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Tuesday, October 7, 2014
Insurers Balk at Funding Addiction Treatment
Taxpayers fund the lion's share of addiction treatment—79.2%, or $22.2 billion—but private insurers avoid helping with the tab, often using denial tactics.
Taxpayers fund the lion's share of addiction treatment – 79.2%, or $22.2 billion – through government-sponsored insurance programs and grants from the Substance Abuse and Mental Health Services Administration to subsidize uninsured patients.
In other healthcare fields, the situation is reversed, with private insurers picking up more than half of healthcare costs. But when it comes to covering addiction treatment, they balk, either failing to offer any addiction-related coverage or rejecting insurance claims.
The Affordable Care Act promised to close the coverage gap for addiction and mental health claims in several ways: by mandating the creation of medical homes that integrate behavioral health into their delivery system, by expanding overall funding for care and by increasing the variety of services available to patients. The ACA also included provisions requiring more plans to comply with the Mental Health Parity and Addiction Act requiring group health insurers to extend mental health benefits that are no more restrictive than those they offer for other care.
But whether addiction treatment providers will see true parity in coverage for their services remains to be seen.
“There's a potential over time for seismic change in the way we are funded due to the ACA,” says Ed Higgins, CEO of JSAS HealthCare, Inc., an outpatient addiction services provider in New Jersey. Higgins, a 40-year-veteran in the addiction treatment industry, calls himself a “born optimist” and says his organization is just beginning to hear from insurance providers about potential changes in coverage.
Right now, taxpayers and patients themselves are much more likely to foot the bill than private insurers – even those whose policies say they cover addiction care.
Medicaid picking up the tab – but for how much longer?
In 2010, private payers were responsible for 55.6% of medical expenditures in the U.S., but only 20.8% of addiction treatment spending, according to CASA Columbia's 2012 report, Addiction Medicine: Closing the Gap Between Science and Practice. That is, private insurers covered $5.8 billion of the $28 billion total spent on addiction treatment that year. The majority of people who went to rehab in 2010 – 65% – reported using Medicaid or other, non-Medicare public funds such as military insurance, and 27% used Medicare. (Patients could report more than one source of funding, and 23% said they'd received financial help from family members.)
That's despite the fact that most rehab facilities are privately run: in Inside Rehab (2013), journalist Anne Fletcher notes that as of 2004, about 58% of rehabs were organized as private nonprofit corporations, with just under a third operating as for-profit facilities. The remaining 12% were public programs run by local, state, federal or tribal governments.
And while Medicaid foots the bill for most addiction treatment, accessing care can be tricky for patients who have it. Some private rehab facilities won't take clients with public insurance. Those that do, often place a cap on the number they do take.
“In New Jersey, we have waiting lists (for Medicaid patients) because if you take too many Medicaid patients, it kills your budget,” Higgins says. As in other medical settings, patients with private insurance or those who pay out-of-pocket have to subsidize to cover the gap left by low Medicaid reimbursement rates.
Another source of public funds for addiction treatment: substance abuse and mental health block grants administered by the Substance Abuse and Mental Health Services Administration, which fund priority treatment for uninsured people, as well as prevention and services not covered by public insurance. Grant funding is noncompetitive and governments have some flexibility in determining how they'll spend them – which means they can be subject to political whim.
That Medicaid shoulders such a large portion of all reimbursements for addiction treatment, and that 25 states chose to opt out of the ACA's mandate to expand Medicaid funding, raises a couple of significant questions about how funding will trend in the coming years. (One question: is the number of uninsured in those states expected to increase?) According to a study published in Health Affairs, opt-out states are likely to see an 18.1% decrease in the number of uninsured people, versus 48.9% in states opting in. It also looked at likely health outcomes among low-income people and projected worse health outcomes and higher likelihood of medical financial catastrophe, as well as increased mortality. The study didn't look specifically at outcomes relating to drug abuse – though among the handful of metrics it considered were catastrophic medical costs and diagnoses of depression, both of which frequently accompany substance abuse. It also notes that the ACA cut funding for safety-net hospitals, reducing the resources available to those who will remain uninsured in the coming years.
Given that Medicaid pays such a high percentage of reimbursements for funding, it will be interesting to see who picks up the tab for low-income people in treatment over the next few years. Will opt-out states rely more heavily on SAMHSA funds for care – or will rehabs be able to count on private insurers to pick up the slack?
