Garrett Legacy Group

Author: Penny, Content Specialist Garrett Legacy Group LLC
Date: September 24, 2026
Category: Behavioral Health Revenue Cycle Consulting 

Use a Revenue Cycle Assessment to Find Billing Inefficiencies

Run a revenue cycle assessment before changing staff, software, or payer strategy.

Review the full billing operation. Measure each stage. Identify the source of lost revenue. Assign corrective actions.

Use this process for behavioral health providers, private practices, outpatient clinics, addiction treatment centers, IOPs, PHPs, and residential programs.

A complete assessment should review:

• Claims submission.
• Denial management.
• Accounts receivable aging.
• Insurance verification.
• Prior authorizations.
• Payment posting.
• Credentialing and payer enrollment.
• Patient billing.
• Staff workflows.
• Revenue cycle reporting.

Review the behavioral health RCM services provided by Garrett Legacy Group for additional assessment and billing support.

Step 1: Define the Assessment Scope

Set the review period before pulling data.

Use a rolling 90-day period for a quick review. Use six to 12 months for a full assessment. A longer period shows payer trends, seasonal changes, staff turnover effects, and recurring workflow failures.

Define the following:

• Locations included.
• Providers included.
• Payers included.
• Service lines included.
• Patient responsibility included.
• Insurance AR included.
• Date range reviewed.
• EHR and billing systems used.
• Staff members responsible for each process.

Pull these reports:

• Claims submission report.
• Clearinghouse rejection report.
• Denial report.
• Payment and adjustment report.
• AR aging report.
• Eligibility and authorization report.
• Credentialing and enrollment list.
• Charge entry report.
• Deposit and bank reconciliation report.
• Patient balance report.

Protect patient information during the review. Limit access to authorized staff. Use de-identified data when possible.

Step 2: Measure the Core Revenue Cycle KPIs

Calculate the same metrics every month. Use consistent definitions.

Clean Claim Rate

Measure the percentage of claims accepted and paid without correction, rejection, denial, or resubmission.

Formula:

Clean claim rate = claims paid on first submission ÷ total claims submitted × 100

Target a clean claim rate of at least 92%. Strong operations often reach 95% or higher.

First-Pass Acceptance Rate

Measure the percentage of claims accepted by the payer or clearinghouse on the first transmission.

Separate first-pass acceptance from clean claim rate. A claim can be accepted electronically and still deny later.

Track:

• Claims submitted.
• Claims accepted.
• Claims rejected.
• Claims requiring correction.
• Claims denied after adjudication.

Days in Accounts Receivable

Measure the average number of days required to collect outstanding balances.

Formula:

Days in AR = ending AR balance ÷ average daily net patient revenue

Calculate days in AR overall and by payer. A payer-specific view identifies slow plans and delayed follow-up.

Target fewer than 40 days. Strong behavioral health operations often maintain 30 to 35 days.

Denial Rate by Category

Calculate denial rate by claim count and dollar value.

Formula:

Denial rate = denied claims ÷ submitted claims × 100

Group denials into categories:

• Eligibility.
• Authorization.
• Coding.
• Documentation.
• Medical necessity.
• Timely filing.
• Coordination of benefits.
• Credentialing.
• Telehealth.
• Duplicate claims.
• Payer processing errors.

Target a denial rate below 8%. Work toward 5% or lower.

Net Collection Rate

Measure the percentage of collectible revenue that the practice actually collects.

Formula:

Net collection rate = payments collected ÷ collectible charges × 100

Subtract contractual adjustments from total charges. Do not classify preventable write-offs as contractual adjustments.

Target a net collection rate of at least 95%. A strong operation often reaches 97% or higher.

Charge Lag and Payment Posting Lag

Measure charge lag from the date of service to claim submission.

Target two business days or less for standard outpatient services.

Measure payment posting lag from the payment date to the date the payment is posted to the patient account.

Set an internal target of one to two business days. Delayed posting creates inaccurate AR reports and slows follow-up.

