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Paul Zimmerman
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Health Net Payments Trickle in to Addiction Treatment Centers as CA Regulators Investigate Insurer

As we have previously detailed, Health Net began directing a great deal of attention toward addiction treatment providers in early 2016. The payor (which has subsequently been acquired by Centene Corp.) started aggressively monitoring and investigating claims from substance abuse treatment facilities, and then dramatically expanded its attestation requests to smaller providers. Among other things, Health Net scrutinized referral practices, the medical necessity of services, and whether providers were waiving out-of-pocket payments from patients. Providers throughout California, as well as states like Arizona, Nevada and Texas, received attestation requests regardless of whether Health Net had any specific evidence of fraud and abuse. At the same time, providers found that Health Net payments stopped completely, including payments for previously-submitted claims that pre-dated the attestation letters.  Now, while some providers are beginning to receive reimbursements from Health Net, the California Department of Insurance (CDI) has reportedly opened an inquiry into the improper withholding of payments.

Back in January, we observed that Health Net’s requests were not accompanied by any evidence or allegations against the specific providers, but rather appeared to have been sent out indiscriminately, based upon geography. Because not every request is reasonable or warranted, we cautioned providers to handle attestation requests carefully to ensure their rights are protected.

Both the CDI and Department of Managed Health Care have reportedly received coordinated complaints from numerous providers, and are now investigating Health Net’s failure to pay substance abuse treatment claims. These providers have been put in the tenuous position of refusing patients the care they desperately need or assuming the risk of providing care that will never be reimbursed. While Health Net and Centene have contacted some providers to make payment, or in other cases, to promise that payment would be forthcoming, numerous providers are still in the dark regarding if and when they will be reimbursed. Even with payments beginning to trickle in, addiction treatment providers, particularly smaller businesses, are struggling to keep up with patient demand.

The majority of providers agree that a certain level of scrutiny is required in order to detect and eliminate fraud and abuse in what is otherwise a vital and benevolent industry. However, by refusing coverage or withholding payment even in situations where there is no articulable suspicion of fraud or abuse, Health Net is effectively preventing patients from obtaining potentially life-saving care. When a patient is denied service because of the likelihood that her health insurance company will delay or completely deny payment, the Affordable Care Act’s purposes and protections are eroded.

Health Net has an obligation to cover behavioral health services and make timely payments to providers for substance abuse treatment. However, at the moment, their commitment to fulfilling this obligation is spotty at best. Even where payments are being made, some providers have complained that the reimbursement rates are drastically lower than Health Net’s reimbursement rates prior to the attestation frenzy. It also remains to be seen whether Health Net will include the appropriate interest and other penalties in its future payments. M&R will continue to monitor this issue as we work with our clients to ensure proper compliance, allow for the provision of quality care to patients in need, and ensure the financial sustainability of their business.

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