Can Treatment Facilities Curb Substance Abuse in This Dire Reimbursement Reality?

Updated on October 24, 2022
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richard daley


That’s how many Americans died of drug overdoses between May 2020 and April 2021; the last year data was available. That’s a 30% jump from the year before—and the highest number ever recorded by the CDC in a single year. 

The global pandemic has given way to a uniquely American one: a crippling volume of substance abuse. Right now, health experts estimate that 40 million people—about 12% of the population—suffer from substance addiction. Millions more still are living in recovery.

Substance abuse treatment providers and behavioral health facilities face a never-ending wave of clinical and patient demands. In parallel, these same providers are hobbled by decrepit technology and feckless data infrastructure that make revenue collection and management painstaking and time-consuming.

These conditions have created two crises: one born out of a cyclone of events that drove skyrocketing substance use disorder and overdose death rates, and one born out of the neglect and undervaluing of the providers tasked to curb the substance use emergency. 

While technology alone isn’t a silver bullet, addressing data and functionality shortcomings is one of the fastest paths toward higher margins, quicker and more accurate reimbursement, improved collections, and greater transparency into outcomes and care. 

The State of Reimbursement for Behavioral Health Providers 

Although revenue is not a provider’s objective, it is the capital that keeps facilities open, attracts and retains talent, and helps connect a provider to community members in need. However, consistent and equitable third-party payor coverage and compensation are lacking. 

In simplest terms, a dire reimbursement reality exists: health insurance payors are reimbursing Substance Use Disorder (SUD) treatment and behavioral health providers at a lower rate than their non-behavioral health counterparts. Federal efforts have been in place since 2008 to balance the inequity, but they have fallen short. The Departments of Labor, Health and Human Services and the Treasury’s 2022 report on reimbursement parity point to the persistence of the reimbursement problem and the unresolved headwinds and enforcement challenges.

Moreover, inflation puts an additional squeeze on provider margins. Self-pay patients lack access to cash or credit as interest rates increase and the cost of living eats away at paychecks. Payor contracts aren’t flexible–the ability to pass on increased costs to health insurance plans is governed by contractual renewal life cycles that typically last three years.

All providers have little to no relief across the board as costs and salary demands increase. According to a recent McKinsey and Company report, providers expect margins to drop between one to three percentage points. Most provider operating margins fluctuate between two and four percent, making a one to three-point dip devastating.

Reimbursement shortfalls mean that many SUD treatment and behavioral health facilities must do more than their non-behavioral provider counterparts and rethink traditional revenue cycle management processes to remain competitive and ensure that revenue challenges don’t distract from patient needs or outcomes.

How to Implement Intelligent, Automated Revenue Cycle Management

Data, analytics, technology, and intelligent automation can significantly help behavioral health providers manage revenue, maintain healthy margins, and lower staffing pressure by freeing capital to help attract and retain clinical resources. 

Intelligently automated Revenue Cycle Management (RCM) is the financial process in which healthcare providers utilize billing solutions, advanced algorithms, and machine learning to track information, from patient registration all the way to the final payment of the outstanding balance for healthcare services delivered. This process minimizes mistakes introduced through human error and streamlines many time-consuming and costly elements of human-powered RCM. 

A unified, data-driven approach facilitates visibility into reimbursement opportunities and revenue risks across the entire patient journey. With this method, SUD providers can:

  • Identify the best referral sources
  • Drive efficiencies into benefits verification
  • Lower no-shows, optimize the daily census
  • Identify documentation and coding errors before billing
  • Flag compliance opportunities
  • Accelerate the billing to drive faster revenue realization 

Substance use disorder treatment and behavioral health providers can begin implementing a unified, data-driven strategy with the following steps:

Automate claims billing processes

Most centers outsource billing, and in doing so, they cannot control the costs and lose critical visibility into each revenue cycle stage. Rather than outsourcing, substance use disorder treatment and behavioral health providers are better served by automating their claims billing processes in-house.

Automate claims validation

This step is one of the most critical investment additions finance teams can make to optimize and expedite claims submission and reimbursement. By automating the claims validation steps using techniques powered by machine learning, financial decision-makers can ensure that most claims sent from their facility are clean (free of errors and missing documentation) and get paid quickly. 

Since there are more than 150 claims validation rules specifically for substance abuse treatment centers, intelligent rules automation across claims is the only way to ensure accuracy, expediency, and scale to claims validation and reimbursement.

Automate the utilization review process

By leveraging the latest in intelligent revenue automation, facilities can gain a comprehensive view of individual and group therapy minutes with total utilization neatly calculated. This summation allows them to identify gaps, correct under or over-documentation, and ensure visibility into clinical performance.

Bring telehealth options into overall practice and revenue management

With an integrated telehealth solution, facilities can manage the complete telemedicine process – from appointment setting through payment and, in turn, ensure complete transparency with upcoming authorizations required, claim submission dates, outstanding balances, and total collections. And by automating the usage calculation of individual and group therapy, revenue teams can improve their collections and revenue by tracking all claims and financials in real time.

Optimize collections by aggregating and analyzing organizational efforts

Create a single source of truth for data. By doing so, administrators can quickly and accurately see where all claims and signatures stand and swiftly action the essential steps teams need to complete to increase the success rate of claims. 

Some important key performance indicators (KPIs) include:

  • Bill charge lag times
  • Clean claim rates
  • Days revenue outstanding (DRO)
  • Accounts receivable aging
  • Denial tracking
  • Revenue actualization percentage
  • Average length of stay
  • Reimbursement rates by treatment type and insurance payor
  • Average treatment revenue
  • Readmission rate

Achieve transparency into the revenue cycle

Revenue teams can attain increased insight into the revenue cycle through end-to-end patient care and visibility, starting with the admission process and extending through post-discharge and alumni programs. 

Furthermore, a consolidated data methodology can deliver better transparency and insight. When general ledgers, charts of accounts, credits, and debits are housed in one place, automation powered by customizable rules empowers revenue teams to produce a more precise and more actionable picture of a facility’s financial health at any point in time. 

This capability enables billing and operational s teams to understand the performance of their collections and optimize efforts based on critical metrics and KPIs. 

Tie back return to campaigns and referral partners 

After obtaining clarity into the revenue cycle, teams can analyze data to identify trends and determine what’s delivering the best return on investment, including the best campaigns and referral sources. This full-circle view connects the revenue billed and realized to the revenue potential from a SUD provider’s community connections and outreach efforts.

Better Processes, Better Reimbursement, Better Results for Behavioral Health Providers

SUD treatment and behavioral health providers’ top priority is delivering the highest quality care, but that requires more than just treating patients. It also requires a practical, efficient strategy to manage administrative and clinical functions. 

Intelligent automation of revenue cycle management allows SUD providers to do both. With a dynamic, unified data-driven approach, providers can deliver better claims and results, helping them grow their care portfolio to meet challenges such as the substance use disorder crisis and the widening gulf between care and reimbursement.

Author Bio

Richard Daley, CEO, Sunwave Health

Richard Daley is a serial software entrepreneur passionate about creating, delivering, and supporting great products that help solve problems and produce opportunities for his customers, partners, and communities. 

Richard has founded and scaled four highly successful analytic software companies focusing on data, analytics, and outcomes. Currently, Richard serves as the Chief Executive Officer for Sunwave Health, a single-platform treatment journey solution for substance use disorder providers. 

He brings his passion and experience to accelerate innovation and technology adoption within the behavioral health industry through an approach that makes sense of complex data and puts it in the hands of the people who can drive outcomes.