Behavioral health billing is in a category of its own. The payer landscape is fragmented — most commercial plans carve BH benefits out to separate managed behavioral health organizations (MBHOs) like Optum, Beacon, and Magellan. Authorization requirements are pervasive. Documentation standards are high. And the denials that result are often more complex to resolve than in medical or dental billing.
Here's what drives behavioral health denials and how to address the most common patterns.
The BH Payer Landscape: Why It's Different
In medical billing, you typically deal with the same payer that covers the patient's medical benefits. In behavioral health, you're often dealing with a carve-out — a separate company contracted to administer only the mental health and substance use benefits.
This creates several problems:
- The patient may not know which company manages their BH benefits
- Eligibility verification for BH benefits is separate from medical benefits
- Authorization requirements are often more stringent than the medical plan
- Timely filing windows and appeal processes differ from the medical payer
The first step in any BH billing workflow: confirm the correct BH payer before the session.
CARC 197: Authorization — The Most Common BH Denial
CARC 197 — authorization absent or not obtained — is the dominant denial code in behavioral health. Most commercial BH payers require prior authorization for:
- Initial evaluation sessions (some payers)
- Ongoing outpatient sessions beyond a certain number (often 4–8 sessions)
- Intensive outpatient programs (IOPs)
- Partial hospitalization programs (PHPs)
- Residential treatment
Why this happens: Authorization is often obtained at intake and then allowed to lapse. A provider may have authorization for 10 sessions, use them over 3 months, and forget to request a continuation authorization before session 11.
Fix: Track authorization end dates and remaining session counts in your PM system. Set alerts at 80% of authorized sessions. Submit continuation requests at least 5 business days before the current authorization expires.
CARC 4 / CARC 29: Timely Filing in BH
Behavioral health claims have an added complexity: some MBHO payers have shorter timely filing windows than the plan's medical benefits. A plan may allow 180 days for medical claims but only 90 days for BH claims — and this is often buried in the MBHO's provider manual.
CARC 4 and CARC 29 appear frequently in BH billing when:
- Providers bill in batches (e.g., monthly) rather than after each session
- There's a dispute about which MBHO is primary that causes billing delays
- Claims are submitted to the wrong payer first, delaying the correct submission
Fix: Submit claims within 30 days of the date of service, regardless of the payer's stated window. Keep a reference sheet of each MBHO payer's timely filing rule.
CARC 96 and Mental Health Parity
CARC 96 — non-covered service — takes on a particular significance in behavioral health because of the Mental Health Parity and Addiction Equity Act (MHPAEA). Federal law requires that coverage limitations on BH services (number of visits, coverage criteria, authorization requirements) be no more restrictive than those applied to analogous medical/surgical benefits.
If you're seeing CARC 96 for BH services that you believe should be covered under parity, you have grounds for a parity-based appeal. This is one of the most powerful and underused tools in BH billing.
How to make a parity appeal:
- Identify the comparable medical benefit (e.g., if outpatient therapy visits are capped at 20/year but the plan covers unlimited physical therapy visits)
- Document the disparity in writing
- File a parity complaint with the plan's appeals department, citing MHPAEA
- If unresolved, escalate to your state insurance commissioner
Parity violations are real and common. Don't accept CARC 96 on BH services without checking for parity issues first.
CARC 50: Medical Necessity in Behavioral Health
Medical necessity denials (CARC 50) in BH are governed by the MBHO's own clinical criteria — typically the InterQual or MCG guidelines, or proprietary payer criteria. These denials occur most often for:
- IOP or PHP when the payer believes outpatient is sufficient
- Residential treatment when the payer approves PHP instead
- Extended outpatient treatment (>26 sessions/year) without documented clinical justification
Fix: The clinical documentation in BH is the key. Treatment plans must include:
- Current functioning level (GAF/WHODAS scores or equivalent)
- Symptom severity ratings
- Response to previous treatment
- Clear justification for the level of care being requested
- Measurable treatment goals
When a medical necessity denial comes back, request a peer-to-peer review immediately — BH peer-to-peer reviews with MBHO medical directors are frequently successful when conducted by the treating clinician, not just the billing staff.
CARC 16: Credentialing and NPI Issues
CARC 16 in BH often relates to credentialing issues: the provider isn't yet credentialed with the MBHO (even if they are with the medical plan), or a newly hired clinician hasn't been added to the group's panel.
BH credentialing timelines are notoriously slow — 60–120 days is common. During this window, claims from a new provider will be denied.
Options:
- Bill under the supervising licensed clinician until the new provider is credentialed (check payer-specific rules on incident-to billing for BH)
- Use telehealth credentials if the provider is credentialed in another state (for multi-state practices)
- Contact the MBHO's Provider Relations team to expedite
Building BH-Specific Workflows
The practices that have the lowest BH denial rates share common workflows:
At intake: Verify BH benefits separately from medical, confirm the MBHO, obtain the session authorization, and document session counts in the chart.
At every session: Update the authorization tracker. Flag when sessions are at 80% used.
At billing: Submit within 5 days of service. Use the MBHO's specific procedure codes — some MBHOs use different codes for the same service than the CPT standard.
Monthly: Pull a CARC report specific to BH payers. Authorization denials and timely filing issues cluster predictably. If CARC 197 is appearing regularly, your authorization tracking has a gap.
Behavioral health billing is harder than most. But the patterns are learnable and the denials are manageable with the right systems. Explore the full CARC code library → to look up any denial code you encounter.