How We Get Paid
The fact that addiction treatment centers need to make money does not make them bad. In fact, some non-profit treatment organizations have massive revenue reserves in comparison to their for-profit counterparts, and vice versa. Despite corporate structure, some do little to help those with less ability to access treatment while others contribute significantly to their communities. So, it isn’t suggested that “for profit” or “non-profit” status be used as an indicator of the quality and viability of treatment; there are good and bad actors everywhere. Corporate structure aside, making money isn’t the issue, it isn’t even how organizations generate their revenue. What really matters are the practices and ethics of the organization around their source of payment and whether the organization is “truly” patient-centered; a claim made by all, though not all live up to the claim.
While ethics and patient-focus are the most important considerations when seeking addiction treatment options, payment sources are extremely relevant. Why? Because the types of payment sources accepted have a significant impact on the ability of patients and families to access treatment or continue treatment in order to obtain better outcomes. The types of payment sources accepted also tend to dictate the structure of organizations and programs that may decrease the overall quality of care. Often access and quality have an inverse relationship, yet, this doesn’t have to be the case. There are treatment programs that accomplish both; you just need to know what to look for and what to ask. This, “accomplishment” is very indicative of a “patient-first” program.
To better understand this idea, it is important to understand how addiction treatment centers get paid and how they shape their entire program around their accepted payment sources. Why? Because there are two types of organizations in this industry. There are alcohol and drug rehabs intent on making money with the byproduct of helping some individuals and there are alcohol and drug rehabs intent on helping people with the byproduct of making some money.
In a 2017 national survey of substance abuse treatment services, the Substance Abuse and Mental Health Services Administration (SAMHSA) found the following when facilities were asked whether they accepted specific types of payment or insurance for addiction treatment. The following data represents facilities that accepted specific types of payment sources:
Table 1.1 Payment Sources Accepted
Again, the accepted payment source is merely a component in a larger, patient-first, equation. Though merely an estimate, here is an alternative perspective of accepted payment sources relative to access and program quality. For many, the choice of alcohol and drug rehab is limited to the options highlighted in yellow (self-pay or private health insurance). The major discrepancies (highlighted in red) are more noticeable when other characteristics of each program are compared to accepted payment sources.
Table 1.2 Payment Source and Program Characteristics
This data is likely to vary by location. While the data appears to be straight forward organizational and program structure are intertwined with the payment source when considering patient outcomes and access. There is more to understanding payment sources than simply whether or not they are accepted by a facility. Let’s put this into the perspective of the average patient and family.
Self-Pay for Addiction Treatment
Obviously, any addiction treatment center can charge patients directly for their services and accept cash as a form of payment, though, the “self-pay” model has become commonly used to describe programs that only accept self-payments. As indicated in table 1.2, self-pay modeled programs provide patients and families with high-quality staff and often much more flexible treatment. Self-pay models are also able to provide services and modalities that may not be covered by insurance plans but still benefit the patient. The major issue with this model is access to care; both initially and over time. Many patients and families do not have the money required up front to join a self-pay program. Even when families can gather enough money to fund the first 3-6 months of treatment, continuing becomes more and more difficult. Data indicates that treatment duration is a significant factor in patient outcomes and the financial obligations can become major obstacles for those seeking treatment or those that desire to continue services. And then there are programs that are self-pay because they must be…
While continuing regulatory changes are redefining what it means to be an alcohol and drug rehab center, there have been many self-pay programs that were not licensed by their respective state or accredited by any professional organization. Some of these still exist but are becoming less common. Self-pay programs are everywhere, and that alone does not indicate a program you shouldn’t go to; as some are very high quality. Here is what you should consider when researching potential programs.
When they ask you to make a large deposit to cover months of treatment ask this question, “If I am discharged or decide to leave the program what happens to my deposit?”, and “Will I be billed for program time or services actually rendered?”. There are countless stories of patients losing between thousands of dollars because they were not ready or were discharged and lost time, or the “program”, they had paid for. Why not refund the money or allow the patient to come back and use what they had already paid for? Patient-centered treatment centers may require a deposit, but they will only charge you for services provided. What is not used should go back to the patient. What other industry takes your money and keeps it whether services were rendered, or products were received? I can’t think of any… well, maybe insurance but that is a story for another day. Ask these questions when seeking treatment, the answers will enlighten you to the type of organization you are getting involved with.
With the continuing conversations around the opioid crisis and addiction in general, regulatory changes have driven the market away from self-pay only centers. After the passing of the Affordable Care Act, and what seems to be a general desire among patients to utilize their insurance benefits, more and more programs are beginning to accept insurance as a payment source. Of course, there are many organizations that still cater to the self-pay patient and often market their program around services surrounded by luxury and comfort. There is little evidence to suggest that such amenities have any significant impact on patient outcomes, but who doesn’t want a massage after their yoga session. Now let’s look at the other common type of payment source and considerations for patients and families seeking addiction treatment.
Insurance and Coverage for Addiction Treatment
Of course, everyone that has health insurance would like to find addiction treatment that is covered. Before we even consider program characteristics there are significant variations in what insurance plans cover. Each insurance plan is differentiated by what they cover and what responsibilities fall on the member or patient. These variations are worthy of an article on their own. For the purpose of this article let’s just consider the average insurance plan which has coverage for behavioral health, mental health, substance abuse treatment, or whatever combination the theoretical plan has in covering services for an alcohol and drug rehab program.
