Working with medical billing isn’t the most exciting part of addiction treatment, but it is one of the most necessary parts of a successful business in the behavioral health field. 

That makes it worth your careful attention.

Today we’ll go over some of the most confusing terms and acronyms you may run into when trying to decipher the CARCs that denied your claim on the basis of a bad ICD-10 code. 

Brace yourself, it’s going to get technical!

Medical Billing Glossary for Addiction Treatment Providers

Adjudication - This is the process that the insurance company uses to determine if they will accept, deny or reject your claim. The insurance company will evaluate the claim, looking for things like correct codes and medical necessity. Finally, they will determine how much they’ll reimburse.

Allowed Amount - This is the ceiling an insurance company places on the cost of any given addiction treatment service. It’s the total cost a provider is “allowed to charge” by the insurance company.  

Authorization - Insurance companies require patients (or providers) to complete an authorization process to gain permission to receive some treatments and services. Addiction treatment usually requires an authorization. This is also known as a “preauth.”

Claim Adjustment Reason Codes (CARCs) - CARCs are used by insurance companies to explain what happens when a claim is billed one way by an addiction treatment center but paid out by the insurance company in a different way. If you spot an inconsistency, you’ll likely be looking to a CARC for an explanation. 

Claim Scrubbing - When medical billing staff review a claim to check for mistakes, the process is known as “claim scrubbing.” This is a best practice for all addiction treatment providers to undertake before sending claims off to adjudication. 

CPT Code - CPT (or Current Procedural Terminology) codes are created by the American Medical Association to describe treatments. Those treatments must be justified by ICD-10 codes to make a viable claim. CPT codes are the heart and soul of an addiction treatment insurance claim. 

Explanation of Benefits - Once an insurance company has processed a claim from an addiction treatment provider, they will issue an EOB. An EOB is a statement that details the amount billed, the allowed amount, non-covered charges, the amount paid to the provider and the various patient responsibility payments. It’s a summary of the adjudication outcome. 

Medically Necessary - A treatment is “medically necessary” when it addresses an illness, injury, condition or disease and when that treatment meets the “accepted standards of medicine.” Medical necessity can feel like a moving target with some insurance providers. 

Modifier - A modifier is a tag added to the end of a CPT code that offers extra information into the treatment to help close any information gaps that may impede the processing of a claim. There are modifiers for many situations, including telehealth appointments.

RCM - RCM stands for “Revenue Cycle Management.” It describes the entire process of medical billing, from pre-auths, to claim processing, to revenue collection. 

Superbill - Addiction treatment providers create a superbill for insurance companies detailing what services they’ve provided and how much they cost. You’ll probably submit your superbill as part of your claim. 

KPIs - Also known as “Key Performance Indicators.” KPIs are industry standard measurements of how well your RCM is working. There are many different measures used to determine how efficient, effective and thorough your billing operation is. For example, net days in A/R is a KPI many addiction treatment providers use to see how quickly their billing department is processing claims and generating revenue. Keeping tabs on improving your KPIs is a great way to increase your bottom line. 

ICD-10 Codes - ICD-10 stands for “International Classification of Diseases.” ICD-10 codes are used to communicate diagnoses to insurance providers as part of establishing the medical necessity of treatment. ICD-10 codes are used to justify CPT codes, which describe the treatments provided. 

Upcoding - Upcoding is a fraudulent practice where providers bill for more services than they are actually offering. This is illegal and unethical. Don’t do it. 

Utilization Review - Utilization reviews ensure that an insurance company agrees with your addiction treatment center’s assessment of medical necessity and that they authorize the introduction or continuation of the level of care your center is providing to a patient. Utilization reviews are best used periodically throughout periods of care in the addiction treatment space. 

Verification of Benefits - VOBs or verification of benefits is a process where a billing staff member calls a patient’s insurance company to discover what treatments and levels of care are covered by the patient’s plan and what the reimbursement will be for any given service. VOBs should always be done during the intake process for any new addiction treatment patient.  

We’re Here to Help Addiction Treatment Providers Master Medical Billing 

At Behave Health, we’re addiction treatment billing experts. Our all-in-one software solution for addiction treatment providers offers native billing capabilities backed by a team of claims processing professionals who are on a first-name basis with staff at each of the top 10 insurance providers across the country. 

See why more treatment providers are making the switch today. Choose Behave Health and we’ll help you run every part of your business - from billing, to clinical operations, to documentation - smarter. 

Get your free trial started today and see why more addiction treatment centers prefer Behave Health.