New CMS Rule, Coding, and Compliance for Behavioral Health and Telehealth

Behavioral health treatment requires specific documentation for accurate coding and compliance. Failure to get these systems right can result in denied claims, revenue loss, repayment due to unsupported services, and poor patient experience.

Establishing and reviewing your current internal controls, operational processes, and delivery areas can help mitigate errors, increase efficiency, and improve your revenue cycle.


During the COVID-19 public health emergency (PHE), several of the limitations for providing telehealth services were lifted. Hospital revenue cycle and revenue integrity departments faced multiple challenges not only capturing the right coding but also identifying what behavioral health services were completed using telehealth technologies.

From a documentation and compliance perspective, transitioning to telehealth for behavioral health providers became more complicated.

In 2021 and again in March 2022, the Centers for Medicare & Medicaid Services (CMS) made significant telehealth changes to coverage for mental health services and expanded behavioral health treatment of those services.

New Rule From CMS

Medicare finalized its rule on mental health services in 2021. The rule states that once the PHE ends, mental health service providers will be required to have in-person examinations based on specific time frequencies.

In December 2020, CMS imposed statutory amendments and conditions of payment related to mental health services provided using telehealth. The new requirements would be imposed after the PHE ends. At that time, CMS will require an in-person exam to obtain payment for telehealth mental health services at a patient’s home.

Under the rule, CMS will cover a telehealth service delivered while the patient is at their home if the following conditions are met:

  • The practitioner conducted an in-person exam of the patient within the six months before the initial telehealth service
  • The telehealth service is furnished for purposes of diagnosis, evaluation, or treatment of a mental health disorder—other than for treatment of a diagnosed substance use disorder (SUD) or co-occurring mental health disorder
  • An in-person non-telehealth visit is furnished at least every 12 months for these services

CMS Revised Rule

President Joe Biden signed into law the Consolidate Appropriations Act (CAA) on March 15, 2022. The act revised and updated certain telehealth flexibilities for Medicare patients.

This allows for the telehealth flexibilities to continue for 151 days after the first day after the official end of the PHE which provides an extension related to the in-person requirement for mental health services.

Rule Exceptions

The CMS in-person rule has exceptions. It’s important that hospitals and physicians’ offices, especially those providing telehealth, understand that these exceptions can assist organizations to extend what they consider an originating site, where the patient is located, as well as, expanding the list of telehealth practitioners.

Exceptions to the rule include:

  • If the patient is at a qualifying originating site in an eligible geographic area, such as a practitioner office in a rural Health Professional Shortage Area (HPSA), and the arrangement meets the statutory requirements for telehealth service coverage under Medicare, an in-person exam isn’t a prerequisite for reimbursement.
  • The in-person exam doesn’t apply to telehealth treatment of a diagnosed SUD or co-occurring mental health disorders—the Substance Use Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities (SUPPORT) Act already made the patient’s home an eligible originating site for such services.
  • If the patient and practitioner agree benefits of an in-person, non-telehealth service within 12 months of the mental health telehealth service are outweighed by risks and burdens associated with an in-person service, and the basis for that decision is documented in the patient’s medical record, the in-person visit requirement won’t apply for that 12-month period.

Revisions for Rural Providers and FQHCs

The revised statutory language for mental health visits in Rural Health Clinics (RHCs) and Federally Qualified Health Clinics (FQHCs) was also addressed in CY 2022 Physician Fee Schedule (PFS) Final Rule, enabling RHCs and FQHCS to provide mental health visits using interactive, real-time telecommunications technology effective January 1, 2022. These visits differ from telehealth services provided during PHE and need to be coded as such. On June 6, 2022, CMS delayed the in-person requirements under Medicare for mental health visits that RHCS and FQHCS provide via telecommunications technology. In-person visits won’t be required until the 152nd day after the end of the PHE, as outlined in Section 304 of the Consolidated Appropriations Act (CAA) 2022.

Documentation of Exceptions

When utilizing any of the exceptions, documentation is key. Providers must document the type of exception for each applicable period.