AR Aging Buckets

Review balances in these groups:

• 0–30 days.
• 31–60 days.
• 61–90 days.
• 91–120 days.
• More than 120 days.

Keep AR older than 90 days below 8% to 10% of total AR when possible. Review every balance older than 120 days for appeal, correction, payer escalation, patient billing, or appropriate write-off.

Behavioral Health Revenue Cycle Benchmark Table

Use these figures as operational reference points. Compare results by payer, program, provider, and service type.

KPI	Risk Range	Target Range	Strong Performance
Clean claim rate	Below 90%	92% or higher	95% or higher
First-pass acceptance	Below 90%	93% or higher	97% or higher
Denial rate	Above 8%	Below 8%	Below 5%
Days in AR	Above 45 days	Below 40 days	30–35 days
Net collection rate	Below 90%	95% or higher	97% or higher
Charge lag	Above 3 days	Two days or less	Same or next business day
Payment posting lag	Above 3 days	Two days or less	Same or next business day
AR over 90 days	Above 15%	Below 10%	Below 8%

Use the table to locate risk. Do not use benchmarks without reviewing payer mix, service type, contract terms, and program structure.

Step 3: Audit Claims Submission

Review a sample of submitted claims. Include clean claims, rejected claims, denied claims, and corrected claims.

Check:

• Patient name and date of birth.
• Member ID and group number.
• Payer and plan.
• Rendering provider.
• Billing provider.
• NPI and taxonomy.
• CPT or HCPCS code.
• Diagnosis code.
• Modifier.
• Place of service.
• Authorization number.
• Date of service.
• Timely filing status.
• Required attachments.

Review rejected claims within one business day. Separate clearinghouse rejections from payer denials. Correct the source error before resubmitting.

Review telehealth claims separately. Confirm patient location, place of service, modifier, modality, provider enrollment, and payer policy. Use the telehealth billing guide for behavioral health providers.

Step 4: Audit Denials and Appeals

Pull the denial report for the assessment period.

Sort denials by:

• Payer.
• Provider.
• Program.
• CPT code.
• Service date.
• Denial category.
• Dollar amount.
• Days outstanding.
• Appeal status.
• Final disposition.

Check whether staff:

• Log denials promptly.
• Assign an owner.
• Record payer deadlines.
• Correct technical errors.
• Prepare complete appeal packets.
• Track appeal confirmation numbers.
• Follow up on open appeals.
• Record overturn results.
• Correct the workflow that caused the denial.

Measure appeal success rate. A high appeal success rate can indicate that the practice is identifying preventable errors too late.

Review the behavioral health denial management guide for a detailed denial workflow.

Step 5: Audit AR Aging and Recovery

Review the AR aging report by payer and age.

Start with balances over 90 days. Then prioritize high-dollar claims and claims approaching filing or appeal deadlines.

For each aged account, identify:

• Current claim status.
• Last payer contact.
• Denial reason.
• Required correction.
• Appeal deadline.
• Assigned staff member.
• Next action date.
• Expected recovery amount.

Do not allow accounts to remain in a general work queue. Assign each balance to a specific employee.

Use the behavioral health AR recovery strategies to organize payer follow-up, appeals, and high-value recovery work.

Step 6: Audit Insurance Verification and Eligibility

Review new patient accounts and a sample of established patients.

Confirm that staff verify:

• Active coverage.
• Behavioral health benefits.
• Mental health carve-outs.
• Substance use benefits.
• Telehealth coverage.
• Network status.
• Deductible.
• Copay.
• Coinsurance.
• Visit or unit limits.
• Referral requirements.
• Authorization requirements.

Check for a date-stamped verification record. Require the payer name, verification method, representative name, reference number, and follow-up action.

Do not accept an “active coverage” response as complete verification. Confirm benefits for the actual service.

Read the insurance verification guide to strengthen front-end controls.

Step 7: Audit Payment Posting and Reconciliation

Compare payment reports to bank deposits and payer remittance files.

