Carve-outs change the model
Behavioral health is carved out to a separate MCO, ASO or county system in many states. A vendor that cannot route the claim to the carve-out payer will show it as CARC 109, not covered by this payer [7].
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White paper · Buyer's guide
Mental health billing services in 2027: a buyer's guide for group practices and community programs
Short answer: three federal clocks land on mental health billing before the end of 2027: the parity enforcement pause, the telehealth in-person rule and the prior authorization API. Each becomes vendor questions, contract KPIs and a 60-day selection plan.
4 models · 3 handoffs · 1 owner per CARC
9 contractable KPIs · HFMA MAP Keys
Baseline first, targets second
Edition
1 · 2027
Focus
Buying MH billing
Audience
Group practices · CMHCs
Framework
HFMA MAP Keys
KPIs
9
Horizon
60-day selection
May 152025
2024 parity rule enforcement paused; statute and CAA, 2021 duties continue [1]
Dec 312027
Last date of service before the Medicare in-person rule for home mental health telehealth [2]
Jan 12027
Prior Authorization API due from Medicaid managed care, CHIP and MA plans [3]
7calendar days
Standard PA decision clock owed since the 2026 rating period [4]
Three clocks, none of them a rate change, each one a payer behavior you can now measure
A billing company adequate in 2024 can be wrong for 2027, because each clock turns a payer behavior into a dated obligation. For the owner or administrator picking, or re-picking, a mental health billing service [1].
Months from this guide's publication (October 27, 2026) to each dated obligation
Prior Authorization API liveJan 1, 2027 [3]
2 months14% of the way to 2028
Last day without the in-person telehealth ruleDec 31, 2027 [2]
14 months100%
Parity enforcement pause endsfinal ERIC decision + 18 months [1]
No date18-month tail has not started
0714 months
Prior authorizationTelehealthParity, undated
| Clock | Dated fact | What to ask a billing vendor |
|---|---|---|
| Parity enforcement pause | Departments will not enforce the 2024 rule until a final decision in the ERIC litigation plus 18 months; statutory parity and CAA, 2021 duties continue [1] | Do you reconcile allowed amounts against contract by CPT, and can you show a therapy-versus-E/M variance by payer? |
| Telehealth in-person rule | In-person visit within 6 months before a first home mental health telehealth service, effective after December 31, 2027; then every 12 months [2] | Can you flag our established Medicare telehealth patients and the claim fields (POS 10, 95 or 93, BB or BC) by date of service? |
| Prior authorization API | API due January 1, 2027; 72-hour and 7-calendar-day decision clocks and specific denial reasons since January 1, 2026 [3] | How will you consume the payer API, and do you time-stamp every request against the payer clock today? |
Takeaway
Buy for the clocks, not the brochure. Every item in this guide is something you can ask a vendor to show you on your own data.
Name the model first; the KPIs and the contract follow
The market sells four things under one name. Three handoffs decide most behavioral health denials: authorizations, credentialing and charge entry. Every CARC family needs a named desk.
| Model | Who does what | Fits | Watch for |
|---|---|---|---|
| Claims submission only | You code and capture; vendor scrubs, submits and posts | Solo and small groups with a strong front desk | Denials and authorizations stay with you, so the KPI you need most is not in scope |
| Full-service billing | Eligibility, authorizations, claims, denials, posting, patient statements | Groups of 10 to 60 clinicians | Scope boundaries on authorizations and credentialing; ask who owns CARC 197 and 242 [7] |
| End-to-end revenue cycle | Everything above plus credentialing, payer contracting support, reporting and analytics | Multi-site groups, CMHCs, CCBHCs, SUD programs | Transition risk; demand a 90-day baseline before any outcome claim |
| Software plus services | Vendor runs its own platform for eligibility, claim status and work queues, with staff on top | Groups that want the data as well as the labor | Ask what the software does with your 271 and 277 responses, and what happens to your data if you leave |
Credentialing is billing
An unenrolled clinician produces CARC 242 denials and timely-filing losses. If credentialing sits outside the contract, write down who owns the queue and the clock.
Telehealth is a claim field
POS 10 versus 02 and modifier 95 versus 93 are set at charge entry. Whoever owns charge entry owns your telehealth denials [2].
