How to Get Through the Maze of Insurance Verification and Coverage for Addictions Treatment

Let’s start with you completing the “Insurance Verification” form on this website. With that information I can begin to verify coverage for you. Sometimes the insurance companies are not that easy to get a clear answer from, but this will get the ball rolling.

Insurance Verification and
Coverage Determination
are two separate steps.

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Verification can be done fairly quickly with a phone call to your insurance company. With the information provided on the Information Verification form, you usually will get a “Yes” or “No” answer over the phone.

Coverage determination is much more complicated, requires more in-depth clinical and family history information, takes longer and is decided solely by your insurance company.

I hope you will read the rest of this article in which I explain how the process works. First, we determine if you have insurance coverage for addiction treatments (verification). Then, your insurance company will inform you what recovery treatment they will authorize for you (coverage determination).

This article presents a “good-to-know” basic overview of insurance terminology and insight. The world of insurance is so much more in depth and involved than I am able or even willing to interpret in a simple blog post. However, this is a collection of the most common words, limitations and concerns that come up when considering the use of insurance to cover addiction treatment.

Please remember: Just because your insurance policy states you have benefits for mental health and substance abuse treatment services does not mean that all treatment services will be covered. It also does not mean that you will receive all the benefits listed in your policy.

I explain this and the information about you which your insurance company will likely need to make a determination about your coverage situation. Let’s start by defining some important insurance concepts and then move on to how insurance companies make decisions regarding authorizations for payment.

Insurance benefits are usually divided into two categories:

  • In-Network – In-network means insurance companies contract with treatment providers to offer services for negotiated contracted rates. These contracted providers are considered ‘in-network’ providers.

  • Out-of-Network - Some insurance policies will include ‘out of network’ benefits which means there are also benefits that include treatment providers who have not contracted negotiated rates with the insurance company.

As a general rule (although not always the case) utilizing in-network benefits will cost you, the client, less money at the time of services. Out-of-Network benefits tend to have higher deductibles and copay percentages at the time of services, thus requiring you to pay more out of pocket.

More insurance terms you may or may not be familiar with

  • Deductible – Simply put, this is the amount of money you will pay the treatment provider before insurance benefits will kick in.

  • Co-pays – Co-pays are usually a set dollar amount or a percentage split between you and the insurance company. For example, a copay may be $30 per visit or $200 per treatment admission, or 80/20 split meaning you pay 20% and your insurance pays 80%. Often, the copay percentages apply after the deductible is met.

  • Out-of-Pocket – Refers to money you pay in addition to what your insurance will pay for services

  • Out-of-Pocket Max – Refers to a set amount of out of pocket cost you will pay in order for your insurance to pick up paying at 100%.

  • Pre-authorization – This means the treatment provider (in some cases the client) has to contact the client’s insurance company to obtain prior authorization of coverage before the client is admitted to services.

  • Authorization – Often referred to as ‘authorized days/sessions’. Authorization means the insurance company has stated they will pay for a set number of sessions or days of service.

Insurance policies have limitations and restrictions (such as pre-existing conditions) written into the benefits. These are very important when discerning coverage for a treatment provider you’ve chosen or will choose. Restrictions will vary from policy to policy. These limiting clauses are another set of terms worth defining for clarity:

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  • State Restrictions – This clause limits you to only providers within the state indicated. This is usually the home state of the policy holder or could be the home state of the employer if the policy is through your employer.

  • Accreditation Requirements – Treatment providers’ (especially intensive outpatient and residential providers) can obtain accreditation from several quality control organizations that set standards for treatment providers to be measured by. The most common are Joint Commission on Accreditation of Healthcare Organizations (JCAHO) and Commission on Accreditation of Rehabilitative Facilities (CARF). Insurance policies may have a clause stating they will only cover providers who have one of these accreditations.

  • Level of Care Exclusions – This usually means the benefits will cover only certain levels of care as outlined in the policy. For example, residential services may be excluded however partial hospitalization programs (PHP) may be covered. This could take on as many different scenarios as there are levels of care and policies to dictate them.

  • Facility Requirements – While this is rare, it does exist. I’ve seen this mostly referenced to a ‘hospital based program’ meaning the treatment program has to be attached to or housed within a medical hospital for the policy to cover the services.

  • Clinical Criteria – This refers to the symptoms and/or consequences you are currently exhibiting that warrant treatment services. For example, substances of abuse, amounts consumed, usage patterns, frequency, family issues and history of addiction, job issues, financial issues, physical issues, etc.

Here is a common scenario so you can see how insurance works with addiction treatment services.

Mr. Smith needs to enter an addiction treatment facility to get help with his alcohol addiction. He drinks daily to intoxication. He’s gotten written up at work for being drunk on the job. His wife and adult children have expressed concerns about his drinking and he has noticed he can’t go more than a day without a drink without feeling shaky. After getting his 2nd DUI, he decides to check himself into a treatment facility to detox and get help with his alcohol addiction. His insurance is BC/BS (Blue Cross/Blue Shield) of GA. His policy states he has a $3000 in-network deductible and 80/20 copay with an out of pocket max of $7500. His policy also has a state restriction and any facility he goes to must be JCAHO accredited.

Interpretation: If he wants to use this insurance policy to help with his treatment cost, he will have to go to a facility that is in network with BC/BS of Georgia that is located within the state of Georgia that is JCAHO accredited. He will owe the facility $3000 to meet the deductible (if it hasn’t already been met) plus 20% of the treatment costs until he reaches $7500 out of pocket max. BC/BS of GA will likely preauthorize a few days of inpatient treatment as he meets clinical criteria for detox (daily drinking accompanied by inability to stop without withdrawal). BC/BS of GA will consider his other clinical criteria in making decisions to authorize further days in treatment beyond detox.

As you can see from this example, the insurance company decides whether you meet clinical criteria for insurance coverage – not you, not your family, and not the treatment provider.

As you can see, there are numerous facets to interpreting insurance benefits and coverage. If Mr. Smith had called his insurance company to ask for a list of his insurance benefits, he would have gotten a list of all the benefits allowed on the policy along with an explanation of his deductibles and co-pays and a list of in network providers. He most likely would not have gotten a comprehensive list of the restrictions or an explanation of how those benefits may or may not be authorized based on his clinical criteria.

Addiction treatment facilities have full time staff dedicated to the task of interpreting and, in conjunction with the insurance carrier, determining insurance coverage for any given client. As stated earlier, there are as many different policies and client scenarios as there are people and insurance companies.

If you want to use your insurance to cover treatment cost, it’s important to have your insurance verified and interpreted as part of the process of selecting a treatment facility. Any quality treatment facility that takes insurance will verify your insurance benefits and give you an estimate of treatment cost based on your benefits, restrictions, clinical criteria, and expected length of stay. Having that understanding upfront goes a long way in making appropriate financial decisions related to seeking the right type of care for addiction treatment.

Call me at 912-678-4480 today. I am available to you and your family to be your concierge and guide you through the Maze of Insurance Verification and Coverage.

Relapse: “I don’t know what happened. It just did.”

Unspoken Rules of Addiction