The American Medical Association now recognizes alcoholism (alcohol use disorder) and substance addiction (substance use disorder) as “diseases,” forcing health insurance companies to acknowledge the need to cover treatment for these conditions. But drug and alcohol treatment is expensive. For many who are dealing with these chemical-related diseases – as well as mental health conditions – the question is: How can I ever afford the treatment I need to recover…even if I have health insurance?
How much does drug or alcohol treatment usually cost?
Most addiction treatment centers incur a cost in caring for each client – about a thousand dollars per day. This cost includes substantial overhead – very similar to that incurred by hospitals. There’s housing and food costs, medical costs with nurses and doctors on staff, plus any therapy staff.
Health care is very expensive, regardless of the condition or procedure. To give a very typical treatment situation as an example of cost, delivering a baby in the hospital costs about $30,000, and so does the average three-day hospital stay for other health conditions. Health insurance is a way to reduce those costs to an amount that you can manage by sharing the risk with other people. That system has worked because most people are generally healthy most of the time, and their premiums help pay for the expenses of those who happen to become sick or injured.
There are three basic ways in which you can pay for a stay in rehab:
1) Private insurance
2) Government funded
Changes in the Law Are Impacting Rehab Services
Three recent changes have placed more responsibility on public and private insurance payers. First, in 2007, the Centers for Medicare and Medicaid Services (CMS) established payment codes for screening and brief intervention. These codes allow primary-care physicians to bill Medicare, Medicaid, and some private insurance companies for the provision of screening and brief intervention counseling.
As a result, primary-care physicians may provide more alcohol and other drug (AOD) treatment services, which would be covered by insurance companies. Second, the 2008 federal parity legislation required changes to private insurance and Medicaid managed-care coverage.
These laws have resulted in dramatic changes in access to and delivery of AOD treatment services.
The 2008 Parity Act
The Mental Health Parity and Addiction Equity Act (sponsored by Paul Wellstone and Pete Domenici) was part of the Emergency Economic Stabilization Act of 2008. This federal legislation was aimed at removing barriers to utilization, removing financial burdens on patients, and reducing the stigma surrounding addictions and mental disorders by requiring group health plans that offer mental health/addiction services to cover these services in a comparable manner to medical/surgical services.
The new law – which expands a more limited 1996 federal law that did not apply to substance abuse treatment – applies to all health plans, including self-insured and Medicaid managed-care plans; however, this legislation exempted group health plans of fewer than 50 employees. Effective on January 1, 2010, the new law requires “equity in coverage,” meaning that any mental health and addiction benefits that a plan offers must be comparable to medical and surgical benefits.
Whereas the legislation requires parity between medical/surgical benefits and mental health/addiction benefits if a plan offers mental health/addiction benefits, it does not mandate that plans cover mental health/addiction treatment at all. Also, it does not mandate that programs cover all types of mental health/addiction conditions; that is, plans can choose to exclude specific diagnoses from coverage. As a result of this legislation, there is a concern that companies that had previously offered some benefits for mental health and addiction services might now decide to drop such coverage altogether in response to this parity legislation.
The Health Reform of 2010
The Patient Protection and Affordable Care Act (PPACA or ACA) expands the reach of federal mental health parity requirements to three main types of health plans:
- Qualified health plans as established by the ACA.
- Medicaid non-managed care benchmark and benchmark-equivalent plans.
- Plans offered through the individual market.
Signed into law in 2010, the ACA requires all Americans to have health insurance. Access to insurance is increased by expanding Medicaid eligibility and mandating individual insurance coverage. This eligibility expansion will result in increased access to substance use disorder and mental health condition treatment coverage through Medicaid. The individual insurance expansion also may result in improved access for those with private insurance if such plans cover AOD treatment services at all.1
What Does Health Insurance Typically Cover?
Insurance policies vary in the amount of treatment services they cover. But most policies will cover one or more of the following:
- Assessment – with most health insurance policies, these expenses are fully covered.
- Detoxification – typically, insurance covers most of these expenses; however, rapid detox and ultra-rapid detox are generally not covered.
- Outpatient treatment – generally, these expenses are mostly covered.
- Inpatient (residential) treatment – in most cases, these expenses are partially covered.
