Why Behavioral Health Practices Feel the Pinch Every January
A Practical Guide to the Revenue Cycle, Insurance Plan Resets, and What to Do About It
If your revenue seems to slow down at the beginning of the year, you’re not imagining it. And you’re not alone. Many behavioral health practices report delayed payments, higher client responsibility, more cancellations, and increased denials once the calendar turns over.
At the heart of these seasonal disruptions?
Insurance plan resets.
But to understand why the slowdown happens it helps to start with the basics:
Your revenue cycle.
The Revenue Cycle: How Behavioral Health Practices Get Paid
The revenue cycle is the full process of turning your services into income. It typically includes:
Submitting a claim to the client’s insurance plan after providing care.
Claim adjudication by the insurer: Determining how much will be paid, what is the client’s responsibility, and what gets adjusted off based on your contracted fees.
Receiving an Electronic Remittance Advice (ERA) and payment (via direct deposit or paper check).
Collecting the client’s remaining balance - Often by charging a card on file or sending an invoice.
When each step runs smoothly, your practice gets paid reliably. But disruptions at the beginning of the year, particularly related to insurance, can throw the process off course.
What Happens at the Beginning of the Year That Slows Down Revenue?
1. Insurance Plan Resets Lead to Increased Client Responsibility
Most commercial and marketplace insurance plans reset their deductibles and out-of-pocket maximums at the beginning of the calendar year. This means:
Clients who had minimal or no financial responsibility late last year may now owe the full contracted rate for each session.
Claims that would normally be paid by the insurer are now applied to the deductible, shifting the burden to your clients.
You may experience delays in collecting payment, especially if you don’t have a card-on-file policy and rely on paper invoices or manual follow-ups.
This increase in client financial responsibility often leads to:
Higher cancellation and no-show rates
Slower collection of balances
Greater administrative workload for your team
Industry data shows that behavioral health no-show rates can range from 31% to 60%, with higher rates strongly linked to cost-related concerns.
Keep in mind that it’s not right away.
In January, you’re still receiving payments for services rendered in the previous year. This can blur the financial picture and temporarily mask how much revenue is being delayed due to current-year claim issues.
2. Clients May Be Unaware of Plan Changes
Even when clients are still insured, they may not realize:
Their employer changed insurance carriers
Their copay or coinsurance has increased
Their provider is no longer in-network
Prior authorization is now required for services that didn’t need it before
Behavioral health providers are particularly impacted by authorization complexity, which tends to be higher than in many other medical specialties. Changes in these requirements can result in treatment delays, claim denials, or unexpected out-of-pocket costs for clients.
Without proactive checks, you may not discover these changes until a claim is rejected or delayed—weeks after the appointment.
3. Insurer Processing Times Often Slow Down
At the start of the year, many insurance companies deal with:
High volumes of new enrollments and coverage changes
Plan configuration and system updates
Re-verification of prior authorizations
Slower response times from support channels
While formal studies quantifying claim backlogs are limited, industry experience confirms that claims submitted early in the year often face longer processing times and higher rates of rejection due to eligibility or configuration issues.
Looking ahead: a new HHS/CMS policy scheduled to take effect in 2026 will require payers to honor prior authorizations for up to 90 days when clients switch plans. While that should ease some future disruption, it won’t help with current challenges.
Why This Matters: The Revenue Dip Is Real
The combined effect of these factors often results in a significant drop in revenue at the beginning of the year even though you’re still working and billing as usual.
At the same time:
You’re still being paid for claims from services provided at the end of the previous year through much of January
You may not realize the full extent of the slowdown until weeks or months into the new year
Operational expenses—like rent and payroll—remain constant, even as revenue lags
That’s why taking proactive steps now is critical.
What You Can Do Now to Stay Financially Stable
1. Collect Updated Insurance and Contact Information
Ensure front office staff (or providers) to ask clients about:
New insurance cards
Changes to their employment or insurance carrier
Updated contact details like phone, email, and mailing address
Consider adding a reminder to your January intake forms or appointment confirmations.
2. Run Benefits Checks for Clients With Upcoming Appointments
This helps prevent denials, reduces client confusion, and prepares your team for accurate point-of-service conversations.
3. Prepare Your Team for More Conversations About Out-of-Pocket Costs
Clients may be surprised by what they owe. Your front-desk or billing team should be prepared to:
Explain how deductibles work
Provide clear, accurate cost estimate
Offer payment plans when appropriate
Update Superbills for private-pay or out-of-network clients
Training your team to handle these conversations clearly and compassionately helps maintain trust and avoid payment disputes.
HINT: Want to brush up on CoPay’s, Coinsurance, Deductibles and Out-of-Pocket Maximums (aka OOP Max)? Read this quick explainer we put together for just that reason!
4. Implement (or Improve) a Card-on-File Policy
Practices that store client payment methods securely and charge balances after claims process report:
Faster collections
Fewer missed payments
Less administrative effort
When implemented thoughtfully and communicated as a convenience for clients, card-on-file policies support a smoother billing experience for everyone. Depending on your outstanding balance policy, this could save weeks in payment delays.
5. Clean Up Your Outstanding Accounts Receivable
Before the year ends:
Rebill any unresolved claims close to timely filing limits
Search for and post missing payments or ERAs
Send final client statements for unpaid balances
Flag old accounts for follow-up
Best practice benchmarks suggest keeping accounts receivable under 60 days, and ensuring that no more than 20–25% of A/R is over 90 days old.
6. Review Your Payer Contracts and Fee Schedules
Use the beginning of the year to:
Compare contracted rates with 2024 vs. 2025 agreements
Identify payers with consistent underpayments
Request renegotiation if your reimbursement rates haven’t kept pace with costs
Communicate With Clients Before the New Year
Transparency builds trust—and prevents confusion. Consider sending a short message to clients in late December or early January. Let them know:
Insurance plans typically reset at the beginning of the year
Their out-of-pocket costs may change temporarily
Providing their new insurance card early helps avoid billing issues
Your team is available to help verify their new benefits
This kind of proactive communication goes a long way in maintaining client satisfaction.
How BreezyBilling Supports Behavioral Health Practices Through Early-Year Disruptions
The beginning of the year is one of the most complex periods for behavioral health billing—and the right support can make all the difference.
At BreezyBilling, we help practices like yours stay on track by:
Running timely benefits checks
Monitoring and following up on delayed claims
Ensuring invoices go out on time
Helping your staff communicate clearly and compassionately with clients with especially complex insurance or balance situations
Our goal is to help you maintain a strong, consistent revenue cycle—even during the most turbulent months.
Final Thoughts
The start of the year often brings financial friction for behavioral health providers—but with preparation, it doesn’t have to disrupt your entire first quarter.
By understanding how the revenue cycle functions, proactively managing insurance resets, and communicating effectively with your clients, you can reduce stress, stabilize cash flow, and stay focused on clinical care.
And if you want expert support as you prepare for the new year, BreezyBilling is here to help.
