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Mental health · Psychiatry · SUD · Updated August 2026
Behavioral health billing, including the parts nobody wants to touch
Carve-out routing, medical-necessity denials, parity appeals, and substance use disorder records under a regulation that grew teeth in February 2026.
Recura Health handles billing and revenue cycle management for independent mental health, psychiatry and substance use disorder practices. We verify managed behavioral health carve-outs at eligibility, document medical necessity to each payer's standard, appeal denials using parity arguments that still hold in 2026, and handle SUD records under 42 CFR Part 2 as a distinct obligation from HIPAA.
What is an MBHO carve-out, and why does it cause denials?
It is the most common structural denial in behavioral health, and it is entirely preventable at the eligibility step.
A carve-out means the health plan has delegated behavioral health benefits to a separate managed behavioral health organization. The member's card names the health plan. The claim has to go to the delegate. Send it to the medical payer and it denies for what looks like an eligibility problem — so the practice re-verifies eligibility, finds it active, resubmits, and gets denied again.
- Optum Behavioral Health
- Carelon Behavioral Health
- Magellan Healthcare
Carelon Behavioral Health is the current name of the organization formerly called Beacon Health Options, rebranded under Elevance Health in March 2023. Provider directories, remittance advice and older payer documentation still carry the Beacon name in places — a small thing, and exactly the kind of small thing that routes a claim to the wrong place.
Does the 2024 mental health parity rule apply in 2026?
Partly — and being precise about this matters, because a lot of vendor marketing currently is not.
| Provision | Status | What it means for appeals |
|---|---|---|
| MHPAEA statutory obligations | In effect | Parity remains a valid basis for challenging a denial or a treatment limitation. |
| 2013 final regulations | In effect | The established parity framework still governs. |
| NQTL comparative analysis (CAA 2021) | In effect | Plans must still be able to produce comparative analyses for non-quantitative treatment limitations on request. |
| 2024 final rule — provisions new relative to 2013 | Not being enforced | Departments announced non-enforcement on 15 May 2025, pending litigation plus 18 months. Do not build an appeal on these. |
Why we put this on a marketing page
Because any vendor selling you on "the new 2024 parity rules" has not read the file, and you should know that before you sign with them. Parity is still a real tool in appeals. It is just the 2013 version of the tool.
What changed with 42 CFR Part 2 in February 2026?
If your practice touches substance use disorder records, your billing vendor is now inside a regulation that carries civil money penalties.
SAMHSA's final rule updating 42 CFR Part 2 — the confidentiality regulation covering SUD patient records — was published in February 2024 and took effect that April, with a two-year implementation window. Civil enforcement began on 16 February 2026, giving the HHS Office for Civil Rights civil money penalty authority over Part 2 violations for the first time. Part 2 is a separate obligation from HIPAA, with its own consent structure and its own restrictions on use in legal proceedings.
A question worth asking every vendor
"How do you handle 42 CFR Part 2 records differently from ordinary PHI?" If the answer is a restatement of HIPAA policy, they are not handling it differently — and as of February 2026 that is an enforcement exposure that lands on you as the covered entity.
Practice types we bill for
Outpatient mental health & therapy
Individual, family and group psychotherapy. Session-limit tracking, telehealth modifiers and place-of-service accuracy, medical-necessity documentation that survives concurrent review.
Psychiatry & medication management
E/M coding alongside psychotherapy add-ons, prior authorization for specialty medications, and the documentation standard each payer actually applies rather than the one they publish.
Substance use disorder treatment
Levels of care and their authorization requirements, per-diem and bundled arrangements, and Part 2 record handling kept distinct from general PHI workflows.
Intensive outpatient & PHP
Programme-level authorization tracking, attendance-to-claim reconciliation, and concurrent review cycles that need somebody watching them weekly rather than monthly.
42 CFR Part 2
Substance use records are a separate obligation, not a HIPAA footnote
Civil enforcement began 16 February 2026, giving OCR civil money penalty authority over Part 2 for the first time. We handle SUD records as a distinct category with their own consent structure — ask any vendor how they do it, separately from HIPAA. Many cannot answer.
Record handling Two consent regimes, held apart
General PHI
- HIPAA treatment, payment and operations
- Disclosure without separate patient consent
- Standard payer release on file
42 CFR Part 2
- SUD records segregated from general PHI
- Patient consent tracked per disclosure
- OCR civil penalties since 16 Feb 2026
Ask any billing vendor to describe this split without prompting. Many cannot, which is the point.
Start with your own numbers
A free AR and denial audit: your denial rate broken down by payer and by code, your aged AR, and what the pattern is costing you annually. Five business days, read-only access, no obligation.