While insurance policies must now cover treatment for substance use disorders and mental health conditions to the same extent that they cover other medical conditions, technically, policies will only cover what an authorized supervising professional determines to be “medically necessary.”
Healthcare.gov defines medically necessary as “health care services or supplies needed to diagnose and treat an illness, injury, condition, disease or its symptoms and that meet accepted standards of care.” These services would likely include things such as a treatment program and a bed, but not a private room with a daily linen-change service.
What Are Steps to Take in Determining Coverage?
- Call the member services department at your insurance company – have your membership identification number ready.
- Write down the name of the representative(s) you speak with, as well as any notes about the conversation.
- Ask what “levels of care” are covered for addiction treatment (assessment, detox, inpatient, outpatient, residential, hospital-based, partial hospitalization, etc.).
- Ask about in-network and out-of-network providers and the percentage covered by insurance for each.
- Ask about co-pays and deductibles.
- Ask what your out-of-pocket maximum expense is.
- Ask what criteria your insurance company uses to determine medical necessity.
Another option is to reach out to the admissions department of the treatment program you’re considering. Treatment providers have many ways of “working magic” to make insurance policies cover expenses.
How Are Substance Use and Mental Condition Claims Filed?
Claims for substance use disorders and mental health conditions are subject to the same copayments, deductibles, coinsurance and coinsurance maximums as medical claims. There is no limit on the number of provider visits allowed as long as the care is medically necessary under the terms of the plan. There is not a separate annual and lifetime maximum for mental health and substance abuse benefits. If you use a network provider, the provider is responsible for submitting claims for services. Your mental health and substance abuse provider will be required to conduct periodic medical necessity reviews.2
Legislative Actions Broaden Scope to Cover “Ten Essential Benefits”
As of 2014, a set of health care service categories – commonly referred to as the “Ten Essential Benefits” must be covered by certain plans.
In this measure, the ACA ensures that health plans offered in the individual and small group markets – both inside and outside of the Health Insurance Marketplace (state-controlled insurance plans, often referred to as simply the “Marketplace”) – offer a comprehensive package of items and services.
The essential health benefits must include items and services within at least the following ten categories: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.
Insurance policies must cover these benefits in order to be certified and offered in the Marketplace. In addition, states expanding their Medicaid programs must provide these benefits to people newly eligible for Medicaid.3
Broad Application of New Coverage Mandates… But Variances by State
The ACA provisions impact both small and large businesses, as well as health plans available to individuals. Among these provisions are coverage of dependents until age 26, the elimination of lifetime limits on coverage, prohibition of denials and pre-existing conditions for children, standardization of appeals processes, coverage of preventive services, and premium rebates by insurers that fail to pay out in medical benefits at least a minimum percentage of premiums.
Other significant changes proposed in 2014 included (1) the rollout of health insurance exchanges for individuals and small groups (re-defined to include groups of up to 100 employees), (2) guaranteed issue and renewal of coverage for individuals and small groups, and (3) rules prohibiting insurers from setting premiums based on health status or claims experience, and rules prohibiting insurers from denying coverage for pre-existing conditions.
Starting in 2014, each state is to operate two exchanges: an American Health Benefits exchange (often referred to as an exchange or an individual exchange) for all legal residents and a Small-employer Health Options Program (SHOP) exchange for employers with fewer than 100 full-time equivalent (FTE) employees. The SHOP exchanges were designed to offer a choice of plans to small employers, and possibly to employees as well.
Also starting in 2014, the tax credit currently available under the ACA to small, low-wage employers that offer coverage became available only to employers that buy coverage through the SHOP exchange. Low-
and middle-income consumers who buy coverage through the individual exchange may qualify for premium assistance and reduced cost sharing if they (1) are not offered affordable employer-sponsored insurance that covers at least the minimum essential benefits, (2) are not eligible for Medicaid or another program, such as Medicare or veterans’ health benefits, and (3) meet certain income requirements.4
Your specific behavioral health benefits will depend on your state and the health plan you choose. You’ll see a full list of what each plan covers, including behavioral health benefits, when you compare plans in the Marketplace.
Pre-existing Mental and Behavioral Health Conditions Covered… with No Spending Limits
- Marketplace plans can’t deny you coverage or charge you more just because you have a pre-existing condition – that includes any mental health or substance use disorder conditions.