Right off the top, understand that there is a difference between treatment centers that “accept” insurance plans and those that are “contracted” with insurance plans. Those that are “contracted” are in-network with your insurance plan and will expose patients to the least amount of costs. This means that rates are negotiated between the facility and insurance payers. Obviously, insurance companies want to pay the least amount of money for services and have a lot of power in negotiations, so the rates are usually lower than self-pay or out-of-network rates and greatly benefit patients. The trade-off for addiction treatment programs is more patients because people want more affordable treatment and the ability to utilize their insurance benefits. The downfall for the treatment program is less revenue per patient for the treatment program, not necessarily overall, but the cost/revenue ratio per patient is much closer than other models.
The out-of-network providers will tell you that they accept all or specific insurance plans. Often times there marketing revolves around the word “accepts” and doesn’t provide more information regarding whether or not they are in-network for addiction treatment. This subtlety is often overlooked by patients and families seeking alcohol and drug addiction treatment options until they are in the midst of a financial discussion at the facility. Out-of-network addiction treatment programs bill insurance the same as an in-network program but they do not have contracted rates with insurance companies. The out-of-network rates that are allowed by the insurance companies can be as much as 200-300% more, and even higher in some cases, than those of their in-network counterparts. When these higher rates are not paid by the insurance provider and are applied to patient’s deductibles and co-insurance (co-pay) they can add up to as much, and sometimes more, than self-pay treatment programs. What some providers do to counter this issue is wave the patient’s responsibility in order to remove discontentment among patients and families and collect the large amounts of revenue paid later when the deductible and co-insurance are met. This practice is at times illegal and unethical, so where else in their program are they implementing questionable practices? This doesn’t mean all out-of-network programs are bad actors. There are great programs that are out-of-network. Patients and families should use caution if they begin seeing rates billed to insurance in excess of 500% of what is typically allowed by in-network plans or promises to take only what the insurance plan pays. The program can bill any amount to the insurance company and may bill lower rates that do not expose patients to extremely high bills. There are times that insurance plans will not contract with a program for one reason or another. Even the best programs have difficulty getting contracts but these programs are conscious of their rates will hold patients responsible for their portion, which are based on contracted rates.
In-network or out-of-network status aside, there is another major factor to consider when researching alcohol and drug rehab programs that accept private insurance. As stated above, and shown in Table 1.2, the trade-off for many patients who can utilize their insurance benefits to access treatment are characteristics of the program and logistical considerations. We previously stated that lower insurance rates decrease the gap between cost and revenue for each patient. In efforts to either reduce the cost or increase the revenue, some major changes may occur in many of these programs.
One change may be that certain levels of care may be limited, or patients may be pushed into levels of care that are not clinically necessary. We discuss this in depth in another article, care levels in addiction treatment. In combination with care-level aspects, organizations may utilize direct-service providers that are not independently licensed. This simply means that instead of services provided by a Master’s or Doctorate level therapist holding a professional license, they may be delivered by lesser qualified staff that would not be professionally allowed to deliver the same services outside the confines of the program. This is often why care-levels are limited to Inpatient, Residential, Partial Hospitalization and/or Intensive Outpatient because billing for these services is done under the facility’s information rather than the individual providers. The type of providers delivering services has two implications. First, that care-levels are limited. This also limits coverage by insurance which limits a patient’s ability to continue in treatment outside of a few months. Secondly, it limits the array of issues that the program can address. Rather than evaluating the whole person and their needs these programs are limited to substance use alone. For the individual to address many facets of their life they may have to seek outside help in conjunction with the treatment program.
In other efforts to keep costs down some programs will rely heavily on group modalities to address patient needs, limiting the number of individualized services they provide. This model, combined with the care-level restrictions, influence when services are provided and results in services that are less apt to work with patient’s schedules, leaving patients with the risks of choosing one obligation over another rather than treatment integrating with their life. While the acceptance of private insurance may increase access to a program, or increase the ability to continue in treatment, it may restrict the quality of care and type of care provided.
There are Programs that Stand Alone.
Based on evidence-based practices, research on treatment outcome, and the input from thousands of patients and families seeking addiction treatment, it can be asserted that the best program available would do the following. The program would provide medical and therapeutic services conjoined. The program would focus on a systems approach that addresses needs beyond substance use alone. The program would facilitate long-term care at appropriate care-levels. The insurance would employ professionally licensed providers. The program would contract with private insurance and other third-party payers to increase access to care and increase the ability for patients to continue with needed services.
There are a few programs that have managed to combine the best of both models and ensure that these practices exist in their programs. These programs are in-network with insurance plans and still provide “self-pay” model treatment. Basically, these programs have navigated obstacles in a way that increases access to treatment, ensures patients can continue treatment, ensures quality services are provided by professionally licensed staff, ensures that services work with patient’s schedules, and ensures that the program comprehensively addresses patients’ needs.
At the expense of better margins and profit, these programs have put patients first and developed programs that not only have excellent outcomes but also excellent organizational practices. All you need to do is ask the right questions and you can ensure that you or your loved one is in the best place possible.
So What Questions Should You Ask Providers When Searching for Treatment?
- How do you bill for your program? Is it for the program or each service rendered?
- What happens to my deposit or money paid if I leave the program or get discharged?
- Are direct-service providers professionally licensed?
- If they offer to provide paperwork for reimbursement: What information is provided? Are the providers rendering services eligible to receive reimbursement from insurance payers (do they have an NPI number and professional license)?
If insurance is accepted:
- Are you in-network with my plan?
- If out-of-network: Do you have a rate sheet I may review?
- Are the staff individually credentialled to bill insurance?
- Are you able to offer long-term services beyond Inpatient, Residential, PHP, and IOP that are covered by my plan?
- When are services provided?
- How many patients are in each group?
- Do you provide individual and family services? How often are these available?
- How do you determine the care level for your patients?