Rick and Drew want to help people get better. As licensed therapists and shareholders in a rehab center, these dedicated addiction and mental health professionals lost everything five years ago due to insurance fraud. Meaining, through no fault of their own, Rick and Drew paid the price for other rehab centers’ unethical practices.
Although the names have been changed, this sad but true story is becoming more and more the norm today.
The Rise of Insurance Fraud Cartels
Rick says sketchy facilities were billing patients’ health insurance $1,200 for a urinalysis, which should have been billed for about $10. Using a typical schedule of three urinalyses a week per patient, some addiction treatment centers were gouging the insurance companies big time.
Holding themselves to a higher moral standard, Drew and Rick refused to over-bill for their services to survive.
Burdened by outrageous bills from other rehabs, insurance companies became slow to pay and eventually stopped paying altogether. Drew spent many hours trying to collect insurance debts of more than $1 million.
The lack of payments drove Rick and Drew out of business, and both therapists lost their life savings that was invested in their dream of helping people.
It brings new meaning to the phrase “drug cartels.”
Insurance Companies Sued
Insurance companies like Health Net, which serves Arizona and California, are suddenly not paying claims for drug addiction treatment. Health Net was sued by nine drug and alcohol treatment centers last year for delayed or incomplete payments for policyholders’ addiction treatment.
The nine treatment centers claim Health Net improperly withheld funds from virtually all drug addiction rehab facilities in Arizona and California.
Similarly, a group of California treatment facilities filed a lawsuit against Health Net for halted payments for medically necessary services.
The New Drug Cartels
This trend of health insurers absconding reflects poorly on the new drug cartels. Insurers control the ebb and flow of industry money, and for each company that gets away with the money, there’s another company that follows suit.
In the same way, sketchy rehab centers act like drug treatment cartels by inflating their claims, gouging insurance companies and learning underhanded tactics from other rehabs.
The Fraud Fallout
Like Rick and Drew’s story, some rehabs have been squeezed financially to the point they could no longer operate, closing their doors permanently. Health insurers blame drug rehabs for filing claims with grossly inflated prices in an attempt to regain their losses impacted by fraud in the industry.
Laws Governing Mental Health Care
Although the rehab industry is not regulated by state or federal government, there are laws requiring mental health care benefits for all insured patients.
Here are a couple of the laws governing mental health care in the U.S:
- Under federal law, insurance companies are required to provide equitable coverage for substance abuse and addiction treatment.
- Equitable coverage is relegated under the Mental Health Parity and Addiction Act.
- The Affordable Care Act reiterates the mandate for essential health benefits, including behavioral health services.
- Insurers are forbidden from denying these benefits due to a preexisting condition.
A few unscrupulous substance abuse programs misapplied these laws and billed exorbitantly, believing the insurers would be required to pay for services no matter what. Additionally, in some circumstances, the services were not medically necessary or not performed at all.
Another way disreputable addiction treatment centers have skirted the laws and taken advantage of insurers is by patient brokering. Patient brokering involves hiring sales agents to convince prospective clients into traveling to a certain rehab facility. The sales agents get a kickback for each client referred.
Potential clients are offered everything from free airfare to perks and financial help to go to the advertising rehab. The recruiters use deceptive advertising and urgency tactics, and when the client’s insurance benefits run out, he or she is immediately discharged.
Early discharge is certainly not in the best interest of the client, as some are released too early and immediately relapse. Death by accidental overdose happens fairly often during a relapse.
Of note, when someone has a relapse, they qualify for readmittance into rehab, and the insurance benefits reset for a new round of therapy.
Patient brokering is illegal in some states, like Florida. Florida rehab facilities are forbidden to fly out-of-state clients in for treatment. They are not allowed to waive fees, copays or give any other monetary compensation for coming to their rehab.
Some rehab facilities have gone so far as to bring out-of-state patients into treatment and help them apply for health insurance from an insurer that pays out high benefits. There are even cases of addiction centers applying for insurance for a patient who is unaware the center is doing so.
Despite these laws, drug rehab fraud is still occurring, and health insurance companies are spending additional time and resources sifting through legitimate and illegitimate claims.
How Insurance Fraud Is Affecting Availability of Treatment for Americans
The availability of addiction treatment for patients is limited. The problems:
- Insurance fraud
- The out-of-network designations with higher patient responsibility
- Increasing number of rehab centers falling into the out-of-network providers’ category
- The impact of the opioid crisis demanding more services than are available in some areas
These factors make it difficult for some to find a rehab center that accepts their insurance and that the patient can afford to go to.
Many who are insured are discovering that most rehab centers are becoming out-of-network providers under their plans. Because more costly rehabs are being excluded from the in-network list, patients are responsible to bear the lion’s share of the costs.
