While there is so much about the relationship between insurance and treatment (especially in behavioral health) that remains a mystery, we will do our best to help answer many of the common questions here.
Why are billable amounts so much higher than cash rates?
Reimbursement from insurance companies varies widely, and rates per level of care or service provided are usually based in some part in relation to a percentage of Medicaid or Medicare rates. One policy might pay out at 125% of Medicaid, while another one pays out at 200% or more. Either that or they have their set allowable amounts for a given area and level of care based on other available services in the area.
When you factor in the varied allowable amounts, varied deductibles and co-insurance amounts (which many programs fail to properly collect), the administrative time required to check benefits, submit preauthorization, file claims, conduct documentation and utilization reviews for reauthorizations, follow up on denials, resubmit claims, and other runaround (or pay a revenue cycle management company to do some or all of these), the cost of actually providing care goes up with insurance.
At the end of the day, providers are hoping that it all settles out to a fair rate for the treatment that they provide, so they have to bill for much more than they need in order to hopefully get that amount, including to cover for days that are denied after treatment has already been provided. When you pay directly, you can skip all of that and just get to the bottom line (or lower if they’re seeking to fill empty beds and allow an even greater discount).
How has length of care been affected by insurance?
It is very rare for insurance policies to pay for residential treatment for a full month, often even when including detox. More policies are forcing facilities to step patients down from detox in less than a week and then cover less than 21 days of inpatient or residential services. Treatment centers used to make up for this by keeping people in residential and then only billing for lower levels of care, but this is technically fraud (billing for something other than the service provided) and payers began charging those claims back to the providers during audits.
In order to extend care to 30 days or beyond, many providers started setting up nearby PHP and IOP programs to continue providing care. People looking for 60-90 or more days had no choice but to step down to lower levels of care when using insurance. However, with direct pay arrangements, consumers can find affordable extended residential treatment.
In what other ways does insurance modify the treatment experience?
There is a sick cat and mouse game of trying to prove patients are sick enough to qualify for medically necessary higher levels of care while also showing treatment progress. Sometimes facilities embellish severity, other times they add extra diagnoses to justify modalities, or give additional meds than what are necessary. Insurance companies WANT to see that people are being medicated in many cases, which can even ben contrary to their ultimate wellbeing by complicating their condition and symptoms. We have seen countless numbers of people go into treatment for relatively routine issues and come out worse due to as many as nine new prescriptions being given to them.
Making people appear sicker than they are is one of the perverse ways insurance has negatively impacted behavioral health treatment.
Can I still file a claim even if I pay cash for treatment?
Yes, sometimes you can do this still if you want to. Taking the insurance company out of the equation will simplify the process, and then a facility may provide you with a superbill for levels of care and dates of service that you can submit on your own, or they may even do a simple courtesy filing for you. People sometimes do this so that they get credit toward their deductibles and out of pocket maximums for the year. Sometimes they may even get some money back from their insurance. Keep in mind that the level of reimbursement or credit wouldn’t be the same as if they were jumping through all of the hoops and billing for higher amounts.
Other people would prefer not to have the treatment episode be a part of their medical record and prefer not to file claims at all. Plus, since you can get discounted rates, it is possible that it winds up being even less than our annual out of pocket maximum for your family, depending on your policy.
Are treatment facilities required to collect deductibles and co-insurance amounts?
Yes, treatment providers are required to collect these. Facilities that waive deductibles and coinsurance amounts, especially those who go as far as buying flights for people in hopes their policy will pay out enough over time, are actually committing fraud. These facilities are subject to claw backs from insurance companies, possible fines, and potentially even prosecution from state insurance commissioners.
The war between insurance companies and many providers has gotten so difficult that many facilities get creative on how to skirt this issue by attempting to collect the amounts owed but not enforcing it. Another niche industry has been created just around attempting to collect deductibles and co-insurance amounts in behavioral health and then provide necessary documentation showing that they “complied” if they ever get audited. As former facility owners and operators, we understand at times when this may be enticing, both from the patient’s perspective as well as the provider’s, but it is illegal when it is done routinely, according to federal statutes.