Another factor that should move treatment-funding numbers in the next few years: the push to legalize marijuana. According to numbers released by SAMHSA, in 2007 37.5% of all rehab patients were referred by the court system due to a drug- or alcohol-related offense. Fifty-seven percent of rehab patients listing marijuana as their drug of choice were referred by the court system – accounting for a sizeable chunk of rehabs' revenues. With two states having legalized pot, two more kicking around legalization initiatives and others mulling medical marijuana, revenues from court-referred patients should trend downward, though it's hard to say now how much. So far, the state of Colorado doesn't have data on the number of court-referred patients in rehab for marijuana use post-legalization; public health officials in Washington didn't respond to The Fix's inquiry.
"I can't tell you how many people have died in this process"
The CASA report succinctly pinpoints the reason Medicaid pays so much more for substance abuse treatment, despite the fact that when it comes to health care in general, the situation is reversed: “The concentration of spending for addiction treatment in public programs suggests that insurance across the board does not adequately cover costs of intervention and treatment, resulting in costly health and social consequences that stem from untreated addiction and that fall disproportionately to government programs. National data indicates that individuals with private insurance are three to six times less likely than those with public insurance to receive specialty addiction treatment.”
Anthony Rizzuto, provider relations representative for the Seafield Center, an inpatient/outpatient drug treatment provider in Westhampton Beach, New York, paints a bleak picture.
When a family comes in to have one member assessed for treatment, he says, he does a bio-psychosocial assessment to determine the best course of treatment. He'll make a recommendation – in the case where a patient is withdrawing from heroin use, he typically recommends titrating methadone and a few days of inpatient treatment – and calls the family's insurance provider.
Often, private insurers will reject the claim, saying that since withdrawal from heroin isn't lethal, suboxone and outpatient treatment should be adequate.
It's discriminatory, he says: “If you break your arm, that's not lethal either. But not to treat it would be inhumane.”
Once the claim is rejected, families will try a number of things. If they have the means, they'll pay for treatment out-of-pocket. Or they'll call friends for ideas, sometimes dropping a child from insurance so they can become eligible for Medicaid and therefore be covered.
“People are calling the police on their kids to get a protective order, so then they get 28 days of rehab,” Rizzuto says. “People are actually giving alcohol or Xanax so it will show up on the UA. Those withdrawals are lethal, so they can get treatment.”
On the flip side, says Mark Parrino, director of the American Association for the Treatment of Opioid Dependence, some insurance companies may reject a claim based on a failed urinalysis. Or commercial insurers will cover methadone for a pregnant woman in jail, but not for a man – a discrepancy he says is motivated more by liability fears than care standards.
“They say, 'We'll deny claims if there's a positive toxicology report because it means the treatment is not successful.' How do we know it's not successful? Is that the only yardstick of success? Is the patient not dying, a yardstick of success?”
The slippery definition of "medical necessity"
Critical-care nurse, Nora Milligan, nearly lost her adult son to two heroin overdoses, both reversed by emergency medical technicians. He detoxed painfully in jail – and only after his second arrest was he approved to get into a long-term treatment program, she says, adding he's been clean and sober and living in sober housing for several months. Her insurance company, Fidelis, has yet to pay for any part of his care.
“Each insurance company can make up their own medical necessity, and they don't have to tell you what it is,” Milligan told the New York State Senate Task Force on Heroin and Opiate Addiction.
Milligan worked in concert with Rizzuto to urge the passage of S4623, which would require group insurance plans to cover drug and alcohol treatment recommended by a certified health professional – and, critically, requires a standard definition of “medical necessity” to prevent discrepancies like those that left her son in a holding pattern for years.
That passed in June, as part of a bipartisan deal that would also crack down on illegal sales of pharmaceuticals. (The state will now be allowed to monitor the phone calls of physicians suspected of selling pharmaceuticals illegally, and penalties will be tougher for doctors and pharmacists who do.)
Milligan wants addiction taken out of the criminal justice system and understood as a medical condition.
“NY has really taken the lead. It's finally getting it,” Milligan says.
Christen McCurdy is a freelance writer in Portland, Oregon. Her work has appeared in Pacific Standard, The Oregonian, Bitch, The Lund Report and a host of small newspapers and trades.