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Why Insurance Companies Fall Short When Paying for Addiction Treatment

April 23, 2015
by Roland Reeves, MD
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Drug and alcohol addiction alters the complex structure and function of the brain. This is a simple statement, but it explains in a nutshell why most addiction treatment professionals view addiction not as a moral failing or an indication of weakness or lack of willpower, but as a chronic disease. Most also agree that like other chronic diseases such as asthma or diabetes, addiction is treatable.

The National Center on Addiction and Substance Abuse at Columbia University (CASAColumbia) estimates that more than one in seven Americans over age 12 have an addiction to alcohol, drugs or nicotine. Yet, although millions could benefit, insurance companies continue to balk when it comes to paying for drug and alcohol addiction treatment, including prescription drug addiction.

Although the Affordable Care Act has expanded coverage for mental health and addiction, including Florida drug rehab centers. However, inability to pay for addiction treatment continues to serve as a barrier to effective, adequate treatment. Unfortunately, many people find themselves in the unfortunate situation of fighting not only an addiction, but their insurance companies.

Too often, it isn’t insurance companies that fund addiction treatment, but taxpayers, through various government-sponsored programs such as Medicare or Medicaid. Similarly, if addiction isn’t treated, taxpayers foot the bill later, paying millions of dollars to the justice system, or for emergency room visits that can often be prevented by treating drug and alcohol addiction early. The National Institute for Drug Abuse (NIDA) estimates that every dollar spent on addiction treatment saves $7 in health care and prison stays.

Most states require insurance companies to cover all or a portion of drug and alcohol treatment. So, how do insurance companies manage to reject claims for addiction treatment? Usually, by implementing their own complicated sets of rules and guidelines, which vary widely from one company to another. For example, insurance companies may say payments are based on medical necessity, which again, is open to interpretation. Unfortunately, medical providers are often behind the times when it comes to acknowledging addiction as a treatable illness.

Some insurance companies are agreeable to outpatient drug and alcohol treatment but refuse to pay for residential treatment. Others may pay for detox only, but not long-term treatment, which they view as a luxury that isn’t medically necessary. Most insurance companies use their own internally produced “criteria for admission” rather than proven criteria published by the American Society of Addiction Medicine. The criteria used by insurance companies can be construed in many ways, and they use their own criteria to deny treatment, or to stop treatment after only a few days. The average length of stay at a treatment center when insurance does allow some treatment is usually less than 20 days. Research today has proven that 90 days of treatment is needed to be successful.

The situation is expected to improve as the Affordable Care Act continue to kick in, but it will likely require thousands of lawsuits and many years before all insurance companies are in full compliance.




In Michigan professionals with addiction focused degrees are having a rough to rejection as it comes to being credentialed by the insurance companies. They would rather pay social workers to provide substance abuse treatment/services.


Roland Reeves MD

Physician, T R Reeves



Roland Reeves, MD, provides medication assisted treatment for the practice T R Reeves, MD, in...

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