Deduction Waiving of Insurance Policies

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America’s opioid crisis is snowballing. Ever since the late 1990s, when pharmaceutical companies misled doctors, patients, and the general public into believing prescription opioid pain relievers weren’t addictive, society hasn’t been the same. As a result, millions of Americans are now addicted to opioids.

Opioids’ grip on human lives isn’t the only area of American culture the drug has managed to snowball into. The result of this surmounting addiction crisis has also led to capitalism showing its hand.

With so many people struggling and searching for treatment, the recovery industry is now booming. But unfortunately, the recovery industry is profitable. The Centers for Disease Control and Prevention (CDC) estimates that the total “economic burden” of prescription opioid misuse alone in the United States is at $78.5 billion a year. Added with the Mental Health Parity Act, which forces insurance providers to pay for addiction treatment, and ObamaCare, which finally gave the law some teeth, people suddenly found out that addiction treatment could be insanely profitable.

The post-ObamaCare era not only drove all-time high profits but brought in shady operators into an industry that, at the end of the day, was supposed to be about saving lives. However, insurance providers hadn’t taken into account the potential for abuse from the addiction treatment sector. But that’s exactly what’s happened.

Now, from seeking out individuals with substance use disorders and good insurance to admit them into treatment centers for a profit (aka body brokering) to false claims of dual diagnosis, it’s hard to know who to trust or what to look for.

Unfortunately, this has brought bad actors into the industry who have been taking advantage of the system, who are using tactics such as insurance fraud, patient enticement, listing theft, and a host of many other schemes aimed at taking advantage of how lucrative the field has become.

One of the most significant ills of the recovery industry is deduction waiving. While, yes, the idea of not having to pay anything for treatment sounds good, understand that some facilities use the offer as a way to practice fraudulent schemes and possibly after you or your loved one’s money.

I. What Is Deduction Waiving?

What Is a Deductible?

Deductibles, copayment, coinsurance — all terms you’ve likely heard before — are just different ways to describe the fee you or a loved one would share with an insurer when visiting a healthcare provider. The insurer sets the deductible amount, and the patient is typically responsible for paying it directly to the provider. You may have encountered this at a doctor’s office or the dentist. For example, the copay under Medicare Part B, which covers doctor visits and most out of hospital services, is 20% of the total approved charge.

When an individual begins the process of being admitted to an addiction treatment facility, their insurance information is typically collected by an admissions representative. Their benefits are then run, and the individual is notified of what their deductible will be. This deductible must be paid before anyone can start a treatment stay.

Why Are There Deductibles?

Deductibles, on paper, sound amazing. Why not make behavioral, mental, and substance use disorder health more accessible?

Well, that’s because the government views copayment as an essential part of the Medicare and Medicaid programs. They feel that requiring patients to share costs makes them better health care consumers. Additionally, the government believes that offering inducements to patients regularly could result in overutilization, biased decisions concerning their care, and increased costs to Medicare, Medicaid, or other government programs — and they were right.

The Problem With Waiving Deductibles

Waiving is self-explanatory: it’s the process of taking the deductable fee away — as in, you or your loved one is no longer responsible for paying for it.

The problem is that it strays clients away from ethical facilities that treat them well. People, especially those using drugs and alcohol, might not have the money required for treatment. So when they hear that they don’t have to shell over money for a copay, it’s hard for patients to say no.

Shady treatment centers aren’t looking for that low percentage you or your loved one is paying out of pocket. As long as they can get an insurance company’s money, they’re getting more than their dollars worth, whether you or your loved one shows up at all. As a result, the acquisition of new clients has become a game of how many people with good enough insurance can gather information from, rather than how many heads they can get in a bed or even how many lives they can save, so they can pocket the insurance premiums.

That’s why there are centers that will gladly waive the deductible, even offering to pay for plane tickets to get people into their treatment center. Some treatment centers go to the length of calling other facilities to waive deductibles.

So not only are clients losing out on quality care facilities in search of the less expensive option, but quality facilities are losing out on clients. When searching for a treatment center, an overeagerness to waive the deductible should be a red flag for you or a loved one.

II. Waiving Deductibles and the Law

The Law

It should be noted that not all deductible waivers are illegal. In fact, it’s perfectly okay to write off a patient’s copay balance if the provider makes a good-faith attempt to collect.

However, it is unlawful to waive coinsurance, according to the U.S. Department of Health and Human Services (HHS), when they make a habit out of doing so.

Routine waiver of deductibles and copays violates the law for two reasons. First, it violates the Anti-Kickback Statute, which says medical providers are forbidden from offering, soliciting, paying, or receiving anything of value in exchange for referrals of Government Health patients (which is what happens when a provider regularly waives copays to make their services seem cheaper to potential customers). Secondly, it causes Medicare to pay more than it should, violating the False Claims Act.

Good Waivers

There are a couple of scenarios where waiving a patient’s insurance responsibility is absolutely a good thing. These may include patients who would like to extend professional courtesy to colleagues or their families, when patients are in financial distress, or when collection efforts have negligible results. The call is up for the healthcare provider’s best judgment in each situation.

A good example would be choosing not to pursue collection activity against the patient for the copay owed during a period of severe financial hardship, like COVID.

The issue arises, however, when physicians routinely forgive the debt. The good deed is only for patients suffering a financial crisis or emergency.

Copay waivers can take several forms. These include:

  • Billing but not collecting a copayment
  • Writing-off copayment amounts
  • Discounting products and services and applying the discount only to copayment amounts
  • Product and drug manufacturers offering copay cards to pay copayments charged by pharmacists and equipment vendors
  • Third-party charities pay patients’ copayment amounts

However, when a provider has a policy of not attempting to collect copays, that becomes illegal. That’s what you’re going to want to look out for and make sure there is not a history of it.