- Coverage for treatment of all pre-existing conditions begins the day your coverage starts.
- Marketplace plans can’t put yearly or lifetime dollar limits on coverage of any essential health benefit – that includes any mental health and substance use disorder services.5
HSAs: A Great Way to Build Up Health Dollars for Treatment
There are five main kinds of health insurance plans, with indemnity plans at one end, and HMOs (health maintenance organization) at the other end of the spectrum. POS (point-of-service plans) and PPOs (preferred provider organizations) include a combination of features from indemnity plans and HMOs; however, they are usually seen as managed care plans.
In 2003, Congress introduced a new opportunity for individuals to help prepare themselves for any big health expenses down the road. That opportunity is called a Health Savings Account (HSA) – a combination of HMO/PPO/Indemnity and savings account with tax benefits.
HSAs are tax-free savings accounts aimed at building up coverage for future medical expenses. Only patients with a high-deductible plan and currently have no other insurance plans are eligible. This type of plan is useful for those who are seeking some kind of protection, do not envisage having any or many ongoing medical costs, and would like to be ready for an emergency or catastrophic healthcare cost. Small businesses may find HSAs a useful alternative to the more traditional health plans on the market.
People can enter an HSA plan through their employer if such a plan is available through the company, or individually (in some states). The HSA plan needs to be paired with an existing health plan with an annual deductible of over $1,100 for individuals and $2,200 for families. There is a limit on total out-of-pocket costs, including copayments and deductibles. Limits can vary as time goes by. Even though deductibles tend to be much higher than in other plans, some of them do offer full coverage, while others offer nearly full coverage (with a small copayment for preventive care).
In general, health plans with high-deductibles have cheaper premiums; however, out-of-pocket costs are much higher. To compensate for that, the insured can contribute a certain amount of money to a tax-advantaged account – the amount, as well as the details of tax benefits, vary from year to year. The contributions can be used to reduce the insured taxable income. If payments are made by an employer on behalf of an employee, they are tax free. The money in the HSA plan can be used at any time for approved medical expenses.6
Stellar Treatment Programs Showing a Big Return on Investment
Federal studies show that the best drug treatment programs pay for themselves 12 times over, reports the National Center on Addiction and Substance Abuse, a private group at Columbia University. Joseph A. Califano Jr., chairman of the center, says this is possible because patients who succeed have quick improvements in health and behavior. The center has been calling for legislation to require broader coverage of substance abuse treatment by health insurers. To rein in spiraling health costs, the center believes that deepening such coverage is vital.7
Speaking of stellar drug treatment programs, Skywood – Foundations Recovery Network’s newest, state-of-the-art treatment facility – builds on our organization’s well-documented reputation for excellence. Find out for yourself why more than ten federally funded studies point to us as a shining star in our field.
1 Stewart, Maureen T., Ph.D., et. al., “Health Services and Financing of Treatment”, Alcohol Research and Health, Volume 33, Number 4, National Institute on Alcohol Abuse and Alcoholism, http://pubs.niaaa.nih.gov/publications/arh334/389-394.htm .
2 “Health Insurance”, S. C. Public Employee Benefit Authority, https://www.eip.sc.gov/ibg/publications/Health_Insurance.pdf .
3 “Essential Health Benefits”, HealthCare.gov, https://www.healthcare.gov/glossary/essential-health-benefits/ .
4 Chollet, Deborah, et. al., “How Will the ACA Affect Community Rehabilitation Programs”, Mathematica Policy Research, Institute for Economic Empowerment, http://www.mathematica-mpr.com/~/media/publications/PDFs/health/ACA_commrehab.pdf , (April 2012).
5 “Mental Health and Substance Abuse Coverage”, HealthCare.gov, https://www.healthcare.gov/coverage/mental-health-substance-abuse-coverage/ .
6 “What Is Health Insurance?”, Medical News Today, MediLexicon International LTD., http://www.medicalnewstoday.com/info/health-insurance .
7 Eckholm, Erik, “Government’s Drug-Abuse Costs Hit $468 Billion, Study Says”, The New York Times, http://www.nytimes.com/2009/05/28/us/28addiction.html?_r=0 , (May 28, 2009).