Part 2: What Does Insurance Pay for in Addiction Treatment?

The good news is that insurance does cover treatment for drugs and alcohol addiction. Here’s how to make sense of your policy and treatment options

This is Part 2 in TreatmentMagazine.com’s six-part guide on How to Find the Right Treatment Center. Future sections include: which treatment therapy approach may be right for you, insights on successful recoveries, and which recovery outcomes to track.

By William Wagner

In 2008, the Mental Health Parity and Addiction Equity Act (MHPAEA) was passed, mandating that insurance plans on the private market cover substance abuse and mental health treatment at the same level as medical and surgical benefits. A couple years later, with the enactment of the Affordable Care Act (ACA), those provisions were expanded to the public sector, including Medicaid and Medicare (though Medicare doesn’t cover residential addiction treatment services).

So: The good news is that most insurance covers addiction treatment.

Now for the bad news: Insurance today isn’t much easier to figure out for people seeking addiction treatment than it was all those years ago.

“Insurance is needlessly complicated,” says Courtney Hunter, who, as vice president, state policy for the addiction nonprofit Shatterproof, has written extensively about the insurance industry. “I would even go as far as to say it’s complicated on purpose so that it’s difficult for consumers to navigate the whole concept.”

Families are overwhelmed [when someone enters treatment]. When a person is in crisis is not the time to fight the insurance companies.”—Teresa Garate, vice president of strategic partnerships and engagement for the Gateway Foundation

But fear not. Hunter believes the industry is slowly coming up to speed in meeting the needs of the treatment community: “It’s changing in terms of consumers’ understanding what their rights are.” With a little homework, you can make sense of it all.

Determine What Is and Isn’t Covered

This is the first step for you or someone you’re helping. Unfortunately, you won’t find one-size-fits-all information. Since insurance is regulated at the state and not the federal level, your costs are dictated in part by where you live. They also hinge on your particular insurance carrier and the type of plan you hold. For example, a health maintenance organization (HMO) plan is more affordable but less flexible, whereas a preferred provider organization (PPO) policy costs more but offers a larger menu of treatment options. The equivalent of an HMO for Medicaid-eligible individuals is a managed care organization (MCO), which also has a number of limitations and challenges.

For a detailed explanation of your specific benefits, read your certificate of insurance. You should be able to find it on your insurance carrier’s website. Additionally, adds Hunter, “Speak to your insurance company to make sure [the treatment that is being recommended] is covered. Understand what you’re responsible for. It might not be covered 100%.”

As a general rule, the more intensive the treatment, the more it costs. Residential care, for example, is costlier than outpatient care. With many insurance plans, coverage for residential care tops out at about 30 days.

Unfortunately, you won’t find one-size-fits-all information. Since insurance is regulated at the state and not the federal level, your costs are dictated in part by where you live.”

Before you look into insurance coverage for a specific treatment program or approach, try to ensure you’ve pinpointed the right issue. For many individuals, substance abuse is masking a core problem such as mental illness. If possible, talk to your or your loved one’s general physician for direction in identifying the root problem. Many centers attempt to tie in mental illness treatment with their addiction program. Some centers actually have dual diagnosis programs, but these are not easy to find. Your best approach is to try to find a center with developed individualized, person-centered treatment plans that address the particular needs of the individual.

Here are the types of treatment that are covered to at least some degree by insurance:

• Residential treatment, otherwise known as inpatient care or rehab

• Outpatient treatment

• Medical detox

• Medication, both during and after treatment

• Mental health counseling, both during and after treatment

Here’s a partial list of the addictions covered to at least some degree by insurance. For a complete rundown, contact your insurance company.

• Alcohol

• Amphetamine

• Cocaine

• Fentanyl

• Heroin

• Marijuana

• Methamphetamine, or meth

• Morphine

• Oxycontin

• Xanax

Learn the Lingo

To make the insurance aspect of treatment run as smoothly as possible, you need to understand some basic terms:

• Deductible: Think of your deductible as a cost-sharing mechanism. Before your health plan begins to cover any of your treatment expenses, you have to meet your deductible. Depending on your plan, this could be the first $500 or $5,000. HMOs have lower deductibles than PPOs.