Bad Waivers

The U.S. Health and Human Services Office of Inspector General (HHS-OIG) identified several suspect behaviors that indicate illegal routine copay waiver:

  • Advertisements that promise discounts to Medicare beneficiaries
  • Routine use of financial hardship forms without an attempt to determine the patient’s financial situation
  • Collection of copayments only where the patient has supplemental insurance that pays for copays
  • Charging more to Medicare beneficiaries to offset the waiver of coinsurance
  • Sham insurance programs offer to cover copays but have insignificant premiums

Other Bad Faith Waivers

  • Copay Coupons: One tactic that pharmaceutical manufacturers use is offering copayment coupons to patients to help reduce or eliminate upfront costs, even going as far as providing branded drugs below their competitor’s price points. While legal for patients covered by private insurance, the practice is illegal for Medicare Part D recipients, although, in 2014, HHS-OIG found that 6-7% of Medicare recipients reported using copay coupons.
  • Sham Patient Assistance Programs: Patient assistance programs are legal and provide a safety net for patients who have demonstrated financial hardship, like the Patient Assistance Program (often referred to as PAP). However, if the provider regularly waives copays due to financial hardship without evaluating patients’ needs, it violates the law. Unfortunately, when it comes to the addiction and recovery industry, the good is mixed in with the bad — there is no separating the two. This is why it’s imperative not to put your entire faith in the justice system the ability for authorities to be on top of these practices. The goal is not memorizing or becoming a legal expert with these concepts and schemes as much as it’s for you to understand what you or your loved one is up against. This is a money-hungry business, which is why you cannot go out there blindly, whether you’re looking to help yourself or a loved one. So here are some ways to protect yourself or someone you love.

III. Protecting Yourself or Family

Ask the Right Questions

One of the first things you can do to protect yourself or a loved one is to ask the right questions. Often, these facilities aren’t expecting someone who is well-read or who even knows the right questions to ask.

In many cases, just doing a good bit of poking around will expose the phonies and shams and help you move along with finding the right place for you. Here are some helpful questions you can ask if you or a loved one are looking for a treatment center or just curious about their insurance policy in general.

Will You Take My Insurance?

Although most shady institutions will go to great lengths before saying no, asking if your insurance is valid is a great way of cracking the ice into the financial line of questioning.

As you probably know, prices for addiction treatment costs range from individual to individual. In many cases, these providers are telling the health insurance companies that they will work with the client (you), especially if a large sum of the treatment program is already being paid.

So the first thing to do is ask if your insurance provider offers coverage for drug and alcohol addiction treatment and then cross-check with your potential treatment center that they will work with your health insurance company to reach an agreement.

The key here is to catch the overeagerness. If they are dismissive of any possible holdups and offering a guarantee out the gate, these could be red flags.

What’s Your Experience With Behavioral Health Billing?

Everyone handles billing differently, and such is the case for the addiction industry. What you are trying to unearth with this question is how well of a handle the potential treatment center you’re interested in has on substance abuse billing procedures, including all addiction billing standards and laws.

What you’re looking for is their understanding of the day-to-day issues that can arise when working with managed care companies. Examples include balancing claims payment accuracy and provider relationships or ensuring if their per member per month rates paid to Medicaid MCOs are actuarially sound, as in the documentation is detailed and that they don’t have a history with data issues.

Do You Have Strong Compliance and Privacy Protection Procedures?

Any potential client of a treatment facility could be seen as a valuable asset to a corrupt treatment facility. Not only because their lives are indispensable, precious, and vulnerable during this time, but because they’re exactly what the bottom feeders of this troubled industry are looking for — someone who is suffering from substance abuse and with good insurance.

Medical providers must protect your private health information. The company you choose must have plans to protect privacy while also preventing fraud and abuse.

Every treatment facility has processes that must meet the billing compliance standards, which typically means the guidelines set by the Health Insurance Portability and Accountability Act (HIPAA) and the HHS Office of the Inspector General (OIG).

Some questions to help cross-reference this would be asking if they have a compliance officer or committee responsible for setting and maintaining their privacy controls. At the very least, they should have a compliance program in place. Also, ask to review their plan and explore how they address a range of topics, from HIPAA compliance for email encryption and home-based employees to reimbursement and employment and Occupational Safety and Health Administration (OSHA) requirements.

What Reports Do They Provide and Can You Get Them Whenever You Need Them?

Ask for the books! These records are important for managing the revenue cycle of your addiction treatment center, and it also helps you understand and manage the health of your practice.

You can ask for all types of reports, like charges and payment analysis, activity summaries, and a key performance indicators report.

Here’s a list of some other metrics you can ask for a report for:

  • How you
  • Whether or not claims are paid on time

What’s Your Fee Structure?

Every billing company has a different structure for its fee arrangements. Some charge a percentage, while others charge a monthly rate or a flat fee.

What you’re going to want to know:

  • Are you being charged a percentage based on charges or receipts?
  • How are refunds handled?
  • Is there a start-up fee for the billing service company?
  • Are there any other administrative costs?
  • How much do you want to spend every month on outsourcing your billing?

Here at White House Recovery and Detox, we believe in complete transparency, including among ourselves. Exposing the industry exposes ourselves, and we hope you vet us with the same vigor we’re urging you to vet others. Treatment theory, practices, and meeting goals are all fine, but if you’re not in the hands of someone who see’s you or a loved one as more than a dollar sign, none of that matters. Deductible waiving is a serious pitfall when getting into the business of recovery, and we want you to be up to date to know best how to navigate those waters. From understanding the term, why the scam loophole exists, and the factors that enable it, to examples of deductible wavering done the right way, we want you to be ahead of the game when it comes to this gimmick that has become prevalent in the recovery industry. Call us (800) 510-5393.