid plans require documentation of the patient’s location and technology used during telehealth. UnitedHealthcare may deny CPT 90837 unless time is documented clearly. Medicare often requires specific modifiers when billing therapy and evaluation services together.

Step 8: Insist on Transparent Reporting and Metrics

Transparency is crucial when you outsource your billing. You should never be left in the dark about your own revenue. The best psychiatric billing services will provide regular reports and updates so you always know how your practice is doing financially. Look for services that offer:

• Detailed monthly reports: At minimum, you should receive a report showing the number of claims submitted, amount billed, amount collected, denial rate, and any outstanding accounts receivable. This helps you track performance.
• On-demand access: Even better, a client portal that lets you run reports anytime. For example, you might want to see how much a specific insurance paid you in the last quarter. A good system lets you get that info easily.
• Key performance indicators (KPIs): Billing metrics like days in A/R (accounts receivable), first-pass acceptance rate (claims paid on first submission), and collection rate are important. A quality service tracks these. They might even help benchmark your practice against norms. For instance, if your average days in A/R is 45 days, is that good or could it be 30? The billing service should discuss these numbers with you.
  

Pro tip: During the selection process, ask to see a sample report. A transparent psychiatry billing service will be proud to show how clear their reporting is​. They should also be willing to explain the results. If you see a lot of jargon or they hesitate to share data, consider that a warning sign.

Example: One small practice owner I know was unhappy because they had no idea what their previous billing company was doing – they just got a check occasionally. When they switched to a new provider, they started receiving easy-to-read reports every month. It showed them exactly where their money was coming from and which insurers were slow to pay. This kind of transparency builds trust.

Mistake to avoid: Don’t choose a billing service that doesn’t communicate results. If months go by and you never see a report, you might be missing problems like a rise in denials or drop in collections. Always insist on visibility into your psychiatry medical billing outcomes.

Step 9: Gauge Communication and Support Quality

In a small practice, you likely wear many hats and need prompt support when billing questions arise. Great psychiatric billing services treat you like a partner. Consider the following:

• Dedicated account manager: Will you have one go-to person or team who knows your practice? It’s very helpful when the billing service assigns a specific representative to handle your account. This person can answer questions and coordinate with you regularly.
• Responsiveness: Test their communication during the selection process. Do they reply to your emails or calls quickly? If it takes a service a week to answer a simple inquiry while you’re still a prospective client, imagine how they might delay once you’ve signed up.
• Patient communication: Some billing services will also handle calls from your patients about bills. If so, find out how they do this. Do they have a hotline that patients can call? Is their staff polite and knowledgeable in explaining charges? Your billing service is a reflection of your practice, so good customer service matters.
• Problem resolution: Ask how they handle issues. For example, if you find an error in a bill or a patient has a complaint, what will the service do to fix it? Look for a willingness to take responsibility and act fast.

Insight: Communication can be even more important than fancy features. A moderately skilled billing team that communicates well is often better for a small practice than an expert team that never updates you. You want to feel taken care of. Regular check-ins (like a monthly call to review your account) are extremely valuable.

Mistake to avoid: Overlooking the human element. Some providers focus only on cost or technical capability and forget about service. If you can’t get in touch with your billing company when you need them, it can be very frustrating. Prioritize a billing service that is known for good support and communication – this will make the partnership much smoother.

✅ Gauge Communication and Support Quality

The billing team should use ERA remits to identify root causes quickly. For instance, a CARC 197 (no referral) should be flagged within 48 hours and routed back to the front desk with resolution notes.

Step 10: Compare Pricing and Contract Terms

Finally, once you have a shortlist of a few psychiatric billing services, compare their costs and the contract details. Price is important for small practices, but remember to consider value and not just the lowest fee. Here’s what to look at:

• Pricing model: Psychiatric billing services usually charge either a percentage of collections (for example, 5–8% of the money collected) or a flat fee per claim/month. Each model has pros and cons. A percentage means they only get paid when you get paid, which can motivate them to collect more. A flat fee might be predictable if your volume is steady. Compare which works best for your situation.
• Startup or hidden fees: Ask about any setup fees, cancellation fees, or extra charges. For instance, is there a fee for software or for handling patient statements? A trustworthy service will be upfront about all costs.
• Contract length: Read the contract terms. Are you locked in for a year or can you cancel with notice? It’s usually safer for a small practice to avoid being locked into a very long contract in case the service is not as expected.
• Services included for the price: Refer back to Step 5’s list. Make sure everything you need is included in the quoted price. Sometimes a cheaper service might exclude important things (like they might charge extra for sending patient bills or for credentialing).
  

Pro tip: Don’t be afraid to negotiate a little. If one service has a higher price but you really like them, see if they can match a competitor or offer a discount for lower volume. Many companies that provide psychiatry medical billing services will work with you on pricing, especially if you are a small practice, because they want long-term clients.

Mistake to avoid: Choosing purely on price. It’s understandable that budget is a concern for a small practice, but the cheapest option might end up costing you more in lost revenue if they perform poorly. Consider all the factors above in addition to price. Aim for a fair price for quality service rather than the rock-bottom bid.

✅ Add a Note on Medicare Revalidation Monitoring

Billing privileges can be suspended if a provider misses Medicare revalidation deadlines. A top-tier billing service regularly checks tools like PECOS and NPPES to keep provider enrollments active—helping avoid payment disruptions.

Conclusion

Selecting the best partner for your psychiatric billing services is a critical decision, but it doesn’t have to be overwhelming. By following these 10 proven steps, you can approach the process with confidence and clarity. Remember to assess your needs , demand psychiatry-specific expertise , and evaluate each service on technology, scope, compliance, reporting, support, and cost. Avoid common pitfalls by asking the right questions up front – this will save you headaches later.

Small practices can be transformed by the right billing partnership. The right psychiatry billing services can significantly boost your revenue, reduce your stress, and give you more time to focus on patient care. Empower your practice by choosing wisely. With the insights and tips from this guide, you have the knowledge to make an informed choice among psychiatric billing services . In the end, the best psychiatry billing service for you is one that understands your practice and helps it thrive. Here’s to a financially healthy and thriving practice!