Insurance Refuses to Pay, Saying Inpatient Wasn’t Needed
Here is a question from Millicent about an appeal she is working on to get insurance to pay for her daughter’s inpatient stay in a treatment facility. Counselor and treatment expert John Fitzgerald responds.
“I’ve written previously and have appreciated your feedback and advice. Today I am seeking counsel on how to best prepare for an insurance-company appeal hearing for my daughter’s last in-patient rehab stay. She spent three and a half months at an inpatient facility, for which the insurance company is being billed for only 30 days. The additional 74 days were under the facility’s “extended stay” program, which is offered to residents who the staff votes on, based on their motivation, commitment to sobriety, and their willingness to perform work duties (dorm monitoring, serving food, taking attendance at meetings, etc.) in exchange for treatment.
The insurance company has denied the entire claim on the basis of medical necessity, saying that she could have been treated at a lower level of care—basically outpatient vs. inpatient care.
I have several compelling letters attesting to her need for inpatient treatment, including one from the therapist who brought her to the inpatient rehab in the middle of an appointment saying that to allowing her to leave her office would have placed her in danger of an overdose. My daughter was in the throes of a dangerous, escalating relapse, using alcohol, smoking crack cocaine, and inhaling heroin. My daughter herself submitted a letter, stating that she would not have complied with outpatient treatment and attesting to the benefits of her lengthy stay.
She is now almost 8+ months sober. She is going to a full time beauty academy and recently moved into her own apartment.
I’m wondering if you have any data, articles, resources, etc. that point to the benefits of inpatient versus outpatient treatment, and also compares relapse rates between the two.”
Thanks for your question about how best to prepare for an insurance-company appeal hearing related to a denial to pay for a residential treatment stay for your daughter. Here are some thoughts to consider:
- It is always best to have addiction treatment programs – particularly residential programs that are far most costly than outpatient – work with insurance companies prior to treatment to secure a prior authorization. This way you know going in what to expect on the billing side. Most insurance companies have processes in place to do this that include assessing the patient prior to treatment for medical necessity. The determination of medical necessity, as you are finding out, can very much be a gray area. And insurance companies know this, and do their best to develop a case for intensive outpatient treatment over residential care due to the cost savings to them. If a prior authorization was not obtained, why did the treatment program not work to obtain one? Prior to treatment did you contact your insurance company and discuss the program, costs, and what they likely would reimburse? Once treatment was initiated (since it sounds like an emergency admittance), did you or the treatment program contact the insurance company and discuss coverage? It may be that the treatment program shares some of the burden for the denial of payment if they did not take steps to contact your insurance upon admittance.
- The most common method of assessing medical necessity is to utilize the American Society of Addiction Medicine’s (ASAM) criteria. In preparing an appeal, you should obtain a copy of your daughter’s intake evaluation done by the residential program, and ensure that the report solidly makes a case for residential care. If not, then why did the program admit her to that level of care? You should also ask the therapist that admitted her to residential care to provide you an updated assessment – again using ASAM criteria – that indicates a clear need for the higher residential level of treatment. Letters attesting to her need for residential treatment are not nearly as helpful in an appeal process as ASAM assessments done by qualified clinicians. Lastly, I would ensure that the assessments include clear statements about your daughter’s risk of death by overdose, given her poly-substance abuse (e.g., alcohol, cocaine, heroin), and prior treatment failure at lower levels of outpatient care.
- The United States is the only developed nation that does not cover all citizens with health insurance. Even more, we have the most expensive healthcare system in the world, yet rank far down the list on quality. One significant difference between the U.S. and other developed nations is that insurance is a for-profit industry, where administrative costs run about 20 percent compared to 5 percent for nations where insurance is not-for-profit. The addiction treatment system is a subsystem of the larger healthcare system in the U.S., and when it comes to paying for treatment, insurance companies do their best to keep their costs low. One way they do this is by denying claims, knowing that only a fraction of people will fight the denial. Read The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care by T.R. Reid and An American Sickness: How Healthcare Became Big Business and How You Can Take it Back by Elisabeth Rosenthal to educate yourself on how best to frame an appeal.
