If you've ever had an insurance company deny a patient mid-treatment because your documentation didn't “support continued medical necessity,” you already know how costly utilization reviews can be—clinically and financially. Health plans deny roughly 10–20% of in-network claims overall, and behavioral health services are often denied at even higher rates, especially when medical necessity is questioned. For IOP and PHP programs, UR denials aren't just frustrating. They're a revenue leak that can quietly sink an otherwise healthy program.kff+2
The good news: a meaningful share of these denials is preventable with better documentation, process, and follow-through.[experian]
Here’s how to stop losing those battles.
What Utilization Reviews Actually Are (And Why They Trip Up New Programs)
A utilization review is an insurance company's way of asking, “Does this patient actually need this level of care—and can you prove it?” Health plans use UR to determine whether services are medically necessary, appropriate, and efficient for the patient’s condition. For IOPs and PHPs, that means demonstrating at intake, and repeatedly throughout treatment, that the patient meets the criteria for your level of care.[cms]
Most payers use either ASAM Criteria (the American Society of Addiction Medicine's patient placement criteria) or their own proprietary version of it to guide level-of-care decisions. The problem is that proprietary piece. Aetna’s criteria aren’t identical to UnitedHealthcare’s, which aren’t identical to a regional Blue plan’s, even though they may all be “ASAM-informed.” New programs often get blindsided when they apply their clinical judgment correctly but document it in a way the specific payer doesn’t recognize.asam+1
This is where programs hemorrhage revenue. Not because the care wasn’t appropriate—but because the paperwork didn’t speak the payer’s language.
Step 1: Build a Payer-Specific Documentation Matrix
Stop treating documentation as a one-size-fits-all clinical note. Create a reference matrix—even a simple spreadsheet—that maps each of your contracted payers to their specific UR requirements.
For each payer, track:
Medical necessity criteria (ASAM-based vs. proprietary placement guidelines). Many plans publish these as “medical policies” or “clinical criteria for substance use treatment.”
Required documentation at admission (biopsychosocial, ASAM assessment, urine drug screen, psychiatric eval if required). These elements line up with ASAM’s expectation for multidimensional assessment and individualized treatment planning.carelonbehavioralhealth+1
Concurrent review intervals (some payers review every few days for higher-intensity care, others weekly). State Medicaid and commercial plans commonly define these UR timeframes in provider manuals and contracts.[oasas.ny]
Preferred clinical terminology (certain payers flag language that sounds too “maintenance-focused” vs. “active treatment-focused”).
Peer-to-peer review availability and how to request it (phone number, portal workflow, timeframe).
This matrix becomes a training document for your clinical staff and a checklist for your billing team. When a UR nurse calls for a concurrent review, your staff should be able to speak fluently to that payer’s specific criteria—not just generic clinical progress.
Step 2: Write Notes That Anticipate the Denial
The single biggest documentation mistake in behavioral health programs is writing notes that describe what happened in group instead of why the patient still needs this level of care.
Insurance reviewers are not reading your notes to understand your patient as a person. They’re scanning for language that either supports or undermines continued medical necessity, using the plan’s criteria and internal UM policies as their lens. A note that says “Patient participated in CBT group and processed family dynamics” tells a reviewer almost nothing useful. A note that says “Patient continues to demonstrate significant emotional dysregulation with a GAF of 45, requiring structured daily therapeutic intervention to prevent decompensation and higher-level-of-care admission” tells them exactly what they need to authorize another week.asam+1
The Three Elements Every UR Note Should Include
1. Current functional impairment. Use validated tools—PHQ-9, GAD-7, ASAM dimensions, COWS/CIWA if relevant. Standardized rating scales are widely recommended in behavioral health as a way to quantify symptom severity and track change over time, and payers give these objective scores a lot of weight. Numbers matter. Reviewers trust scores more than narrative alone.[asam]
2. Active treatment focus. What specific clinical goals are being addressed right now? Not “patient is working on coping skills.” More like: “Patient is in the early stages of grief processing following loss of employment due to substance use, with no current family support system. Outpatient step-down is premature given lack of psychosocial stability.” This maps directly to ASAM dimensions around readiness to change, relapse risk, and recovery environment.[asam]
3. Risk factors justifying level of care. Relapse risk, psychiatric comorbidity, unstable housing, early recovery stage, history of failed lower-level-of-care attempts—document all of it, every time. Even if it feels repetitive. These are the exact elements ASAM calls out when determining whether someone belongs in Level 2.1 (IOP) vs. 2.5 (PHP) or a lower level of care.horizonblue+1
Step 3: Leverage Technology to Track UR Deadlines and Payer Patterns
This is where programs that scale separate themselves from programs that stay stuck.
