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How Does Insurance Work with Addiction Treatment?

There has been an ongoing push for people with substance use disorders to get adequate benefits and coverage from their insurance policies. In the past decade there have been significant improvements in this area, including the passage of the Mental Health Parity Act and the Affordable Care Act. However, insurance companies have also more recently fought back in various ways and continue to make it more difficult for people to use their substance abuse treatment benefits in the ways they should be allowed to use them. Seeking a balance in this struggle will help stabilize parts of the behavioral healthcare field and provide the life-saving care for those who need it.

Insurance Coverage for Drug & Alcohol Rehabilitation

Here are some common questions and information regarding health insurance coverage and addiction treatment:

What does a verification of benefits do?

In order to find out more about how your individual policy will cover substance abuse treatment services, most programs will start with a verification of benefits (VOB). This involves looking up benefit information through online portals and/or calling the insurance carriers directly to get specifics on the plan. This includes what type of plan it is, whether or not there are substance abuse benefits, the deductible amounts, out of pocket maximums and co-insurance responsibilities.

What is the difference between in-network and out-of-network?

Health insurance policies are often divided into whether or not they are restricted to treatment providers that are in-network with their respective carriers or out-of-network. An HMO policy is limited to only in-network providers, while a PPO policy usually allows the person to choose, with the understanding that their coverage and co-pays are different for in- vs. out.

On one side, when people have the choice, their in-network deductible is lower and their co-insurance payments are also lower. This is because the treatment provider agrees to accept lower payment amounts from the insurance carrier. On the other side, their deductible may be higher to go out-of-network, but they have more program options in hopes to find what will best suit their needs. Most out-of-network facilities will try to work with people to be able to make it affordable for them.

Why do I have to pay my deductible still?

Deductibles have to be met. This amount is withheld by the insurance carriers from any payments or reimbursements and is a non-negotiable number. Sometimes treatment providers can help finance out the higher deductibles over time to make the payments easier.

What is my out of pocket maximum?

Most policies have an out of pocket maximum. Let’s say they have a $2,500 deductible, then insurance covers %60 percent of the allowable amounts until the person reaches and out of pocket max of $7,500. After that, the policy pays 100% of the allowable amount. Theoretically, this should mean that for most policies and treatment providers, the patient/client would owe somewhere between the $2,500 and $7,500, depending on total billed charges and allowable amounts, and the insurance would pay for everything else.

What is the difference between the allowable amounts and billable rates?

Allowable amounts are the maximums that a particular policy will pay per service. This varies from carrier to carrier, state to state, and even within policies from the same carrier in the same state. For out-of-network providers, there is no way of knowing the allowable amounts ahead of time, unless they have had someone with the exact same policy before, otherwise they have to estimate based on historical data.

Billable rates are either pre-determined for in-network providers or based on usual and customary rates (UCR) for those services in a given area for those that are out-of-network. Usual and customary rates are the average amounts charged by treatment providers for those same services in a city, state or region.

Can I use my insurance for treatment again if I have relapsed?

Yes, people can attend treatment more than one time per year since substance abuse and mental health benefits have been mandated to be covered at the same level as other major medical conditions. Nobody hopes to attend treatment again, but sometimes recovery can be a long process and may take multiple attempts or several different types of treatment. If you have already been to a rehabilitation program this year and are in need of help now, contact your preferred treatment provider or facility locator service and they can help you verify your coverage.

Most Common Insurance Carriers

  • Aetna
  • Beacon Health/Value Options
  • Blue Cross Blue Shield
  • Cigna
  • Coventry Health
  • Humana
  • Magellan
  • Multiplan
  • Anthem
  • Highmark
  • UnitedHealthcare

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