Understanding Health Insurance for Addiction Treatment
Paying for addiction treatment can be both expensive and confusing for consumers. Unlike typical medical issues, behavioral health issues seem to be looked at differently by insurance companies. For years, health insurance companies attempted to hold behavioral health to an impossible standard like other medical issues or often did their best to not pay for services.
Health insurance companies often use the term “medical necessity” to determine if a patient or client meets a certain level of care, as well as use the same term to deny coverage if internally they believe that the patient or client no longer meets medical necessity. However, unlike many other medical conditions, behavioral health issues such as substance use disorder and mental health disorders do not naturally fall into a category of “medical necessity.”
Parity through the Mental Health Parity and Addiction Equity Act of 2008 (MHPARA) was a federal law that was passed that generally prevents health insurance plans and health insurance companies from imposing less favorable benefit limitations on addiction and mental health benefits than on other medical or surgical benefits. This was created due to many payers or health insurance companies purposefully not offering appropriate benefits coverage to their insured even though those individuals did have substance use disorder and mental health benefits. Cases like the landmark ruling in Wit v. United Behavioral Health are good examples of this and how parity is necessary to make sure those in need of services receive them.
However, there are many questions as it related to insurance coverage for addiction, substance use disorder, and mental health issues. Many consumers don’t understand insurance as a whole, much less how it related to covering services for treatment, rehab, or other addiction treatment or mental health services. So, here is at least some basic information that will be helpful:
What does “in-network” mean?
Certain providers (or rehabs and treatment centers) are in network with certain insurance plans. In network refers to providers or healthcare facilities that are part of a health plan’s (an insurance company’s) network of providers with which that health insurance company has negotiated a rate. This means that the healthcare provider or facility negotiated a rate with the insurance company it is in network with, so that both the provider and insurance company have an agreed upon rate for services provided. So, the treatment center, rehab, or provider has a negotiated contract rate that they have accepted from the insurance company. Sometimes, being in network also has a negotiated allowance for time, meaning that some facilities have an agreed upon time that if a patient or client meets criteria, they will be ensured to get the full number of days of treatment. Meaning, for example, if a rehab is a 28-day inpatient rehab, SOME rehabs in-network may get that full amount of 28-days of treatment for clients with a specific type of insurance. However, this is not always the case. Many treatment centers that are in network still must fight for their patients to get the full amount of time. As an example, there are many cases of 28-day treatment centers and rehabs being in network with insurances, but that still discharge patients after 2 weeks or so because the insurance company denied further days in treatment. Understand that being in-network sometimes can equate to quality of care, but not always. Also, just because a treatment center is in network with certain insurance companies does not always mean that the insurance companies will cover the full amount of treatment of a rehab’s program. In network simply means that an insurance company and a treatment provider have a contractually agreed upon rate for services. In network typically is a cheaper option for the consumer, since outside of potential deductibles and copays, there is no additional cost to the patient or their families. For in-network insurance plans, consumers are still responsible to pay their deductible, copays, and any other out-of-pocket costs associated with their insurance plan. Some examples of health insurance plans that only cover in-network options are HMOs or EPOs.
What does “out of network” mean?
If a provider (a treatment center or a drug rehab) is out of network, it means that the facility providing care does not have a contract with your health insurance company. This means that the health insurance company and the treatment provider do not have a contractually agreed upon rate. This means that a provider can typically charge more for their services and will get reimbursed by the insurance companies differently than in-network rates (sometimes more and sometimes less.) Many providers choose to be out of network based on the low reimbursement rates that many health insurance companies have had for behavioral health services (the idea that truly comprehensive treatment requires skilled psychiatrists, nurses, doctorate and master’s level therapists, and that traditional health insurance reimbursement was far less than what it would take to provide adequate treatment for addiction and co-occurring disorders.) However, because being out of network allows providers to charge more, this platform was one of the reasons that many unscrupulous providers stayed out-of-network during the time when Obamacare was implemented- it allowed them to charge more and make more until many insurance companies caught on (and some are still catching on and catching up.) Out-of-network insurance coverage often are PPO plans, and they allow the patient to receive care outside the network of their insurance company. Out-of-network options give consumers seeking treatment more choices, but it also allows for higher costs, as out-of-network providers can charge patients the difference in their costs versus what the insurance company reimburses. Going out of network sometimes can offer greater choice and flexibility, and allow patients to receive higher quality services, but that is not always the case. While many good rehabs are out-of-network based on their clinical care, many of the bad actors in the addiction treatment space are out-of-network for the flexibility of simply charging consumers more. Just like being in-network can be an understanding of quality, but isn’t always, the same is true of out-of-network providers. Just like being in-network, consumers that choose a provider out-of-network are responsible for paying their copays and deductibles, as well as any other out-of-pocket costs associated with their health insurance plan.
