Coding & Behavioral Health Reforms

What Providers Need to Know

The landscape of behavioral health billing is changing rapidly in 2025. From new coding standards to California’s CalAIM behavioral health reforms, providers are navigating an increasingly complex billing and compliance environment.  These updates are not just administrative; they directly impact patient access, reimbursement, and the efficiency of clinical workflows.

In this article, we’ll break down the ICD-11 transition, updates to telehealth coding, and the requirements of CalAIM, and explain how they affect behavioral health providers across the U.S.

What is CalAIM

CalAIM stands for California Advancing and Innovating Medi-Cal. It’s a multi-year initiative led by the California Department of Health Care Services (DHCS) to transform and improve the Medi-Cal program.

What CalAIM Aims to Do:

1. Integrate care – Coordinate physical health, behavioral health, dental, and social services to treat the “whole person.”
2. Expand access – Provide more consistent and equitable Medi-Cal services across the state.
3. Focus on behavioral health – Standardize billing and coding for mental health and substance use disorder treatment.
4. Enhance Medicaid reporting – Improve transparency and accountability by collecting better data.
5. Address social needs – Support programs like housing services, care management, and community supports for vulnerable populations.

Why It Matters for Providers

• Behavioral health providers must use standardized coding and documentation.
• Medi-Cal reporting requirements are now stricter, meaning claims and billing data play a direct role in compliance.
  
• The changes are designed to make reimbursement more consistent, but they also increase administrative responsibilities.

CalAIM is a Medi-Cal reform plan that seeks to modernize California’s Medicaid system, expand equity, and strengthen behavioral health care delivery.

What is ICD?

ICD in medical billing stands for International Classification of Diseases. It’s a standardized coding system created by the World Health Organization (WHO) and used worldwide to classify diseases, conditions, and health-related issues.

How ICD Works in Medical Billing

• Every diagnosis or medical condition is assigned a specific ICD code.
• In the U.S., providers currently use ICD-10-CM (Clinical Modification) for diagnoses.
• These codes are submitted on insurance claims to explain why a patient received a certain treatment or service.
• Insurers use ICD codes to determine if the service is medically necessary and eligible for reimbursement.

ICD-11: The Global Transition

The World Health Organization (WHO) officially introduced the ICD-11 (International Classification of Diseases, 11th Revision) as the global diagnostic standard. While the U.S. has not yet fully mandated its adoption, momentum is building toward eventual transition from ICD-10-CM to ICD-11.

Why It Matters for Behavioral Health

• ICD-11 includes expanded categories for mental, behavioral, and neurodevelopmental disorders, offering more precise diagnostic codes.
• Conditions like PTSD, complex grief disorder, and gaming disorder are now clearly classified, improving diagnostic clarity.
• Providers will need to update EHR systems, billing processes, and staff training to align with ICD-11.

Telehealth Coding and Modifiers

The pandemic accelerated telehealth adoption, and it remains a critical tool in behavioral health care. Payers continue to refine their policies for telehealth reimbursement, requiring the use of CPT and HCPCS modifiers to indicate virtual care delivery.

• Common modifiers include 95 (synchronous telemedicine service) and FQ/FR (audio-only telehealth).
• Failure to use the correct modifier can lead to claim denials or underpayments.
• Accurate telehealth coding also supports compliance with state Medicaid programs and private payer requirements.

For behavioral health providers who rely heavily on virtual sessions, these coding rules are essential to maintaining a healthy revenue cycle.

CalAIM Behavioral Health Reforms

In California, the CalAIM (California Advancing and Innovating Medi-Cal) initiative represents one of the most significant Medicaid reforms in decades. Behavioral health providers must pay close attention to its requirements.

Key Impacts:

• Standardized coding and documentation for mental health and substance use disorder services.
• Enhanced care coordination across providers, with billing data tied directly to reporting requirements.
• Stricter Medicaid reporting to ensure services align with CalAIM’s goals of whole-person care and equity.

For providers, this means billing isn’t just about reimbursement; it’s also about compliance and accountability.

Why These Reforms Matter

• For patients, accurate coding ensures access to the right services without unexpected denials.
• For providers, compliance reduces the risk of audits, penalties, and cash flow disruptions.
• For payers and regulators, consistent coding supports transparency and cost control.

In short, coding is not just a back-office task—it’s a core part of delivering quality care in behavioral health.

10 Frequently Asked Questions (FAQs)

1. What is ICD-11 and how does it differ from ICD-10?

ICD-11 is the new international diagnostic coding system, with expanded categories for mental health and greater clinical precision compared to ICD-10.

2. When will the U.S. fully adopt ICD-11?

The U.S. has not set a final transition date, but providers should start preparing now by updating systems and staff training.

3. Why are telehealth modifiers important?

Modifiers such as 95, FQ, and FR indicate virtual service delivery. Using the wrong modifier can result in claim denials.

4. How does telehealth coding affect reimbursement?

Accurate coding ensures proper reimbursement from Medicaid, Medicare, and private payers for virtual behavioral health visits.

5. What is CalAIM?

CalAIM (California Advancing and Innovating Medi-Cal) is a statewide reform initiative aimed at improving Medicaid services, especially in behavioral health.

6. How does CalAIM impact behavioral health billing?

Providers must use standardized codes and improve reporting to meet compliance and reimbursement requirements under Medi-Cal.

7. What happens if providers don’t comply with coding reforms?

Non-compliance can lead to denied claims, financial penalties, or increased audit risk.

8. How do these reforms affect patient care?

Accurate coding improves treatment tracking, continuity of care, and access to covered services, benefiting patients directly.

9. What role do billing specialists play in this process?

Billing specialists ensure claims meet payer requirements, apply correct modifiers, and manage denials—helping providers stay compliant and efficient.

10. How can providers prepare for ICD-11 and CalAIM?

Start by updating billing software, training staff, and partnering with a certified billing service like Bridge Billing Services to stay ahead.

How Bridge Billing Services Can Help

Navigating these reforms requires more than just coding knowledge; it requires a partner who understands the full billing cycle and the evolving demands of Medicaid and private payers.

At Bridge Billing Services, we:

• Provide certified billing support for ICD-10, ICD-11 readiness, CPT, and HCPCS updates.
• Manage telehealth coding to reduce denials and ensure compliance.
• Help providers align with CalAIM reporting and Medicaid billing standards.
• Optimize the revenue cycle so providers can focus on patient care instead of paperwork.

📞 Contact Bridge Billing Services today to ensure your practice is ready for coding reforms and behavioral health billing challenges.