According to a major investigation being carried out by the Southern California News Group, there are many problems lurking in the drug rehab industry. For starters, most of the registered rehabilitation centers do not have any degree, medical or otherwise.
As a result, these institutions administer subpar services and unnecessary care to their patients and then bill insurance companies with the aim of earning high reimbursements. It is for these reasons that some lawmakers are working to cut down corruptions at these facilities by changing how insurance providers reimburse providers.
According to the investigation, this sort of fraud, now known as patient-brokering starts by a facility administering patient into their program. Some facilities, even go to the extent of enticing patients with money. The facility then enrolls the patient into their health plan with a goal of billing the insurance company for services and getting paid back.
Mick Meagher, a private attorney, stated that commercial insurance plans reimburse higher rates than public plans. Since Medi-Cal does not pay for private treatment centers, these facilities opt to enroll these patients in private plans. When asked about these allegations, no response was provided by representatives from the substance abuse industry.
The DHCS (Department of Health Care Services), which is the licensing body for 24-hour residential rehabilitation centers for alcohol and drug addicts said that they were aware of those problems. Carol Sloan, the spokesman of DHCS wrote in an email that they had received numerous complaints about allegations of patient-brokering. However, since most of these facilities do not receive payments from Medi-Cal, the DHCS’ authority to supervise their billing and payments is limited.
A new bill from Connie Leyva, the Democratic State Sen aims to make the payment scheme more strict for these rehabilitation facilities. Senate Bill 1156, will require these facilities to continue paying premiums for patients benefiting from these schemes for a full plan year, regardless of whether they are still receiving treatment at the facility or not.
The facilities will also be required to report to the DHCS and insurance plans for their payments for patients’ premiums. They should also disclose whether or not the patients are eligible for Medi-Cal or Medi-Care. Therefore, if a patient is eligible for a public plan, the insurance provider will be expected to reimburse at Medicare rate and not the commercial ones.
The senator reported that while it is OK for these facilities to make a profit, these financial gains should not be at the expense of their patients or to keep them from receiving the medical care they deserve. Senator Leyva noted that these cases had become more rampant after the Affordable Care Act allowed patients with prior conditions to benefit from the plan. As a result, there were more fraudulent cases in the Substance abuse industry especially after the opioid crisis and at dialysis centers.
Still, some patient advocacy groups are opposing the bill claiming that it will make it even harder for low-income earners to stay insured. The American Kidney Fund, for instance, wrote that the bill was not acting in the best interest of the patients. The letter went on to say that insurance companies would gain financially by removing the sicker more costly patients from their plans.
According to them, all patients receiving premium assistance should be able to afford a plan that fits their medical needs and should not be forcibly ousted from the plan by insurance firms looking to save some money.
Following the letter, staff from Leyva’s office said the bill only aims to change the rate at which providers get reimbursed and should not, in any way affect a patient’s medical care. They went on to state that the bill does not prevent organizations from paying premiums for their patients.
The main goal of the bill is to address fraud in the substance abuse industry. It aims to incorporate more thorough background checks on rehab centers, owners and workers to make it more strict in new treatment facilities to get licensed without meeting all the requirements. Ultimately, this will help ensure that
However, Mick Meagher doubts any of these changes will make an impact on the industry. According to him, although these changes are well intended, they are highly likely to miss the mark. The criminals involved in these fraudulent activities will somehow find a way to figure it out.
If Leyva’s bill passes, it will head to the Assembly appropriations committee.