The addiction treatment industry has always had a fraught relationship with insurance companies. It’s not uncommon to hear of individuals getting kicked out of residential treatment centers because their insurance company won’t pay. And, insurance fraud was quite a common issue when it revolved around drug rehab. But that doesn’t mean insurance coverage for addiction treatment hasn’t changed.
The relationship isn’t all bad. Insurance companies fill the vital gap between someone needing treatment and being able to afford said treatment. In many ways, the two industries are symbiotic.
In no time in history has this symbiotic relationship become more evident than the last number of years. With the changes the Affordable Care Act rolled out, insurance companies and rehab treatment programs work together.
Both insurance companies and rehab centers are businesses. They both have financial burdens and limitations to keep in mind. Both industries are either painted as lifesavers or evildoers when the truth is a bit subtler. They reside somewhere in between, seeking to help the most considerable number of people without going broke.
The History of Rehab Insurance
Health insurance, as we know it today, has only been around since the early to mid-1900s. So, when we talk about health insurance, we’re talking about a reasonably modern phenomenon.
The relationship between insurance companies and addiction treatment is even younger. It wasn’t until the late 20th century that the two industries began interacting. Around this time, the ’80s and later, rehab centers began to accept insurance. Before this, they’d operated on a fee-for-service model.
In today’s world, most rehab facilities accept insurance. Indeed, most treatment centers in America receive a large amount of their revenue from insurance companies. It doesn’t come, though, without some struggle.
From almost the start, insurance providers would commonly deny coverage to individuals in treatment. While this could prove catastrophic, and in some cases it was, it’s not nearly as cold-hearted as it sounds.
As insurance and treatment became increasingly intertwined, insurance companies found ways to help many individuals receive treatment without having to raise their premiums.
Denial of Coverage
The basic logic behind insurance providers denying an individual addiction treatment is that if they approved everyone for intensive levels of care, they’d have to raise their premiums, deductibles, and out of pocket expenses to unmanageably high rates.
While that sounds very money-driven, with a focus on only the bottom line, it isn’t always. Think about it like this – if a significant insurance provider raised their premiums and deductibles significantly, fewer people would be insured. In turn, fewer people would be able to afford substance abuse treatment or other medical care.
The Solution
Insurance companies’ solution was to approve patients for lower levels of care. Instead of sending someone to residential treatment for a month, insurances would offer a month of intensive outpatient treatment. Instead of paying for long-term (three-plus months) of treatment, they’d provide outpatient and aftercare.
While this solution isn’t perfect, it does marginalize many who desperately need inpatient treatment. It’s better than the alternative – having to pay treatment centers out of pocket.
Now that we’ve explored the relationship between rehabs and insurance companies, let’s examine some of the significant changes which have occurred recently.
Significant Changes in Rehab Coverage
There have been many immense upheavals in the insurance and treatment industry as of late. Undoubtedly the largest was the introduction of the Affordable Care Act, better known as Obama Care.
Obama Care and Substance Abuse Treatment
With Obama Care, substance use disorders and mental illness are now essential health benefits. That means that any insurance plan must offer some form of addiction and mental health coverage.
Obama Care did a few other things for addiction treatment. It got rid of yearly limits for addiction and mental health coverage. It ensured that no one could be denied coverage because of any preexisting addiction or mental health condition.
Finally, and perhaps most importantly, Obama Care establishes parity in terms of mental health and substance use disorder coverage. This means that the scope, treatment, care management, and cost of mental health and addiction services can’t be more restrictive than for any other ailment.
To say Obama Care shook up insurance companies would be an understatement. With the introduction of these new regulations, insurance companies must cover more rehab treatment options.
Introducing Evidence-Based Practices
One of the unexpected side effects of the Affordable Care Act is the move away from “traditional” rehab care, which focuses on twelve-step principles and towards something called evidence-based practices. The 12-step facilitation therapy is still part of what insurance companies include as Behavioral Therapy under the description of the evidence-based practice.
Evidence-based practices are simply treatments that have a firm basis in science. It’s worth noting here that the move away from twelve-step based treatments doesn’t mean they don’t work; it means that insurance companies are more interested in seeing treatment plans that can be quantified. Evidence-based approaches help insurance companies section the different addictions by segmenting them by Pharmacotherapies, often used for opioid and alcohol addiction. Or through Behavioral Therapy, which can include interventions, family therapy, community reinforcements, cognitive-behavioral therapies, and so on.
Even though, initially, evidence-based therapies for drug and alcohol abuse were labeled as unfavorable. Today, the labeling system is helping more people receive treatment through their insurance coverage.
The Future of Rehab & Insurance Coverage
It’s safe to say there will continue to be tension between American addiction centers and insurance providers. However, after ten years, the Affordable Care Act changed the way insurance companies treated drug and alcohol addiction.
By 2017, around 20.7 million people, age 12 and older, needed substance abuse treatment. Yet, only 4 million of those received treatment. Today, health insurance benefits make health care affordable and accessible, with no stigma attached. By looking at substance abuse as illness, insurance companies can cover 40-60% of the treatment costs and, on occasions, up to 80% of the treatment cost. Finally, it’s possible to use insurance coverage to the fullest to receive the care needed to leave addictions behind.
At Lighthouse Recovery Institute, our onboarding specialists will work with your insurance company to find the best possible coverage for your treatment. Our role is to help you find the best path towards recovery, which includes talking to your insurance company. If you or someone you love is struggling with substance abuse, don’t let your insurance get in the way of seeking treatment. Together, we can find the best alternative to help you find the help you need.
