Pros and Cons of Outsourcing Mental Health Billing Services

For behavioral health therapists, handling the financial side of a practice can be as tough as giving quality care. The reason is simple: mental health billing is complicated. Because of this, therapists have an important choice to make. They can either handle behavioral health billing on their own or hire a billing service.

This decision impacts cash flow, administrative workload, compliance, and overall efficiency. In this article, we will discuss the key systems needed for in-house billing versus outsourcing to a mental health biller.

In-House Billing vs. Outsourced Billing: Understanding the Differences

Before we discuss the pros and cons of each option, let’s define in-house and outsourced billing.

In-House Billing

In-house billing means your practice does everything related to billing. This includes submitting claims, posting payments, managing insurance credentials, and following up on claims. Usually, this means hiring or training someone to handle billing. As an alternative, you can also do it yourself as the practice owner.

Outsourced Billing

Outsourcing behavioral health billing means contracting with a third-party service that specializes in claim submission, insurance verification, and revenue cycle management. These services can handle everything from coding and claim submissions to denials management and reconciling payments.

Pros and Cons of In-House Behavioral Health Billing

The size, structure, and goals of your behavioral health practice affect which billing model is best for you. Each model has its own pros and cons that you should know about.

Pros:

Full Control Over the Process

• Handling billing in-house allows for direct oversight of every claim, payment, and insurance-related issue.

Immediate Issue Resolution

• If an issue arises with a claim, the person responsible can address it without waiting for an external party.

Cost Savings (Potentially)

• While hiring an internal biller has costs, it might be less expensive than outsourcing if claim volume is low.

Enhanced Client Privacy

• All billing data remains within the practice, reducing exposure to third-party handling.

Cons:

Time-Intensive

• Billing, insurance credentialing, and claims management require significant time that could otherwise be spent on client care.

Higher Administrative Costs

• You may need to hire a dedicated biller, invest in billing software, and train staff on insurance policies.

Risk of Errors and Compliance Issues

• Without a good understanding of insurance rules and billing codes, mistakes can happen. This can lead to denied claims and delays in revenue.

Pros and Cons of Outsourcing Behavioral Health Billing

Pros:

Time Savings

• Therapists and administrative staff can focus on client care rather than billing tasks.

Expertise in Billing and Insurance Compliance

• Professional mental health billers are well-versed in behavioral health insurance, credentialing, and claim submission, minimizing errors and denials.

Higher Reimbursement Rates and Faster Payments

• Because of their expertise, billing services can optimize coding and claims processing, leading to quicker and more complete reimbursements.

Lower Overhead Costs

• No need to hire in-house billing staff or invest in expensive billing software.

Better Handling of Denials and Appeals

• Outsourced services often have dedicated teams to manage denied claims and follow up with insurance providers effectively.

Cons:

Loss of Control

• You won’t have direct oversight of each step in the billing process, which can be concerning if transparency is lacking.

Additional Costs

• Most billing services charge a percentage of collections (typically 5–10%) or a flat fee, which can build up over time.

Potential Communication Issues

• If a billing service is unresponsive or slow to address issues, it can impact cash flow and client experience.

What does each Approach Require?

Depending on the mental health billing model you choose, your practice will have different system requirements.

For In-House Billing, You Need:

• A behavioral health EHR system with integrated billing features
• A staff member trained in mental health billing and insurance claim submission
• A process for tracking claims, denials, and payments
• Compliance knowledge regarding HIPAA, CPT codes, and insurance policies

For Outsourced Billing, You Need:

• A reliable billing service with experience in behavioral health
• Clear expectations and a contract outlining services and fees
• A system for securely sharing client billing information
• Regular check-ins with the billing provider to ensure accuracy and efficiency

Best Strategies for Managing Either Option

Once your behavioral health practice decides on your revenue cycle management process, it’s time to determine your team strategy. Below are general strategies for both keeping your mental health billing system in-house or outsourcing.

If Keeping Billing In-House:

Invest in High-Quality EHR Billing Software

• Look for an EHR with strong billing capabilities, such as CheckpointEHR.

Stay Updated on Insurance Changes

• Regularly review behavioral health insurance policies and CPT coding updates.

Establish a Billing Workflow

• Define clear procedures for claim submission, payment posting, and follow-ups.

Hire a Knowledgeable Biller

• If you manage multiple insurance plans, consider hiring a credentialed mental health biller.

If Outsourcing Billing:

Vet Potential Billing Services

• Check references, read reviews, and ask about experience with behavioral health billing.

Clarify Fee Structures

• Ensure you understand whether they charge a percentage of claims collected or a flat monthly fee.

Confirm Their Insurance Credentialing Capabilities

• A quality biller should also offer credentialing services to help you get in-network faster.

Request Regular Financial Reports

• Ensure they provide transparent reporting on claim submissions, denials, and reimbursements.

Conclusion: Which Option is Best for Your Practice?

The decision to manage billing on your own or to hire someone else depends on a few factors. These include the size of your practice, the skills of your staff, and your financial goals. If you’re a solo therapist with a manageable caseload, in-house billing may be feasible. However, for growing practices with complex insurance needs, outsourcing can lead to increased efficiency and fewer billing headaches.

No matter which approach you choose, having the right systems is important. You must also keep an eye on your revenue cycle. This is key for a financially healthy practice.

If you have been managing billing but are considering outsourcing, be sure to check out our recommended Biller Partners.