In an unregulated industry, the little man gets the brunt of the bill. For instance, many rehab facilities are refusing to admit patients with certain types of health insurance — like Health Net. Non-payment became an insurmountable hindrance to the aforementioned California and Arizona facilities, and they had to start refusing care to patients with Health Net insurance.
In this way, Americans are losing the freedom to go to the rehab of their choice.
Between soaring premiums, deductibles, copays and the out-of-network factor, patients are paying the price. Patients are not only paying the financial price, but also receiving a lower quality of mental health care.
Soaring Costs for Patients
The cost of substance abuse services covered under PPO plans surpasses all other types of medical treatment. Cancer, childbirth and even surgeries are less expensive than lengthy rehab stays.
Even when insurance policies require prior authorization of treatment — and when that treatment gets approved — the big business of health insurance stiffs the small business rehabs. It has been documented that insurance companies are doing audits of the claims, invoices and services of drug and alcohol abuse programs. But even when the audits come back clean, insurers often find a reason not to pay.
Patients receive huge bills after coming home from rehab. Quite a few people who’ve struggled with addiction have been ravaged by their disease and come to treatment broke and homeless. When the emotional, mental and physical work concludes and individuals regain their health, the financial aspect of life may take longer to recoup.
In other words, people who trusted their insurance to pay as agreed are left with a big bill they can’t pay.
In the end, the drug addiction and sober living homes suffer. Their patients can’t pay and their insurance won’t. The smaller facilities, like Rick and Drew’s, are forced out of business. Health insurance companies are bought and sold for billions of dollars; it is a highly profitable industry.
Having difficulty finding an in-network provider can be a roadblock for families seeking help for their loved one. Addiction devastates one’s whole life and whole being, and those dealing with addiction need the proper help to recover.
Insurance Premium Hikes for Policyholders
Health Net reports that due to widespread fraud at drug rehab centers in California and Arizona, they have lost tens of millions of dollars and have had to pass the costs on to individuals in the way of higher premiums.
If it hasn’t already affected your insurance premium, it may be coming. Attempting to balance the deficit caused by fraud, insurers are passing on the expense to employers and policyholders. Even if you get your health insurance through your job, your company will likely only take on a portion of the increase in cost and make you responsible for the rest.
It’s a dirty needle business.
Insurance companies have to be cautious that claims are not fraudulent to protect themselves. They certainly can’t turn a blind eye to blatant misuse or providers taking advantage of the system. But also, insurers must keep their agreements to pay and not penalize all rehab facilities and patients because of a few underhanded for-profit facilities.
Opioid Epidemic Killing People and Prices
At a time when, according to the Centers of Disease Control and Prevention (CDC), 115 people die every day from overdosing on opioids, we need addiction treatment centers more than ever. The CDC also reports opioid-related deaths are still continuing to rise. In a country divided on how to solve the opioid issue, one thing we all agree on is something needs to change. We need to help our people.
With the swelling opioid crisis, a continually growing number of beds and treatment centers are needed to meet the demand. The rehabilitation industry booms because the opioid epidemic booms. Along with more rehab centers springing up and sober living communities growing, the demand cannot be met fast enough.
However, the effects of drug rehab fraud on insurers and the trickle-down effect on patients trying to gain access to addiction treatment are concerning obstacles. Proper health care needs to be a priority, and the rising number of opioid-addicted citizens means an increasing burden on insurance companies to pay out mounting costs from more rehab patients.
Like Rick and Drew discovered, insurance is foremost a for-profit business and their bottom line is their top priority.
While it’s true that the substance abuse treatment field is littered with bad apples, that’s only half the story. The other half is people like Drew and Rick who lost everything because insurers failed to keep their agreements.
The Impact of Halted Payments
It’s now five years after Drew and Rick lost their life’s work. They only recently received the records and files their attorney requested for review. In viewing the documents, they were shocked to find so many late and unpaid claims, along with trumped-up excuses from health insurance companies.
A few months after their loss, Rick and Drew pulled themselves out of the situational depression engulfing them and they found work as therapists in a bigger rehab center. They spearheaded a new program at the center, and as a team still working together, they run the obsessive-compulsive process addiction department.
They don’t make the money they used to, but their hearts are full once again, doing the work they love and helping people recover. Rick is 81 years old and Drew is 79.
Rick, Drew and many other addiction treatment providers are still waiting for their money from insurance companies.
ECHO Recovery Is Helping
Because the opioid epidemic and rehab fraud are making it more difficult for some people to receive addiction treatment, ECHO Recovery is working harder than ever to help as many Americans as possible find affordable addiction treatment, housing, and help.
If you can empathize with the plight of those struggling with the debilitating disease of addition, we encourage you to be a champion of those who need it the most and join our grassroots movement.
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