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Paul Zimmerman
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Health Net Deepens Investigation of Addiction Treatment Centers

As noted in a blog posted earlier this year, addiction treatment providers have been receiving an increased number of requests from payors seeking a range of medical and billing records and other documentation concerning the provision of substance abuse treatment and related services. Several major payors have begun aggressively monitoring and investigating claims, and now Health Net has separated itself from the pack by dramatically expanding its attestation requests to smaller providers. While there are, no doubt, some bad actors in the addiction treatment community, it appears that health insurers are cracking down hard on all providers in an effort to ferret out allegedly fraudulent practices.

Among other things, payors are investigating referral practices, the medical necessity of services and whether providers waive out-of-pocket payments from patients. In early 2016, providers were met with widespread requests from Health Net for attestations and verifications. All letters came from Health Net’s Special Investigations Unit. The early round included spreadsheets with requests for specific patient and date of service information, as well as a demand for supporting documentation for each corresponding claim.

On Feb 29, 2016, Health Net sent out a second round of letters, this time without any reference to specific patients or dates of service. Instead, Health Net asked providers (some of whom have treated only a very small number of Health Net beneficiaries) to simply sign and return the attestation. It now appears that Health Net is expanding the scope of these letters, potentially to all substance abuse treatment providers in California. The company is also sending these requests to providers in other states, including Arizona, Nevada, and Texas.

The second round of letters does not appear to be tailored to target specific providers who are under suspicion of fraud or abuse, and in fact were sent to many providers who have never had any prior indication from Health Net that there is a question about their treatment or billing. Health Net’s Claims Department is simultaneously requesting support records with respect to every claim submitted by some providers, and is thus withholding payments longer or freezing them entirely.

This puts providers who are currently treating Health Net patients in a difficult position: Do they continue treatment in light of frozen payments?  Do they stop treating patients who are at a critical stage of recovery with potential to relapse? Some providers might be inclined, in light of financial constraints, to stop seeing Health Net patients, raising the question of access to care, which is required under the Patient Protection and Affordable Care Act (PPACA) and other regulations.

With the Health Net/Centene merger now approved, it is unclear what the company’s intentions are with regard to the substance abuse treatment industry. M&R attorneys are closely tracking this matter, and will provide updates as they happen. In the meantime, if you are an addiction treatment provider, the time is now to educate yourself regarding payor audits, marketing arrangements and industry referrals. In addition, facility owner/operators and their laboratories should focus on developing fraud and abuse compliance programs and procedures, if they have not done so already. Your ability to continue doing business might depend on it.

This article is not offered as, and should not be relied on as, legal advice. You should consult an attorney for advice in specific situations.