What a vendor should be doing with your 835s
The May 15, 2025 statement suspends federal enforcement of the 2024 rule's new portions until a final ERIC decision plus 18 months; MHPAEA's statutory obligations under the CAA, 2021 continue [1]. For a provider the parity argument was never the regulator's audit. It was the pattern in your own remittances: therapy allowed below contract while comparable medical visits paid at contract; authorization rules on therapy and not on medical care; network terms that differ by benefit type. A billing partner builds that evidence monthly or it does not.
- 1Nov 13, 2013Original parity rule [1]
- 2CAA, 2021Comparative analysis duty on plans [1]
- 3Sep 9, 20242024 final rule issued [1]
- 4May 15, 2025Nonenforcement statement [1]
- 5Decision + 18 monthsEarliest end of the pause [1]
The CAA, 2021 comparative analysis duty did not pause; the DOL fact sheet sets the plan's clock at 10 business days once a regulator requests the analysis [8].
| Parity exhibit, monthly | Built from | Used for |
|---|---|---|
| Allowed versus contract by CPT, payer and month | 835 AMT allowed, SVC lines, your contract rate sheet | Underpayment demand; the therapy-versus-E/M comparison |
| NQTL log | Authorization denials (CARC 197, 198), concurrent review requests, medical necessity denials by payer [7] | Comparative analysis request; state complaint |
| Network and credentialing gaps by payer | Enrollment status, CARC 242, out-of-network adjustments | Network adequacy and parity arguments |
| Appeal and overturn ledger | Appeal dates, outcomes, dollars recovered | Proof the pattern is systematic, not one-off |
The shape of the exhibit
Our parity underpayment case study: 24 months, two payers
19 to 22%90832below contract
19 to 22%90834below contract
19 to 22%90837below contract
1.2%E/Mwithin contract
The plan's clock once a regulator asks
DOL fact sheet [8]
10Business daysto produce the comparative analysis
0Days the statutory duty pausednone
Takeaway
If a vendor cannot produce a parity exhibit, it is not doing the reconciliation.
The claim fields and the 2027 calendar
CMS's FAQ, updated October 8, 2026: telehealth anywhere, including home, through December 31, 2027; from January 1, 2028 the in-person rule applies to home mental health telehealth, patients who started by December 31, 2027 established and needing one in-person visit every 12 months [2].
| Field | Rule | Source |
|---|---|---|
| POS 10 | Telehealth with the patient at home; paid at the non-facility rate since January 1, 2024 | CMS FAQ Q8 [2] |
| POS 02 | Telehealth with the patient anywhere other than home | CMS FAQ Q8 [2] |
| Modifier 95 | Synchronous audio and video | CMS CR 14468 modifier list |
| Modifier 93 | Synchronous audio-only; behavioral health at home, practitioner video-capable, patient cannot or does not consent | CMS FAQ Q6 [2] |
| Modifiers BB and BC | Required from January 1, 2027 for virtual-platform and incident-to telehealth; no payment effect | CMS FAQ Q17 and Q18 [2] |
| In-person visit | Within 6 months before the first home mental health telehealth service after December 31, 2027; then within 12 months of each service | CMS FAQ Q5 [2] |
Ask: panel count
Can you list our Medicare patients on home telehealth by first date of service, so we know who is established?
Ask: edit before submission
Do you stop a POS 10 claim without 95 or 93, and a 2027 claim without BB or BC where required [2]?
Ask: payer variation
Do you keep Medicaid and commercial telehealth rules by payer, or apply the Medicare rule to everyone?
FQHCs and RHCsBehavioral health visits by telecommunications have been paid under the PPS and AIR since January 1, 2022, and CMS says in-person requirements will not apply to those virtual behavioral health visits until at least January 1, 2028. The CY 2027 PFS proposed rule proposes the same through December 31, 2027 under section 6209(c) of the Consolidated Appropriations Act, 2026; proposed until the final rule publishes [5]. State and commercial rules sit outside section 1834(m): see the behavioral health payer matrix and the 2028 countdown.
The payer now owes you a clock
CMS-0057-F covers Medicare Advantage, state Medicaid and CHIP FFS, Medicaid and CHIP managed care, and FFE QHP issuers. Since January 1, 2026, impacted payers other than QHP issuers decide expedited requests within 72 hours and standard within seven calendar days, with a specific denial reason [3]; 42 CFR 438.210 carries the same numbers for Medicaid managed care, each extendable by up to 14 days on request or with justification [4]. From January 1, 2027 the API must say whether a service needs an authorization, what documentation the payer wants, and return an approval with its end condition, a denial with a specific reason, or a request for more information; drugs excluded [3].
