Do a reality check when navigating substance abuse treatment coverage under ACA | Behavioral Healthcare Executive Skip to content Skip to navigation

Do a reality check when navigating substance abuse treatment coverage under ACA

June 12, 2014
by Kelly Hagemann
| Reprints
Kelly Hagemann

Although there is no shortage of excitement surrounding the changes the Affordable Care Act (ACA) brings to addiction treatment, there are some problematic aspects that will become more evident over time. Private insurance coverage for substance abuse treatment has been substantially improved.  For government plans, however, the existence of coverage is not the same thing as a guarantee that providers will be willing to offer treatment.

Low reimbursement rates have the potential to undermine the ACA’s goal of ensuring quality care for more Americans. Not all states will accept expanded Medicaid funds–a political reality that is completely outside providers’ control.  Also, even in the 26 states that opted for the Medicaid expansion, the discretionary nature of a state’s distribution of Medicaid funds can lead to diverse forms of treatment and corresponding reimbursement rates among different states.

Volume-based business

The new system covers more services for more people, but providers have to weigh the benefits of a volume-based business. Some may choose not to accept patients with certain plans, because their personal treatment philosophy does not comport with a high-volume, low-margin business model. Further, Medicare and Medicaid reimbursements for most services are consistently low. As a result, even though providers may enjoy a substantial increase in patients seeking substance abuse treatment, those providers may not necessarily see a corresponding increase in their overall earnings.

This trend could undermine the ACA’s efforts to make substance abuse treatment widely available; as providers in certain areas determine the government reimbursement rates to be too low and stop seeing Medicare or Medicaid patients, other providers in the area who continue to see those patients will likely become overwhelmed with the increased demand.  This in turn would likely lead to more providers deciding to reject government-based reimbursement rates.

The remaining few providers might take on a disproportionate share of these patients, resulting in larger caseloads without a corresponding increase in payments.  Unless–and until–there is evidence that these patients have reduced access to care, the government might not step in to provide relief. 

A provider, then, has two choices: either accept low reimbursement rates and continue seeing rising volumes of patients, or turn away patients with life-threatening addictions.

Providers spread thinly

Despite the ACA’s victories in the areas of increased coverage and expansion of the applicability of parity regulations, patients will only benefit if providers are willing, and able, to treat them.  Low reimbursement rates mean that limited provider resources are spread more thinly across a greater patient base.  Not all providers are willing to shift the nature of their practices to account for the greater need when that need is not paired with some incentive for the provider. 

This is not a moral or ethical dilemma, it is an economic reality. Even the most caring providers have to stay in business; closing their doors hurts all patients, not just government plan beneficiaries. Like providers of medical and surgical services, many substance abuse treatment providers already refuse to treat Medicare and Medicaid patients because they cannot afford to accept reimbursements that are a fraction of what private insurance or cash patients pay. Smaller facilities and providers, or those in less populous communities, may not be able to absorb the new demand because they simply cannot afford to do so.

Further, although all state Medicaid programs provide some mental health services, the specific types of treatment covered and the prices at which they are covered are left primarily to the state’s discretion.  Predominant courses of treatment may thus vary significantly from one state to another, as each state decides what types of treatment it wants to encourage by offering payments only for those treatments. Meanwhile, providers have to modify and bill their services to ensure they maximize their reimbursements, or in some cases, to ensure they have a right to any reimbursement from the state.  Rather than basing treatment plans on experience or research, facilities and providers that depend on state reimbursements must instead follow the course of treatment the state will reimburse. 

The waiting game

There is no doubt the ACA makes a sweeping statement that patients are entitled to mental health and substance abuse treatment without arbitrary or discriminatory limitations. However, rights accorded to patients are only as good as the ability to enjoy those rights. Despite the much celebrated and anticipated surge of new patients, providers and payers nevertheless face serious reimbursement hurdles, as well as challenges regarding new models of care.  It’s too early to tell how this will play out, and so much depends on how each state approaches funding disbursements, but the harsh reality is that it might not be time to celebrate just yet.


Substantial Practical and Moral Gains for Substance Abuse Treatment   

·         Under MHPAEA, financial requirements and treatment limitations for mental health cannot be more restrictive than the predominant financial requirements and treatment limitations that are applied to substantially all medical or surgical benefits.

·         MHPAEA also prohibits separate treatment limitations, such as a maximum number of visits per year or special pre-authorization requirements, which apply only to mental health or substance abuse treatment.