Improving Behavioral Health Program Performance

Inpatient and outpatient behavioral health programs have faced significant funding challenges for many years. Most health programs treat a high number of Medicaid and underserved patients, and in most states Medicaid reimbursement does not cover even direct costs associated with treating these individuals. Whereas reimbursement rates may rise slowly over time, expenses continue to rise at rates where payment continues to be insufficient to cover expenses.

These issues were exacerbated significantly due to the onset of the COVID pandemic, and five years later many of these challenges remain. Some of these financial challenges are a product of market forces that can be difficult to control. These include salary and benefits price pressure due to a significant reduction in workforce availability, and inflationary pressures that have impacted almost all expense categories.

One contributing factor to increasing financial challenges relates to insufficient management of program-specific revenue and expenses. For example, clinical providers are often not well educated on clinical documentation necessary to support revenue generation and reduce payment denials. Large health system with significant clinical document integrity programs (CDI) tend to focus improvement efforts on higher revenue service lines, leaving lower revenue services such as behavioral health with less support for educating providers on clinical documentation to support revenue maximization. The same is true with revenue cycle teams who focus on higher margin services

Other challenges related to maximizing revenue and managing expense are often associated with program management lack of training and education relative to the financial impact that they could have when held accountable for budgeted revenue and expense. Sufficient oversight of factors that impact revenue recognition and program specific expenses are critical to maximize behavioral health programs’ financial performance. Larger programs provide little oversight relative to procurement.

Implementing Strategies to Improve Financial Performance

A primary way of improving revenue relates directly to provider clinical documentation. If providers are not well educated on appropriate clinical documentation that will support appropriate evaluation and management and procedure coding, insurance denials will inevitably be higher than they should be. A robust education program for clinical providers on appropriate clinical documentation and proper coding, often led by CDI and coding personnel can help providers understand how important proper documentation is when billing provided services.

Managing expenses to an annual budget, and particularly discretionary expenses, will help to improve behavioral health program financial performance. It is common for management personnel who are primarily responsible for program budget oversight to not have the education needed to understand where options to reduce expenses may lie. Several steps in helping management staff be better equipped to understand their monthly financial statements from the perspective of maintaining expenditures according to an annual budget may include:

1.     Financial training for unit managers to help them understand program-based financial management. Ensure that each manager has access to accurate revenue and expense reports and work on developing a culture of accountability where managers present monthly variances by expense category to senior leadership with an expectation that variances from budget are understood and include a plan for addressing negative expense variances.

2.     Create robust approval processes for purchase orders. This should include an electronic process that requires various levels of approval based on pre-determined levels of purchasing authority that will not allow purchases to be made until all required approvals are documented. Managers should be required to justify any unbudgeted purchase requisition and why it is needed for improved patient care and safety. Many software programs exist designed to provide procurement approvals and oversight

3.     Ensure that the finance team has a role in overseeing and approving unit-based expenditures, and that a procurement department has the primary responsibility ensure that purchases are made at the best price available. Minimize authorization for staff to make purchases outside of the approved purchase requisition process.

4.     Review purchasing contracts on an annual basis, particularly high cost expenditures and identify opportunities for renegotiation or competitive bidding.

5.     Ensure that managers associated with procurement and accounts payable personnel have reviewed invoices for accuracy prior to approval for payment

Some health system senior leaders consider behavioral health programs as a necessary service for the communities they serve and know they will never be profitable. With a strong commitment to programs designed to improve clinician understanding of how to maximize revenue through appropriate modifications to clinical documentation, and an equally strong commitment to expense management, behavioral health programs do not have to be a significant financial drain on a larger health system’s financial performance.

Coming soon: improving financial performance as a Certified Community Behavioral Health Clinic!

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