Authorization clocks in hours, and the 2026 to 2027 dates
Expedited decisionMA and Medicaid managed care
72 h21% of the old 14-day limit
Standard decisionsince the 2026 rating period
168 h7 calendar days, 50%
Possible extensionon request or with justification [4]
up to 14 days336 h, 100%
072 h168 h336 h
ExpeditedStandardExtensionMar 31, 2026: first public PA metrics posted by payers; Jan 1, 2027: API live
Covered
Medicare Advantage, state Medicaid and CHIP FFS, Medicaid and CHIP managed care, FFE QHP issuers [3].
Not covered
Commercial employer plans; their authorization terms come from contract and state law.
Excluded service
Drug prior authorizations, proposed separately in CMS-0062-P.
1
Ask how the vendor will connect to the API
Through your EHR, its own platform, or a clearinghouse. "We will use the portal" is a 2026 answer.
2
Ask for the authorization desk's time-stamp report
Request received by payer, decision received, units approved, end condition. Without it the 72-hour and 7-day clocks are unenforceable [3].
3
Ask for authorization denial share by payer, monthly
CARC 197 plus 198 dollars over total denied dollars [7].
4
Ask whether appeals cite the payer's own published metrics
Required by March 31, 2026 under CMS-0057-F [3]. The prior authorization API explainer goes deeper on what the API exposes and the 438.210 clocks.
A service level not defined in the contract is a conversation, not a commitment
Use the HFMA MAP Key definition where one exists so the vendor cannot redefine the number later [6].
| KPI | Definition to write into the contract | Source data | Cadence |
|---|---|---|---|
| Clean claim rate | MAP Key CL-1: claims passing edits with no manual intervention over claims accepted into the claims tool [6] | Clearinghouse reports | Monthly |
| Remittance denial rate | MAP Key AR-5: claims denied over claims remitted, actionable denials, initial and appeal [6] | 835 CLP02 and CAS | Monthly |
| Authorization denial share | CARC 197 and 198 dollars over total denied dollars, by payer [7] | 835 CAS | Monthly |
| Timely filing loss | CARC 29 dollars as a share of charges [7] | 835 CAS, charge ledger | Monthly |
| Net days in A/R | MAP Key FM-1: net patient receivable over three-month daily average net patient service revenue [6] | Balance sheet, revenue ledger | Monthly |
| Over-90 A/R share | MAP Key AR-3 buckets 91 to 120 and over 120 combined, over total A/R, by payer class [6] | A/R aging | Monthly |
| Allowed versus contract variance | Sum of (contract rate minus 835 allowed) for lines allowed below contract, by CPT and payer | 835 AMT and SVC, fee schedules | Monthly |
| Denial turnaround | Days from 835 denial date to first appeal or corrected claim | 835 DTM, work queue | Weekly |
| Posting lag | Days from 835 payment date to posting in the PM system | 835 DTM, PM posting date | Weekly |
Set targets after a baseline, not before
Our behavioral health and SUD baseline case study, insurance A/R over 90 days at transition
52.9%Measured at transitionone organization
30%Negotiated glidepath ceiling
Nine KPIs, two cadences
Each with a written definition, a data source, a cadence and a remedy
7Monthly · 78%
2Weekly
Takeaway
Write the definition, the data source, the cadence and the remedy for each KPI. A KPI without a remedy is a report.
Six clauses before the price
Data ownership
Your 835s, 837s, work notes and reports belong to you. The contract should say so and set an export format and a timeline at exit.
HIPAA posture
A signed business associate agreement, access controls by role, and audit logs. Ask how the vendor's systems are designed to support HIPAA-aligned controls, and who reviews access.
Transition plan
A 90-day baseline at the start and a 90-day runout at the end, with A/R ownership named for every claim in flight.
Reporting access
Direct access to the work queue and the monthly KPI pack, not a PDF summary.
Staffing continuity
Named leads for authorizations, denials and credentialing, with a replacement clause.
No outcome guarantees
A vendor that guarantees a collection rate before seeing your data is pricing in the surprise. Prefer a baseline-then-target structure.
Where software is part of the offerAsk what it does with the transactions it already touches. Our own platform work is described plainly: CorePulse runs eligibility (270/271) and claim status (276/277) transactions and surfaces authorization answers from the payer response; Work Genie is the denial and A/R work queue our teams use; CredPro tracks enrollments. None of that replaces the questions above, and you should ask them of us too.