The Code of Federal Regulations (CFR), 125(c) of the CAA amended section 1834(m)(4)(C)(ii) provides the following examples of exceptions:

  • Situations in which an in-person service is likely to cause disruption in service delivery or has the potential to worsen the patient’s condition
  • The risks and burdens associated with an in-person service could also outweigh the benefit if a patient is in partial or full remission and only requires a maintenance level of care
  • The clinician’s professional judgement that the patient is clinically stable or that an in-person visit has the risk of worsening the patient’s condition, creating undue hardship on self or family
  • If it’s determined that the patient is at risk for disengagement with care that has been effective in managing the illness

CMS officials emphasized that coverage for audio-only telehealth services is limited to mental health care services furnished by providers to a patient who is in their home, who use two-way audio-visual telehealth platforms—often called video visits—but whose patients either can't or don't want to use that platform and choose to use the audio platform only.

According to the exceptions allowed under the new rule, audio-only telehealth can be reimbursed.

Consequences of Miscoding

The Department of Justice (DOJ) and the Office of Inspector General (OIG) placed telehealth as a focus area in the in 2021 and 2022 work plan items and audit reports.

The OIG has focused on behavioral health services including a study in 2021 stating that states may not have oversight of the extent or quality of the services performed as telehealth and that further expansion without proper delivery provisions may lead to further problems and review.

Consequences of inappropriate reporting may result in identification as an outlier for telehealth services and may include:

  • Under or overpayment
  • Regulatory audits
  • Denial of benefits for professional and telehealth service fees

In addition to the general training, your organization should develop coding and billing team members who understand and can provide guidance with telehealth and the new rule changes from CMS.

Best Practices of Behavioral Health Coding and Compliance

There are several steps that an organization can follow to reduce the risks related to your telehealth program:

  • Assess your telehealth program
  • Create team expertise
  • Document clinical treatment
  • Be aware of exceptions
  • Regularly audit and test

Assess Your Telehealth Program

An assessment of your telehealth program can help determine how processes and protocols have been established to provide behavioral health, substance abuse, and other eligible service lines.

To assess the program your organization could conduct interviews, review documentation, test claims, review the chargemaster, and review workflow and processes.

You might also identify specific departments and areas subject to noncompliance, including:

  • Inpatient
  • Partial hospitalization
  • Intensive outpatient
  • Outpatient
  • Emergency department
  • Clinics

Once you determine what service lines are part of the telehealth program, start with a focus on behavioral health services and in particular services provided during the PHE.

The assessment should also review the program’s controls and how those controls are designed—the program should include a process related to the new in-person examination standards outlined by CMS.

Create Team Expertise

Ideally an organization has included in the roll out of a telehealth program a strong training program of not only the providers but also coding and billing professionals.

In addition to the general training, your organization should develop coding and billing team members who understand and can provide guidance with telehealth and the new rule changes from CMS.

Document Clinical Treatment

Organizations should consider reviewing current tools used to document behavioral and mental health treatment so that providers have what they need when capturing the required documentation as required by regulations.

Your organization may want to consider a few questions regarding the documentation of mental health, behavioral health, and substance abuse disorder treatment:

  • Are mental, substance abuse, and behavioral health treatment plans being written?
  • Are documentation requirements for services being adhered to?
  • Is there a process in place for the documentation of clinical review and attending signature attestations of group therapy services?

Be Aware of Exceptions

Along with being aware of rule exceptions and how they may apply to you, there are several steps your organization can take to train team members and properly document exceptions:

  • Document the exception within the medical records as applicable.
  • Share the coding protocols with all providers as part of your training
  • Establish mechanisms to monitor the implementation of the documentation requirements related to the exceptions
  • Work with your compliance auditors to review the in-person requirements and those exceptions

Regularly Audit and Test

Monitor the implementation of your telehealth program by establishing an auditing and testing process.


Complete audits of the documentation, operational workflows, revenue cycle controls, and compliance issues.

This can help determine if your organization has adequate controls related to the capture of charges, billing of services, write offs, follow up, and payment posting.


Test medical records at regular intervals so that all lines of service meet the appropriateness of:

  • Diagnosis Related Groups (DRG)
  • Revenue code
  • Current Procedural Terminology (CPT) code assignment
  • Diagnosis code selection
  • Modifier application
  • Whether units billed were supported
  • Documentation to support behavioral health standards including time, plan of care, and treatment plans

After each audit and monitoring activity, an organization should document the corrective action plan necessary to correct and prevent the same error from happening in the future.

We’re Here to Help

For guidance in developing and implementing a telehealth program for your organization, or for assistance in auditing and monitoring the program, contact your Moss Adams professional.

You can also visit our Health Care Practice page for additional resources.

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