Health providers are facing a period of rapid change. From the rise of psychedelic-assisted therapies to evolving telehealth policies and heightened regulatory scrutiny, organizations must balance innovation with compliance. Proper documentation, coding, and audit preparedness are no longer optional; they are essential for protecting patients, practices, and reimbursement.
This article summarizes key takeaways from LW Consulting’s Senior Consultant, Christine Pilarski’s recent workshop on Coding, Billing, Payment, Audit, and Enforcement at the ASKP3 2025 Mastering the Essentials: A Hands-On Introduction to Ketamine Administration Conference.
Documentation: The Cornerstone of Compliance
Medical records are more than notes—they are legal documents that determine whether services can be reimbursed and withstand audit scrutiny. In behavioral health, thorough documentation supports medical necessity, validates coding, and provides continuity of care.
Core requirements include:
- Legibility and identification: Patient name, date of service, and provider credentials must be clear.
- Medical necessity: Records must show why the visit occurred and why the treatment was clinically appropriate.
- Coding support: CPT® and ICD-10 codes must align with documentation.
- Authentication: Records must be signed—electronically or in writing—by the licensed provider.
Remember: If it isn’t documented, it isn’t done.
The medical record should open with a clear explanation of why the patient is being seen, presented as a concise statement that may include the patient’s symptoms, identified problem, existing condition, diagnosis, physician-directed follow-up, or other contributing factors related to the visit. The chief complaint is essential, as it demonstrates medical necessity and serves as the foundation for all subsequent documentation and coding decisions.
Vague chief complaints, such as “follow-up” or “medication refill,” do not establish medical necessity. Instead, providers should record specific clinical reasons such as “Patient presents today for follow-up of treatment-resistant depression” or “Patient complains of increased anxiety when interacting with others.”
Telehealth: A Shifting Regulatory Landscape
Telehealth, particularly in behavioral health, has expanded significantly since the Public Health Emergency (PHE). Some temporary measures will expire in 2025, but many flexibilities have been made permanent by Medicare.
Key permanent changes include:
- Audio-Only Services: Continued allowance of audio-only telehealth services for patients who cannot access video technology.
- Expanded Originating Sites: Increased number of places where telehealth services can originate, including patient homes.
- Expanded Provider Types: More practitioners are allowed to provide telehealth services under the extension
- Geographic Requirements Removed: Elimination of geographic restrictions for telehealth services, expanding access to patients regardless of location.
Providers must remain attentive as Telehealth regulations in behavioral health continue to evolve. A clear understanding of current guidelines is essential to ensure compliant billing and reimbursement. While Medicare has announced that it will not accept the new telemedicine codes, providers should verify with each individual payer to determine whether the new codes will be recognized.
Esketamine and Ketamine-Assisted Psychotherapy (KAP)
Esketamine, Ketamine – what’s the difference?
In Scientific terms, the Chemical Structure & Mechanism of Ketamine is a racemic mixture containing two mirror-image molecules: R-ketamine and S-ketamine, whereas Esketamine is the S-enantiomer (S-ketamine) isolated from ketamine, making it more selective and potent at NMDA receptors, which are involved in mood regulation. In plain English, Ketamine is like the original recipe; it’s been used for decades as an anesthetic and is now being used (off-label) to help with depression, and Esketamine is like the deconstructed recipe; it’s one half of ketamine (the “S” part), cleaned up and officially approved by the FDA to treat depression.
Esketamine treatments require specific documentation and coding protocols to ensure compliance with FDA regulations and proper reimbursement. There is a REMS registry involved, and the coding and billing largely depend on how the esketamine was obtained, either through the patient’s pharmacy benefit or through a buy-and-sell program.
Ketamine, on the other hand, is not as easy to navigate. Ketamine-Assisted Psychotherapy (KAP) is gaining attention as an innovative treatment model, but it remains a complex area for providers, especially when it comes to documentation, coding, and reimbursement.
KAP typically involves four phases: intake, preparation, medication administration, and integration. Ketamine itself can be delivered in various ways—IV, intramuscular, intranasal, or sublingual—and documenting the specific dosing method is essential for compliance.
From a payer perspective, the picture is far from clear. While esketamine is FDA-approved for treatment-resistant depression and follows established coding requirements, ketamine is not FDA-approved for psychiatric use. When it comes to off-label use of a drug, Medicare states it may cover treatment when it is medically appropriate and supported by scientific evidence, but final decisions are often left to the local MAC. Commercial payer policies are equally inconsistent: some deny coverage outright, while others allow limited off-label use if backed by compendia or medical literature.
Because there is no universal billing pathway for KAP, providers must fall back on strong fundamentals:
- Verify coverage first. Always contact the patient’s insurance to confirm whether KAP-related services are included in their plan. In most cases, the drug itself will not be covered. If billed, ketamine should be submitted under an unlisted drug code (J3490) with the NDC and dosage, along with an invoice—though payment is far from guaranteed.
- Consider administration codes carefully. If the drug is not covered, the associated injection, infusion, or nasal administration codes are also unlikely to be reimbursed. While automated claims systems may process them, this does not make billing appropriate.
- Bill for what is covered. Services typically reimbursable include intake or assessment visits, medication management appointments, psychotherapy (when provided on a different date from administration), and preparation and integration sessions.
- Prepare for self-pay. Medication administration sessions are most often self-pay. While temporary CPT® codes (0820T–0822T) exist for psychedelic-assisted therapy, and Ketamine is not typically considered a psychedelic drug, payer reimbursement is limited. Many practices continue to rely on transparent self-pay models until FDA approval or payer policies expand.
Ultimately, meticulous documentation across all phases of care and open communication with patients about costs are critical for compliance and sustainability in offering KAP.
Tip: Contact payers directly to confirm whether KAP-related services are covered—and document all communication for each patient. Don’t assume one-size-fits-all coverage.
Audit Preparedness: Don’t Wait Until It’s Too Late
Audit activity in behavioral health is increasing. Both government and commercial payers are focusing on high-risk areas, particularly where new treatments and telehealth are involved.
Common audit triggers include copy-and-paste or cloned notes that lack individualization, uniform billing patterns across different patients, excessive use of high-level codes, and so-called “impossible day” scenarios where the number of billed hours exceeds what could reasonably be provided in a single day.
Best Practices for Audit Readiness
To stay audit-ready, organizations should establish a standardized response process and train staff to quickly recognize and route audit notification letters. Keeping documentation complete, legible, and properly signed is essential, along with conducting routine internal audits and technical claim reviews to catch issues early. When needed, compliance consultants or attorneys should be involved to provide guidance and strengthen audit responses.
Enforcement Trends: Compliance Is Non-Negotiable
Recent enforcement actions highlight the risks of non-compliance:
- Telehealth ketamine providers shut down by the DEA.
- Providers fined for billing esketamine without proper acquisition or documentation.
- Behavioral health organizations investigated for fraudulent billing practices.
The industry is under scrutiny, and regulators are sending a clear message: cutting corners on compliance can lead to fines, loss of licensure, or even criminal charges.
As psychedelic-assisted therapies grow in popularity and telehealth becomes a mainstay of care, behavioral health providers must balance innovation with compliance. Strong documentation, payer verification, and proactive audit preparation are essential safeguards.
By investing in compliance now, providers not only protect their organizations but also ensure patients continue to receive safe, effective, and reimbursable care.
LW Consulting, Inc. (LWCI) offers a comprehensive range of services to assist your organization in maintaining compliance, identifying trends, providing education and training, or conducting documentation and coding audits. For more information, contact LWCI to connect with one of our experts!