Baseline, scope, data test, references, contract, transition
- 10Day 10Baseline done
- 20Day 20Scope fixed
- 35Day 35Vendor data test back
- 45Day 45References and site visit
- 55Day 55Contract signed
- 60Day 60Transition starts
Days 1 to 10
Baseline: run the eight KPIs from the KPI guide on your last 90 days of 835s
Days 11 to 20
Scope: pick the model; decide in writing who owns authorizations, credentialing, charge entry and patient statements
Days 21 to 35
Vendor data test: same 90-day file to two or three vendors; parity exhibit, time-stamp report, telehealth field audit
Days 36 to 45
References and site visit: a behavioral health client of similar size and payer mix; watch the authorization desk work a live queue
Days 46 to 55
Contract: KPI definitions, data sources, cadence, remedies, exit terms, business associate agreement
Days 56 to 60
Transition start: agree the 90-day baseline period and the first KPI review date before the first claim moves
Your dataDecisionsVendor testVerification
Five moves before you take a quote
Pull 90 days of 835s and run the eight KPIsThis is the data every vendor must respond to.
Write down who owns authorizations, credentialing and charge entry todayThe three handoffs that decide most behavioral health denials.
List your Medicare home-telehealth patients by first date of serviceThe established panel for January 1, 2028.
Add submission and decision time stamps to every authorizationWithout them the 72-hour and 7-day clocks are unenforceable.
Then take quotes on the same baseline, scope and KPI definitionsStart at get a written quote; our scope is on mental health billing services, CMHCs, CCBHCs and SUD programs on behavioral health billing services, and the parity claims playbook is the long version of the parity section.
Frequently asked questions
How should I compare mental health billing proposals?
Be wary of any vendor that quotes before seeing your payer mix, clinician count and a 90-day denial file. Compare proposals on the same baseline data, the same scope and the same KPI definitions, with the same exit terms, and only then compare the commercial terms.
Is parity still enforceable in 2026 and 2027?
The federal Departments said on May 15, 2025 that they will not enforce the new portions of the 2024 final rule until a final decision in the ERIC litigation plus 18 months. The statute, the 2013 rule and the CAA, 2021 comparative analysis duty continue to apply, and states may still enforce against issuers.
Which KPIs should be in a mental health billing contract?
Clean claim rate, remittance denial rate, authorization denial share, timely filing loss, net days in A/R, over-90 A/R share, allowed-versus-contract variance, denial turnaround and posting lag, each with a written definition (HFMA MAP Key where one exists), a data source, a cadence and a remedy.
Does the January 1, 2027 prior authorization API apply to commercial plans?
No. CMS-0057-F covers Medicare Advantage, state Medicaid and CHIP fee-for-service, Medicaid and CHIP managed care, and QHP issuers on the Federally Facilitated Exchanges. Commercial employer plans follow their contracts and state law. Drug prior authorizations are excluded from the API.
What changes for Medicare telehealth patients on January 1, 2028?
The in-person visit requirement applies to home mental health telehealth: a visit within 6 months before a first telehealth service and within 12 months of each later one, with limited exceptions. Patients who began on or before December 31, 2027 are treated as established and need one in-person visit every 12 months.
- Departments of Labor, HHS and the Treasury: Statement Regarding Enforcement of the Final Rule on Requirements Related to MHPAEA (May 15, 2025)
- CMS Telehealth FAQ, updated October 8, 2026 (posted October 9, 2026)
- CMS fact sheet: Interoperability and Prior Authorization Final Rule, CMS-0057-F (January 17, 2024)
- 42 CFR 438.210, Coverage and authorization of services (Medicaid managed care), govinfo.gov
- CMS fact sheet: CY 2027 Medicare Physician Fee Schedule proposed rule (July 14, 2026), proposed
- HFMA MAP Keys: revenue cycle key performance indicator definitions
- X12: Claim Adjustment Reason Codes (CARC) and Claim Adjustment Group Codes
- DOL EBSA fact sheet: Final Rules under the Mental Health Parity and Addiction Equity Act (September 2024)
Checked October 25, 2026. Confirm against the source; items marked proposed may change in the final rule.
Want a written quote built on your own 90 days?
Send the 835s and the clinician roster. We return the baseline KPIs, the scope we would propose and a written quote, with the three checks applied.