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Making Insurance Relationships Work

June 16, 2008
by Mark Willison
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A California center finds it can maintain the integrity of its mission under changing payment realities

My reflections in this article are not meant to criticize or pass judgment on any insurance company or health maintenance organization (HMO). They merely offer my perspective on the current insurance issues within the addiction treatment field and how we at Beacon House in California have managed to maneuver through the maze of changing policies and procedures presented to us by third-party payers—and why we continue to do so.

Simply put, we work through the maze of managed care by offering a number of different programs that our community needs and that insurance companies are willing to cover. In doing so, we purposefully opened the door for cooperation.

In today's world of addiction treatment, insurance companies have varied limits on what type of treatment will be covered within each client's plan. Typically, clients will see higher copayments for treatment of substance use disorders than for other types of medical care, such as the care one would receive for a broken bone. Often there will be a limit on how many times a person can be treated for addiction-related issues, which would not be the case for other medical ailments. An insurance company's managed care division or a subsidiary controls this authorization process and the delivery of health services to its members.

Considering all of these stipulations, the onus falls on treatment centers to “manage” an insured client's care. At times, depending on one's coverage, admittance to treatment requires only a phone call verifying coverage. Yet more often than not, as part of the initial authorization process, a patient's illness must first meet the test of an insurance company's medical necessity criteria. These criteria often are based on the severity of the disease (i.e., the amount of substance use, length of time using, the individual's current mental and emotional state, psychosocial influences, and family support).

Follow-up authorizations are frequently required in defense of continued treatment for the patient. Quite often these authorizations reach the level of a “doc-to-doc” review, involving physicians who represent the insurance company and those representing the treatment center.

To complicate matters, this practice varies from insurance company to insurance company, policy to policy, patient to patient, and case manager to case manager. Over the years, many treatment centers have found this situation too time-consuming, tedious, and costly to endure. Rather than abide by managed care's requirements, many centers have chosen not to accept insurance at all, leaving clients with no choice but to pay out of pocket for services. To their credit, many of these treatment centers have succeeded in developing business plans that help people in the recovery process and help the organization maintain a healthy bottom line.

Yet with the cost of a customary residential treatment program today ranging anywhere from $6,000 to $50,000 or more, paying cash is out of the question for many, including those who have been paying high insurance premiums and have naïvely expected coverage to be there when they need it.

History

Beacon houseOur story at Beacon House is different. To understand, we have to go back more than 50 years to the organization's origins.

At its inception in 1957, Beacon House was a traditional social model program offering residential treatment only. If an adult was interested in getting sober, he/she could show up at the front door and ask if a bed was available. Fees were based on one's ability to pay, and in exchange for the stay the “guest” would be asked to help maintain the home and gardens. (At a recent Beacon House reunion, a 1959 graduate reported paying $5 a day for a 30-day stay.) Virtually all residents were male, and only a few stayed 30 days or more.

In the late 1960s, Beacon House began offering a more formalized program that included both individual and group counseling, often facilitated by professional counselors. These changes were to some degree a response to Beacon House seeking and receiving licensure from the California Department of Alcohol and Drug Programs. More women were being treated too, yet the treatment philosophy remained a social model into the early 1990s, albeit with more professionalized programs and staff and, as the need presented itself, higher fees.

Until the mid-1980s, insurance companies were reimbursing Beacon House and other treatment centers for services at rates reasonable enough for a program to remain open. But the world was beginning to change. By 1986, “managed health care” had become a feared buzzword, and soon thereafter the practice became prevalent throughout the industry. Obtaining authorization from insurance companies to treat those seeking help for alcohol and drug dependency became increasingly difficult, and consequently it became more challenging for Beacon House to remain open. To the credit of a very dedicated board and staff, it did.

By the summer of 1993, however, Beacon House was at a crossroads. In its attempt to continue providing services while battling managed care, it found itself strapped with accounts receivable in excess of $300,000 on an annual budget of $450,000. The board of directors was faced with borrowing money to make an August payroll. It wasn't until then, at Beacon House's breaking point, that a re-evaluation of its mission, goals, and purpose in the community occurred.

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