What is a deductible?
A deductible is an amount you pay for covered healthcare services before your insurance plan starts to pay. For example, if you have a $2500 deductible, you are responsible for paying the first $2500 of medical and health services. After you pay that $2500 deductible, your insurance will begin to pay for services, although you may still have and be responsible for a copayment or coinsurance. Legally, you are responsible for paying whatever your deductible is, and although many patients and families are told that rehabs or addiction treatment providers will waive their deductible, this is illegal and often a red flag as it relates to the ethical practices of a rehab or treatment facility.
What is a copay?
Some health insurance plans include copays. A copay (or copayment) is a set fee you would pay for a doctor visit, provider visit, or prescription. Copays are typically due at time of service, meaning you would pay your copay at your appointment, treatment visit, or when you pick up your prescription at the pharmacy. You may have a copay before you’re finished paying your deductible or you may also have a copay after you pay your deductible. After health insurance plan is different, so if you have a copay or when it is due and for what services would be based on your specific health insurance coverage and your specific plan.
What does “parity” mean?
The term parity has become more ingrained in the public since Congress passed the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) in 2008. This act was to ensure equal coverage for treatment for mental illness and addiction. In November 2013, the federal government released rules to implement the law. Before this time, treatment for mental health and addiction was covered at far lower levels in health insurance policies than traditional medical care or physical illness. Parity is meant to ensure that substance use disorder and mental health issues are covered equally and fairly as any other medical condition or health issue. Unfortunately, while sometimes this occurs, there are still major violations that take place by health insurance companies related to parity. There are certain health insurance companies that must follow federal parity guidelines. These are:
- Group health plans for employers with 51 or more employees
- Most group health plans for employers with 50 or fewer employees unless they have been “grandfathered” in, meaning those plans were created before the Parity Act
- The Federal Employees Health Benefits Program
- Medicaid Managed Care Plans (MCOs)
- State Children’s Health Insurance Programs (S-CHIP)
- Some state and local government health plans
- Any health insurance plans purchased through the Health Insurance Marketplaces
- Most individual and group health insurance plans purchased outside the Health Insurance Marketplaces
However, there are some health insurance plans that do not have to follow federal parity guidelines. These include:
- Medicaid fee-for-service plans
- “Grandfathered in” individual and group health insurance plans that were created and purchased prior to March 23, 2010
- Health insurance plans who received an exemption based on an increase of costs related to parity.
Health insurance can be a confusing issue for many people, especially relating to how insurance covers treatment for addiction, substance use disorder, and mental health conditions. Many consumers don’t truly understand their health insurance coverage in general, and due to issues of parity, it can be very difficult to understand related to addiction treatment. However, consumers should do all they can to understand their health insurance coverage. And treatment centers and addiction treatment providers also need to do their part to make sure they are offering clarity as it relates to how and why certain health insurances cover their services. People seeking treatment should be able to ask about their coverage, and ethically, addiction treatment providers should make sure that the way they are explaining coverage is clear and concise. Individuals and families suffering from addiction are in enough crisis as is, and they do not need to have added stress and fear related to the cost of addiction treatment services.
If you or someone you know needs help for addiction or co-occurring disorder issues, please give us a call. Maryland Addiction Recovery Center offers the most comprehensive dual diagnosis addiction treatment in the Mid-Atlantic area. If we aren’t the best fit for you or your loved one, we will take the necessary time to work with you to find a treatment center or provider that better fits your needs. Please give us a call at (410) 773-0500 or email our team at email@example.com. For more information on all of our drug addiction, alcohol addiction and co-occurring disorder services and recovery resources, please visit our web site at marylandaddictionrecovery.com.
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