- As to data comparing different levels of care, check out this summary about levels of care, and more detailed information about outpatient and residential care.
Glad to hear treatment was a success and your daughter is doing well! Good luck in your appeal process.
Dear Allies- Many months ago I wrote seeking advice on how to best appeal an insurance claim denial. Briefly, my daughter’s second stay at a residential rehab facility was denied. The insurer (Harvard Pilgrim Health Care) said she did not meet the residential criteria for “medical necessity.” They said she could have been treated in an outpatient program. That would not have worked for her: she had already “failed” outpatient treatment. In fact, her outpatient therapist drove her to the rehab in the midst of a therapy session (thank goodness my daughter agreed to allow her to do this!). The therapist feared that if my daughter left her office, she would meet up with a person who was selling heroin, and possibly fentanyl.
Long story short: my daughter stayed there for 3 and a half months–the last two months she was awarded an “extended stay” based on her new-found motivation to stay substance free. At the time of her admission, she had escalated her drug use, was about to be evicted from a sober house and had no place to go (living with us would have exposed her to her old drug-using friends.)
I appealed twice to the insurance company and lost both appeals–despite the fact that I had included letters from her therapist, her treatment providers at the rehab, and two of her previous clinicians; one even said that her “life depended on” residential treatment. Finally, I hand-delivered another appeal to the Office of Patient Protection in Boston. That office, as per its protocol, forwarded it to an outside reviewer, who overturned the denial. I won. I was shocked and thrilled.
Harvard Pilgrim reimbursed me for close to the entire cost of her residential stay (including interest). The lesson is simply: persist–especially if you can provide objective support. Not only did I include letters from therapists, but I cited articles from academic journals to reinforce my arguments.
And the good news. My daughter is now substance free for 17-months and she is now working at the rehab, in its admissions department. Most of its employees have gone through its program.
I also owe a large thank you to Dominique and another Allies in Recovery expert for their advice and support. It’s not just about the money–it’s about what is right and important in treating substance use before it escalates into overdose. Insurers need to rethink their policies: clearly, it’s ultimately more cost effective to treat early rather than often–they’d not only save money, but more importantly they’d save lives. So my message to this community, don’t give up when an insurance company rejects a claim if you believe that your loved one needed treatment.
WOW! This is a huge piece of information for so many. Thank you for posting this, I bet a lot of other families will appreciate it.
Thanks, On-a-mission. The only way insurance companies will start responsibly paying for treatment is if enough of us challenge their denials! To borrow the popular political meme: We persisted!
Update: Feb. 1, 2018: Thank you again for your advice with my appeal. I took your suggestions, emphasizing the critical “self harming/self destructive behavior” my daughter was exhibiting. I stopped short of saying she was showing signs of suicidal ideation, as her therapist at the rehab in the intake evaluation noted that she wasn’t suicidal or homicidal. I compiled seven single-spaced pages of what I thought were cogent arguments to counter all of their objections (primarily, that she could have been treated at an out-pt program rather than in-patient). Despite letters from three therapists, my daughter’s own letter stating that she wouldn’t have attended an out-pt treatment program, etc, they turned down the appeal. I took your advice and also cited the Society of Addiction Medicine’s criteria for inpatient treatment, showing that she met each of the six points. Despite all of the above, I lost the appeal.
My next step is to ask for another appeal through the Mass Dept of Patient Protection. I have nothing to lose, but I’m of course, quite cynical.
The system is disinclined to be pro-active in responding to a person on the verge of heavier drug use. Insurers appear willing to pay only for extreme cases of withdrawal, detox, etc. It seems like the costs are ultimately higher in that approach, as prevention might be not only better for the individual, but more cost-effective for insurance companies. I’m obviously disappointed, to put it mildly, but not surprised.
The good news, however, is that my daughter continues to do well. She is very close to her 10-month anniversary of remaining substance free. She continues to attend school (a full-time beauty academy), is living in her own apartment(as the sober house where she lived immediately after discharge closed) and has adopted a young cat.
Thank you so much for your thoughtful reply… I appreciate it and will continue to prepare and research. Insurers seem to find ways to say no!