A provision of insurance reimbursement that is made directly to patients, specifically for substance abuse treatment, continues to be scrutinized, as some say the practice can lead to relapse.
While some states have created laws stopping such payments, California is not one of them.
The issue occurs when patients see a provider outside of their insurer’s network, commonly referred to as out-of-network coverage. Because no contract between the insurer and service provider exists in such cases, reimbursements for services are sometimes made to patients directly.
The method of such checks is known as “pay to patient.” In the substance use treatment industry, such direct payments have been criticized, with some saying it may lead to relapse for patients.
The passing of the Affordable Care Act in 2010 made quality health insurance more obtainable for low-income or unemployed individuals, allowing more treatment for those struggling with substance use disorder.
Insurance plans, however, generally pay more to out-of-network providers, since there is no established contract between the two, which negotiates prices at a lower cost for services.
This incentivizes substance use treatment providers to admit more patients with out-of-network plans according to Sherry Daley, an executive of government affairs with the California Consortium of Addiction Programs and Professionals—the largest conglomerate of community-based treatment agencies in the state, which licenses drug and alcohol counselors in California.
Daley said insurance companies use “pay to patient” for out-of-network providers on purpose, to deter them from admitting patients with such plans, despite a larger payout, for fear of patient relapse.
“The provider then is stuck in a situation where they’re taking a risk to take that patient,” she said. “Oftentimes, they don’t know that the payment is going directly to the patient until after they’ve provided services.”
She said in 2017 she helped introduce a bill, SB 636, with California State Sen. Steven Bradford (D-Gardena), which sought to eliminate insurance providers’ ability to send payments directly to patients of substance use among other things. But the bill didn’t pass.
“It’s an evil practice that the insurance companies do,” she said.
According to one executive with a treatment center in Southern California, such direct payments to patients are of concern in the industry.
“What happens a lot of times is a person struggling with substance use disorder in early recovery [receives] a check in the mail ... for a few thousand [dollars], for a week of services or so,” he told The Epoch Times. “So, they cash the check and continue using.”
The executive, who said he has been in his position for nearly five years, said he’s experienced such at his treatment center and has heard of it happening at others.
To avoid someone in treatment from using such payments to relapse, the treatment center executive said generally, most centers have patients sign over such checks to the provider of the service.
But, he said, often the checks are delayed, which creates challenges once patients have left their care.
It can become “difficult to collect [checks] from them. If they go back home and they’re not on the right track ... they receive the checks and that’s just like adding fuel to the fire,” he said.
An example is of a 34-year-old man who said after receiving such checks after substance use treatment, they helped fund his recent relapse on drugs such as fentanyl and cocaine.
He said he received about $11,000 in such reimbursements from Blue Cross and Blue Shield of North Carolina.
“They just started sending me checks. I wasn’t sure what to do with them but when I called and asked, they said they were for me,” he told The Epoch Times.
The insurance company declined to comment if patient payments are used intentionally for non-contracting providers. The company also declined to comment on the man’s particular case.
The commissioner for the Department of Insurance of North Carolina, Mike Causey, told The Epoch Times in a statement that the department is aware of the issue.
“I continue to be concerned about out-of-network payments going to patients receiving treatment for drug addiction because it presents an opportunity for the patients to use the money to buy drugs and relapse,” he said.
He said he plans to look for ways to resolve the issue.
“Anything that contributes to the opioid crisis is of concern to me. I will continue to monitor this situation and work with our legal counsel and legislators to come up with a solution that is in the best interest of consumers,” Causey said.
According to the man in question, last fall he had been sober for a few months and had saved $11,000 mostly from the insurance payments.
One day in early October, he said, he regrettably called his old dealer and made arrangements to purchase.
During this recent relapse, he said he overdosed several times and required hospitalization.
“The nurses told me I wouldn’t live long,” he said. “I could barely breathe or do anything.”
Having more money to spend, he said, made it easier for him to use.
But insurance companies say the “pay to patient” model encourages treatment providers to only admit patients that are contracted with them.
The Association of California Life and Health Insurance Companies—which advocates for private sector partnership between the state and health insurers—sent a letter in 2017 asking Bradford to amend SB 636 to remove language preventing insurers to pay substance use patients directly.
Steffanie Watkins, a vice president with the association, said in the letter the bill would remove insurers’ only “tool” to encourage providers to serve “in-network” patients.
Blue Cross and Blue Shield of North Carolina declined again to comment if patient payments are used intentionally for non-contracting providers. Blue Cross of California also didn’t respond to a request for comment.
President and CEO of the Association for Behavioral Health and Wellness—which represents U.S. health plans and insurers—Pamela Greenberg told The Epoch Times that payments to patients are typically made for out-of-network services because the health plan doesn’t have a contractual relationship with the out-of-network provider. The relationship, she said, is between the insurer and the patient.
Greenberg said that “pay to patient” is one payment method for services that aren’t in-network. This is true not only for behavioral health, including substance use treatment but also for medical care.
“There are reasons payment is done this way. It’s not done to be negligent,” she said.
According to Greenberg, without a contract or any sort of relationship with out-of-network providers, insurance reimbursements are sometimes made to patients since that’s to who insurers have a responsibility.
“That’s why when it’s out of network, the check is going to the patient. This happens on the medical side too,” she said.
She said the association is aware of concerns about such payments, especially to those who have been in substance use treatment, and is open to possible solutions.
“We don’t want to see people then use that money and go buy drugs and overdose,” she said. “If there are remedies, we’d be interested in having conversations about that,” she said.
One option, she said, is to possibly only have such “pay to patient” reimbursements for medical services, and not for substance and mental health disorders, which would be paid directly to the service provider instead.
But Greenberg said such might not be an option as some may consider it a violation of the federal Mental Health Parity and Addiction Equity Act of 2008, which mandate equal treatment between behavioral health and medical services.
The issue has, however, slowed as more insurers have expanded their in-network services, according to industry experts.
Stampp Corbin, who is the president of the Addiction Treatment Advocacy Coalition—which advocates for education and consumer protection in the field of addiction treatment—told The Epoch Times there are at least 26 states that have passed laws preventing such payments to patients, but California is not among them.
Corbin, on behalf of the coalition, sent a letter in 2019 to California Assemblyman Jim Wood (D-Santa Rosa) asking for his support in addressing the issue, specifically to author legislation for a state ban on all such insurance payments and those related to mental health disorders. Corbin said he did not receive a response from the assemblyman.
The coalition was also a major supporter of the 2017 attempt in the Legislature which sought similar action.
“[They] could prevent this simply by having the check made out to the substance use treatment provider and the patient, so the patient can’t cash the check. They won’t do this either,” he said.
Corbin said he believes insurers understand how patients will likely spend the money. With the money spent on drugs or alcohol, the treatment provider would never see the funds and would be less likely to admit patients with similar plans.
“They send it directly to the patient, knowing full well that may cause a relapse, and the likelihood of the provider getting those funds is reduced substantially,” he said.