Review:

• Insurance payments.
• Patient payments.
• Contractual adjustments.
• Non-contractual adjustments.
• Refunds.
• Recoupments.
• Unapplied cash.
• Missing remittances.
• Duplicate postings.
• Incorrect patient responsibility.

Require staff to post payments promptly. Reconcile deposits to posted transactions. Investigate every variance.

Review adjustment codes. Excessive non-contractual write-offs can indicate preventable denials, poor follow-up, or inaccurate patient billing.

Step 8: Audit Credentialing and Payer Enrollment Exposure

Review each provider and location.

Confirm:

• Individual NPI.
• Group NPI.
• Taxonomy.
• CAQH status.
• Payer participation.
• Effective dates.
• Practice locations.
• Rendering provider links.
• Telehealth enrollment.
• Revalidation deadlines.
• Credentialing application status.

Look for claims submitted before the provider’s effective date. Check whether a provider is enrolled under the correct group and location.

Credentialing gaps can create denials that billing staff cannot correct after the service occurs.

Step 9: Prioritize Findings by Dollar Impact and Effort

Do not treat every finding as equal.

Rank each issue by:

1. Dollar value at risk.
2. Number of affected claims.
3. Speed of recovery.
4. Compliance exposure.
5. Staff effort required.
6. Root-cause complexity.
7. Likelihood of recurrence.

Address high-dollar, high-frequency issues first. Examples include missing authorizations, eligibility errors, payer enrollment gaps, recurring telehealth errors, and unworked AR over 90 days.

Step 10: Build a 30/60/90-Day Remediation Plan

First 30 Days

• Correct high-dollar aged AR.
• Work open denials.
• Assign denial ownership.
• Fix eligibility checklist errors.
• Reconcile unapplied cash.
• Confirm payer filing deadlines.
• Correct urgent credentialing gaps.

Days 31–60

• Update payer-specific billing rules.
• Add claim scrubber edits.
• Build authorization alerts.
• Retrain front-desk and billing staff.
• Review payment posting procedures.
• Report KPIs by payer and provider.

Days 61–90

• Recalculate all core KPIs.
• Compare results to the baseline.
• Complete a second chart and claim sample.
• Review staff performance.
• Update written workflows.
• Set quarterly targets.
• Decide whether additional behavioral health billing services are required.

Use the guide to common behavioral health RCM mistakes to review recurring control failures. Compare internal capacity with the in-house versus outsourced billing guide.

Revenue Cycle Assessment Checklist

• Define the assessment period.
• Identify included providers, payers, locations, and programs.
• Pull claims and rejection reports.
• Pull denial and appeal reports.
• Pull AR aging by payer and age.
• Pull payment and adjustment reports.
• Pull eligibility and authorization reports.
• Pull credentialing and enrollment records.
• Calculate clean claim rate.
• Calculate first-pass acceptance rate.
• Calculate denial rate by category.
• Calculate days in AR.
• Calculate net collection rate.
• Calculate charge lag.
• Calculate payment posting lag.
• Measure AR over 90 days.
• Audit claim submission accuracy.
• Audit denial ownership and follow-up.
• Audit appeal deadlines and outcomes.
• Audit insurance verification.
• Audit payment posting and reconciliation.
• Audit credentialing and payer enrollment.
• Rank findings by dollar impact and effort.
• Build a 30/60/90-day remediation plan.
• Repeat the assessment quarterly.

A revenue cycle assessment converts billing activity into measurable findings. Use the results to reduce denials, improve behavioral health AR recovery, stabilize cash flow, and reduce administrative burden.

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• Send this guide to your practice manager.
• Review the checklist with your billing team.
• Contact Garrett Legacy Group to request a revenue cycle assessment.

Contact Information

• Email: glginfo@garrettlegacygroup.com
• Phone: 989-461-6108
• Website: garrettlegacygroup.com

Author: Penny, Content Specialist Garrett Legacy Group LLC
Date: September 24, 2026
Status: Approved. Scheduled for Thursday, September 24, 2026.