Manual UR tracking—sticky notes, calendar reminders, spreadsheets someone updates inconsistently—is how authorization lapses happen. Even a single missed concurrent review can trigger a retro-denial, meaning the payer refuses payment for days of otherwise covered services because the authorization was not updated on time, a risk highlighted in many payer and state UR policies. For PHP, where contracted per-diem rates often reach several hundred dollars per day, one week of denied services can easily translate into thousands of dollars of lost revenue.cms+1
Invest in an EHR that has UR workflow built in. Many behavioral health EHRs include authorization tracking modules that support UR management. At minimum, your system should flag:
Upcoming authorization expiration dates
Concurrent review due dates by payer
Pending peer-to-peer requests
Denied claims with appeal deadlines
If you’re not ready for a full EHR build-out, even a well-maintained shared spreadsheet with automated reminders is better than nothing. The point is that UR management cannot live in someone’s head.
Beyond tracking deadlines, pay attention to payer-specific denial patterns. If you’re getting denied by the same payer for the same stated reason repeatedly, that’s data. Pull your denial reports at least quarterly and look for trends—then adjust your documentation templates accordingly. Industry analyses show that a significant portion of denials are linked to missing or inconsistent data, which means process changes on your side can materially improve approval rates.[experian]
Step 4: Master the Appeals Process Before You Need It
Many programs do not fully use their appeal rights, often because they lack time or internal process, and that leaves money on the table. Under the Affordable Care Act, patients and providers acting on their behalf have a defined right to internal appeals for adverse benefit determinations and, after that, to an external review by an independent organization. These protections apply to behavioral health services under federal mental health parity requirements, which require similar processes for medical/surgical and mental health/substance use conditions.bradley+1
In other words: the appeals process is standardized by regulation, and it’s there for you to use.
What a Strong Appeal Includes
A formal letter of medical necessity from the treating clinician (not just the billing department) that explains why the requested level of care meets the plan’s criteria.
Specific ASAM Criteria citations supporting the level of care, tied directly to the patient’s clinical presentation and ASAM dimensions.asam+1
Clinical notes that directly address the reason for denial (for example, if the denial claims the patient could be treated at a lower level of care, show exactly why that’s not safe or appropriate).
Peer-reviewed literature supporting the treatment approach if the denial cites “lack of efficacy evidence” for a particular modality or duration.
A peer-to-peer review request, if you haven’t already done one, so your physician or clinical director can speak directly with the plan’s reviewer.[oasas.ny]
Peer-to-peer reviews—where your medical director or attending clinician speaks directly with the payer’s medical reviewer—can be powerful in overturning clinical denials, especially when there’s disagreement on how criteria are being interpreted. If you’re not routinely requesting peer-to-peers for concurrent review denials, you’re probably missing opportunities to get appropriate care approved.[oasas.ny]
FAQ: Addiction Treatment Utilization Reviews
Q: How often do insurance companies require utilization reviews for IOP/PHP programs?
Most payers require an initial authorization at admission and then concurrent reviews at defined intervals—for example, every few days for higher-intensity levels of care and weekly or biweekly for lower-intensity services—though exact schedules vary by plan and contract. Always verify concurrent review timelines in your payer manuals and contracts rather than assuming they’re the same across payers.cms+1
Q: What ASAM criteria do insurance companies use to authorize PHP vs. IOP?
PHP typically lines up with ASAM Level 2.5 criteria—marked impairment across multiple ASAM dimensions, need for near-daily structured programming, but not requiring 24-hour medical monitoring. IOP generally aligns with Level 2.1, where patients still need intensive, structured services several times per week but can safely live in the community with appropriate support.carelonbehavioralhealth+2
Q: Can insurance companies deny treatment mid-program?
Yes. Health plans routinely conduct concurrent reviews and can issue mid-treatment denials if they determine that criteria for the current level of care are no longer met. You can typically appeal these decisions and, in many cases, continue providing services during the appeal, understanding that you may carry the financial risk if the denial is upheld.bradley+2
Q: What is a peer-to-peer review and when should I request one?
A peer-to-peer is a discussion between your program’s physician or clinical leader and the payer’s clinical reviewer to clarify clinical details and how criteria are being applied. You should request one for any clinical denial where you believe the treatment was medically necessary and the reviewer may not have had a full picture of the patient’s risk or environment.[oasas.ny]
Q: What’s the difference between a precertification and a utilization review?
Precertification (or prior authorization) happens before treatment begins—the payer reviews medical necessity and approves a set number of days or sessions in advance. Utilization review is the ongoing process of demonstrating continued medical necessity during care, and failing either step can result in non-payment even if the service itself was clinically appropriate.bradley+1
Q: How do I find out what documentation a specific payer requires for IOP/PHP authorization?
Ask your provider relations representative or network contact for the plan’s written clinical criteria and UM policies for substance use and mental health levels of care; most plans will share these materials or publish them on their provider portals. Build this request into your contracting and credentialing process so you know requirements before you start treating patients.asam+1
Want to Build a Program That Gets This Right From Day One?
ForwardCare is a behavioral health MSO (Management Services Organization) that partners with clinicians, sober living operators, healthcare entrepreneurs, and investors to launch and scale behavioral health treatment centers. We handle the business side — licensing support, insurance credentialing, billing, compliance, and operational infrastructure — so our partners can focus on growth and clinical quality.
If you’re serious about opening or expanding a behavioral health treatment center but don’t want to navigate the business side alone, ForwardCare may be worth a conversation.