Although waiving of patient financial responsibility—deductibles, copays and coinsurance—is a longstanding compliance issue across the healthcare industry, the practice has received unprecedented attention in behavioral health and addiction treatment of late. The issue surfaced as many health insurers were obligated by the minimum “essential benefit” requirements of the Affordable Care Act to include coverage for substance abuse treatment in their plans.
Substance use disorder patients began to present insurance cards to treatment centers with deductibles that needed to be paid before their health insurance plans would pay claims, and in many cases, shares of coinsurance would fall under the common 80/20 ratio of plan/patient financial responsibility. Meanwhile, addiction treatment centers enjoying the new flow of insurance reimbursement have been unsure of how hard they are required to work to collect these amounts from patients.
While these issues are present in hospitals, doctors’ offices, and throughout healthcare, they have presented unique challenges in addiction treatment.
Addiction affects many younger people who are otherwise healthy and haven’t needed health insurance coverage in the past, and who often lack the wherewithal to pay deductibles and coinsurance. In addition, addiction is a disease that all too often “unravels” lives: Those with substance use disorder tend to lose their jobs, housing and other stabilizing factors. Even when families offer financial support, after the pattern of multiple stints in treatment programs, resources are scarce to cover patient financial responsibility.
On the other side of the table, addiction treatment providers in recent years have competed aggressively with each other for patients by waiving or heavily discounting patient financial responsibility. Healthcare marketers recruit patients and their families with promises that they won’t have out-of-pocket costs. Radio and internet ads advertise that programs accept insurance without additional charges as a selling point. The healthy reimbursement levels hold the prospect of sufficiently attractive revenues to make it conceivable for programs to waive or discount copays and coinsurance. Some organizations might find themselves wondering how to compete with programs that are waiving these amounts.
In this environment, it is of little surprise that failure to collect deductibles and coinsurance has become a problem.
Health insurers have begun to zero in on waivers of patient responsibility as a form of fraud and abuse. In recent months, insurers including Health Net, Cigna, and others have begun widespread auditing to determine if addiction treatment programs have violated the law or the terms of health plans contracts in their billing practices. They argue that not collecting deductibles amounts is an inducement to patients, a misrepresentation of the true program charges or interference with the plan-patient relationship that leads to overutilization.
In many cases, insurers have overreached, violating the rights of patients and treatment programs by ignoring legitimate and well-established ways that financial hardship and discounts are handled in other parts of the healthcare industry. In some cases, insurers have begun to do unprecedented things like force treatment programs to submit financial records proving they verified and collected the deductibles as a condition of authorizing care.
In this environment, it’s little wonder that providers, patients, insurers and even regulators are confused. Are addiction treatment programs that bend over backwards to help patients in financial distress doing the right thing or violating the law? Is it okay to give scholarships? How big can discounts be? Are insurance companies that are auditing providers appropriately policing against abuse or overreaching in an effort to prevent access to treatment for people who need help? What are the remedies for aggrieved program operators, families and health plans?
These and other big questions are being hotly debated with few answers available, given the newness of the circumstances of even having insurance reimbursement available for treating substance use disorders. In coming years, the addiction treatment industry, health plans and regulators will need to resolve and establish standards on patient financial responsibility. In the interim, the issues will be contested in audits and investigations and before the courts and regulatory agencies.
Harry Nelson is the managing partner of Nelson Hardiman, a firm that works with behavioral care providers.
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