How Substance Abuse Billing Issues Cause Lost Revenue?

How Substance Abuse Billing Issues Cause Lost Revenue?

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Substance abuse billing and revenue cycle management are two of the most important factors for addiction treatment centers. There is an abundance of lost revenue across the United States by addiction treatment facilities. Collecting payment for services provided by drug and alcohol rehabilitation facilities is a difficult process with many different areas. Revenue cycle management companies usually only try to get the low hanging fruit. They never advise to establish an early relationship with clients to assist in getting the checks the insurance companies are sending to the client.


It is now a requirement in many states that insurance companies provide benefits for drug and alcohol rehab. Most treatment centers will accept private insurance such as Cigna, Blue Shield. Other operators elect to be all cash pay or accept public insurance such as Medicaid.


When a patient goes to a drug addiction treatment facility in need of care one of the first steps is determining what treatment program to choose. This is largely influenced by the patient’s mode and means of payment. If the patient is using their insurance coverage to pay for services rendered, they must check whether the program:

  • fully accepts insurance – meaning that insurance will pay for all your treatment
  • accepts insurance partially
  • where you pay a deductible, co-pay and/or another amount upfront and the insurance company pays the rest
  • cash-pay with billing, where the patient pays everything upfront and receives reimbursement from the insurance later
  • complete cash-pay only, where there are no insurance billing services and the patient has to pay for treatment out of pocket
  • Is the centers client getting the check in their name sent to them.


The last one is the overlooked by many operators. Pay 2 patient works the best when the facilities establish a working relationship at the beginning.


Understanding Substance Abuse Billing and Pay 2 Patient Reimbursement


Many substance abuse treatment center owners think their substance abuse billing is under control. However, it is estimated that these facilities are leaving 25% of their billing on the table. Usually their revenue cycle management overlooks the pay 2 patient issue. Many times, the CEO and Owners will right off the unpaid balances from clients that directly received the payment from the insurance company.


Sometimes it happens that when the insurance company is giving reimbursements, it reimburses the payment for services with a check directly to the client. The check is cut in his, or her name and not to the addiction treatment center.  Once the patient receives that check (which can amount to tens or even hundreds of thousands of dollars), they are expected to forward that money to provider. This causes some problems that could be prevented by a pay 2 patient service provider.


Revenue Cycle Management Pay 2 Patient Top 7 Problems Caused by Insurance Companies


Substance abuse billing issues stem from not being prepared. There should be processes and procedures in place to help prevent not getting paid. While many operators know this, there still are millions of valuable dollars left on the table. What are the top 7 substance abuse billing issues with pay 2 patient?

  1. Not using a pay 2 patient service that doesn’t get paid unless the treatment center gets its’ due receivables.
  2. The treatment facility doesn’t have a previous agreement with the patient and is expecting reimbursement as billed. This means that the treatment facility would have carried out services without the promise of payment.
  3. If the substance abuse treatment facility does not meet the criteria as specified for insurance reimbursement to occur, insurance companies may do this on purpose to avoid sanctions.
  4. Not knowing which insurances make payments directly to the client.
  5. Direct payment to patients who are in early recovery phase can have immense impact including relapse, or worse yet, overdose. Overdose may be encouraged by a sudden increase of available cash that would otherwise be unavailable. Imagine a patient who is only a couple of weeks sober suddenly getting a check for thousands of dollars. Chances are, they will be tempted to use that money to get their next “hit” and from here, the out-of-control spiral continues.
  6. It may be difficult to track down individuals to follow up on a payment due from insurance companies. This would mean that if, for instance, this happened to ten people, the treatment facility would have to use its resources to search for these patients and reclaim their money.
  7. Chances are that the treatment facility will not be paid on time. There may be delays in reimbursement especially if the patient uses up part of the money or holds on to it. This hinders the normal flow of the treatment facility and if it happens multiple times, it may eventually have long-term effects.


Insurance Payments Sent Directly to Clients Increases Relapse


The whole point of going to a treatment facility for drug abuse or alcoholism is to provide an environment free of triggers. Keeping clients away from addictive substances themselves so they can start the healing process on a good note. Giving them a whole load of cash that they can squander around is counterproductive.


Joan Borsten, Vice President of the Addiction Treatment Advocacy Coalition spoke about this issue. Here’s what he had to say, “It takes a long time for the brain of a former addict to heal and while cravings are imminent, as soon as the patient sees all that money, they will probably think about getting drugs again. For the treatment facility, this may mean that they never get reimbursed for their services.” Those who support Bradford’s bill include the California Consortium of Addiction Programs and Professionals (CCAPP), the County Behavioural Health Directors Association of California, the Borsten’s group, and the

California Access Coalition. Currently, in the US, 27 states have outlawed the issuance of insurance payments directly to patients who are in recovery from addiction. That leaves 25 states that have this issue. Is your treatment center in one of these states?

Allowing insurance companies to make direct payments to out-of-network providers would remove one of the tools that insurers have to encourage providers to include themselves in the network, thus providing quality care.


Patient Brokering Fuels Lost Reimbursements


Another issue that comes about is patient brokering. This is a big issue with California drug rehabs and new patient brokering laws. Recovery advocates or middlemen find patients and sells them and their insurance coverage to select centers willing to pay the highest on the side. Some of these facilities say that they would not receive any patients otherwise. They have come up with a blanket figure to pay these brokers every month regardless of the number of patients they bring in. This curbs the pay-per-patient taboo but brings with it another host of problems.

Addicts begin to see their insurance cards as get-out-of-jail-free cards, making material demands in exchange for staying in treatment. If the treatment center does not deliver, the patient simply jumps onto another bandwagon that will meet his demands.


The Bradford Bill aims to stop this practice by making patient brokering a misdemeanour that is subject to a fine of $2,500. This will also allow out-of-network providers to collect payment directly from insurance companies, and of course, as we have seen above, direct payments also come with their own host of problems.


Pay 2 Patient collects Lost Substance Abuse Billing Revenue at No Risk


Substance abuse billing and revenue cycle management leave a tremendous amount of money left uncollected. Solutions to the above problems are available with ways to recapture lost substance abuse billing dollars. At Pay 2 Patient if we don’t collect anything, you pay us nothing. We work in conjunction with your billing company and admissions staff on the pay 2 patient issues. We have collected in excess of 2 million dollars for addiction treatment centers.


This is a sad because the ones who will suffer the most are the drug addicts and alcoholics. With pay to patient situations they view their condition as a money-making opportunity to continuously fund their habits. If this is not solved soon, the number of deaths by overdose will certainly increase. We are in difficult times for operating a drug and alcohol addiction treatment business. Having operating cash is one of the biggest factors in remaining open for business. Give Pay2Patient a call at (954) 592-1922 and get some earn revenue back without any risk.

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