• In-network providers: These are care providers—in your case, treatment centers—that are contracted by your insurance company to be part of your plan.

• Medical necessity: Your insurance company determines whether the level of care being recommended by your treatment professionals is necessary and, thus, covered. “You will frequently see this if you’re denied coverage,” Hunter says. “Your insurance company will send you an explanation of why you were denied: ‘It was deemed medically unnecessary.’”

• Out-of-network providers: These providers aren’t part of your insurance plan. A PPO gives you better access to out-of-network providers than does an HMO.

• Out of pocket: It’s exactly what it says: the amount of money you must pay out of your own pocket, based on services or the percentage of a service not covered by your insurance plan. Your out-of-pocket expenses are applied to your deductible, and there is an annual maximum out-of-pocket amount.

• Preauthorization: Here’s where things get tricky, and potentially flawed. Often referred to in treatment circles as a “fail-first policy,” preauthorization means the insurance company has to sign off on the provider’s recommended level of care in order for it to be covered. Many providers will help families navigate the preauthorization process.

Hunter feels the concept of preauthorization is counterintuitive. “You have to fail at a more minimal level of treatment before you can qualify for a more intensive level of treatment,” she says. “Instead of a provider saying, ‘We think this patient needs residential care,’ some insurance companies say, ‘They need to fail first at outpatient.’ In the age of fentanyl, that could mean a person’s life.”

Look into Payment Options

For your out-of-pocket expenses, there are several payment options. For instance:

• Some treatment facilities will adjust your financial obligations based on your income level, using a sliding scale.

• Depending on the treatment program, you can set up a structure for making monthly payments.

• Organizations like the Substance Abuse and Mental Health Services Administration (SAMHSA) and maybe the treatment center itself provide grants.

• Credit cards often are accepted.

• You can take out a private loan.

Follow These Guidelines Before, During and After Treatment

Before treatment: Make sure you understand your explanation of benefits, or certificate of insurance.

During and after treatment: Maintain a file that documents every interaction you’ve had with your insurance company. This might be your best weapon if disputes arise.

“Save all your documentation—any call you’ve had with the insurance company, any emails, bills, denial letters, explanation of benefits,” Hunter says. “Get agents’ last names when you talk to an insurance company on the phone, and get a reference number for that call. It’s critically important because they may say, ‘We have no record of that call.’”

If you run into problems with your insurance company, you also can turn to certain companies that exist to advocate on your behalf. Your care provider can point you in the right direction on this front.

Know Your Rights

You’re not at the mercy of your insurance company—it only seems that way. If a claim is denied or a level of care isn’t preauthorized, you have recourse.

Appeal, appeal, appeal. Complain, complain, complain. Some insurance companies will just deny a certain level of care as a standard practice. But if you appeal, there’s a good chance of them accepting that.”—Courtney Hunter, Shatterproof vice president, state policy

For starters, you can file an appeal with the insurance company based on the documentation you’ve assembled and case information from your treatment professionals. If the appeal falls short, you can turn to the state. Every state has an insurance commissioner.

“The whole reason we fought for parity for so long in Congress was so that the insurance companies would have to abide by the same rules for addiction as they do for other medical diseases,” says Cynthia Moreno Tuohy, executive director of NAADAC, the Association for Addiction Professionals. “Your family will want to make sure the insurance company is on parity with other medical services.”

Hunter puts it this way: “Appeal, appeal, appeal. Complain, complain, complain. Some insurance companies will just deny a certain level of care as a standard practice. But if you appeal, there’s a good chance of them accepting that.”

None of this seems fair, of course. Insurance should be the least of your worries during treatment, but it too often winds up near the top of the list.

“Families are overwhelmed [when someone enters treatment],” says Teresa Garate, Ph.D., vice president of strategic partnerships and engagement for the Gateway Foundation. “When a person is in crisis is not the time to fight the insurance companies.”

In the meantime, the best thing for families and advocates to keep in mind is to stay calm, get to know the ins and outs of your insurance policy and keep meticulous records of every conversation you have about treatment terms and options.