Navigating the complexities of insurance verification in behavioral health can be a significant challenge for patients, providers, and payers alike. On October 8th, 2024, a conversation at the BHB INVEST conference featured Kelvin Chan, President and Co-founder of Nirvana, Mike Dedmon, Senior Product Manager at Headspace, and Hassaan Sohail, Senior Director of Product Management at Alma. The discussion highlighted how incorrect insurance verification in behavioral health results in substantial hidden costs across the healthcare ecosystem—and how technology is helping solve these issues.
Understanding the Ripple Effect of Incorrect Verification
The costs of incorrect insurance verification in behavioral health are felt by all three key stakeholders—patients, providers, and payers—and the consequences go beyond just financial implications.
Hassaan Sohail noted that for patients, incorrect insurance verification in behavioral health often means higher out-of-pocket expenses, leading to financial stress and potentially even avoidance of care. If a patient is told their insurance covers a particular service and later finds out they owe more than expected, it can create a barrier to seeking additional care or even continuing treatment.
For healthcare providers, denied claims are a significant pain point. Providers must often hire additional staff to investigate denied claims and follow up with insurance companies, which results in increased operational costs. These administrative tasks consume valuable time that could otherwise be spent focusing on patient care. Sohail emphasized how these denied claims lead to inefficiencies that negatively affect the business, especially when these claims are tied to inaccurate or incomplete information.
On the payer side, the cost of dealing with verification issues isn’t small. When insurance companies are called repeatedly to resolve issues, their customer service teams are burdened with extra work. This process increases operational costs on their end, too. When these challenges occur at scale—across hundreds or thousands of claims—it becomes clear how inefficient the system is and how much these mistakes are costing everyone involved.
The Financial and Reputational Impact
Mike Dedmon, with his background in payer systems, shared some insight into how these issues affect patient satisfaction. He highlighted the importance of cost transparency in building trust. Research shows that many patients value upfront knowledge of their costs even more than a strong relationship with their provider. If patients aren’t confident about what their insurance covers or how much they’ll need to pay, they might avoid scheduling an appointment altogether, leading to fewer people seeking treatment.
Kelvin Chan added to this by emphasizing the financial impact of these issues. Whether it’s a denied claim worth $100 or an hour spent on the phone with an insurance company to sort out coverage, the impact on providers’ bottom lines is clear. But what’s harder to quantify, he noted, is the damage caused to the patient experience. Billing problems often lead to negative reviews—on platforms like Yelp or Google—that tarnish a provider’s reputation. According to Chan, a significant portion of healthcare practice complaints focus on billing issues, rather than the quality of care. This reputational damage can lead to decreased patient retention and lower referral rates, which are crucial for the success of any practice.
Why Has Insurance Verification Been Such a Persistent Challenge?
A large part of the problem stems from the outdated systems that payers still use for insurance verification in behavioral health. Both Sohail and Dedmon shared insights from their experiences working at large organizations—Sohail at Optum and Dedmon at Athena. Dedmon explained that, in the case of behavioral health, the cost of services is often lower than those in other specialties, such as orthopedic surgery or emergency care. Because behavioral health claims are smaller in value, they often don’t get prioritized by payers. This makes it difficult for providers to get clear and timely answers about patients’ coverage.
Sohail added that another major issue is that payers are still relying on legacy systems from the 1980s, while benefits have grown increasingly complex. These outdated systems don’t always provide clear, up-to-date information. Data can be inconsistent or incomplete, making it a challenge for providers to determine exactly what is covered under a patient’s insurance plan. As Sohail noted, a key to solving these issues is verifying eligibility early and frequently—ideally right when a patient joins a practice and periodically before each appointment. By doing this, providers can proactively track any changes in coverage and address issues before they become problems.
Kelvin Chan echoed Sohail’s point, explaining that outdated systems often lead to confusion about carve-outs—situations where a payer like Optum might subcontract behavioral health services to another company like Magellan. If a practice isn’t aware of these carve-outs, they could assume the entire plan is covered under Optum, only to find out that services related to behavioral health aren’t covered. These scenarios are common but can often be avoided by ensuring insurance verification in behavioral health is thorough and up to date.
How Technology is Revolutionizing Insurance Verification
As insurance verification in behavioral health tools have evolved, the benefits for both businesses and patients have become clear. Sohail emphasized that one of the major advantages of technology in this space is the ability to provide cost estimates upfront. Behavioral health patients often experience a high level of anxiety about potential expenses. By offering them a clear picture of what their costs will be, providers can ease that anxiety and give patients the confidence to proceed with care.
But, as Chan pointed out, accuracy is only half the battle. It’s important to communicate the information in a way that is easy for patients to understand. Despite technical accuracy in verifying insurance benefits, many Americans still struggle to understand key terms like “deductible.” If patients don’t understand their financial obligations, they may feel uncertain about moving forward with treatment. At Nirvana, the goal is not only to provide accurate insurance verification in behavioral health but also to present the information in an intuitive way that patients can easily comprehend.
Reducing Cancellations and Improving Patient Conversion
The rise of online mental health appointments has introduced new challenges in patient conversion—particularly the issue of abandoned appointments. As Dedmon explained, providing verification and cost information upfront during the booking process is key to reducing cancellation rates. At Headspace, they’ve seen significant success in lowering cancellations by arming patients with the information they need before they even show up for their appointments. Dedmon’s team has reduced their cancellation rate to around 15%, which is lower than the industry average of 20%.
Sohail added that Alma has implemented a helpful strategy of offering free initial consultations. These 15-minute consultations give patients the chance to explore whether they feel comfortable with a provider before committing to a full session. This strategy has helped reduce both no-shows and cancellations, further improving access to care.
Proactive Claims Management: The Best Approach
While many providers view claim denials as an unavoidable cost of doing business, Kelvin Chan argued that they are, in fact, largely preventable. Training staff—especially intake coordinators—on how to navigate payer systems is crucial. With proper expertise, staff can identify issues like managed Medicaid carve-outs early in the process, preventing denials before they even occur.
Sohail and Dedmon both agreed that proactive claims management is far more cost-effective than dealing with issues after the fact. Addressing insurance verification in behavioral health problems upstream, before the claim is submitted, reduces the chances of denials and administrative work later on. Behavioral health providers, in particular, have an advantage in this space since they typically know the type of care they’ll be providing, making proactive claims management more feasible.
Improving Accessibility to Care
Ultimately, the goal for all these organizations is to improve accessibility to care. Dedmon emphasized the importance of making cost and coverage information as clear as possible so that patients can start their mental health journey with confidence. Sohail highlighted Alma’s commitment to meeting patients where they are, whether that means online, through payers, or through other channels, and ensuring a diverse network of providers to meet their needs.
Chan concluded by emphasizing Nirvana’s role in simplifying eligibility verification so that providers, like Headspace and Alma, can focus on delivering high-quality care. By removing the burden of verifying insurance, Nirvana enables providers to deliver care without getting bogged down by administrative tasks.
Conclusion
The challenges of insurance verification in behavioral health are widespread, but the evolution of technology is helping to streamline the process, reduce costs, and improve the patient experience. By addressing verification proactively and offering clearer cost transparency, providers can create an environment where patients feel confident and supported throughout their treatment journey. As these technologies continue to evolve, we can expect further improvements in accessibility and efficiency, ultimately ensuring that more people can get the care they need when they need it.
