Without More Standards, Behavioral Health Is the ‘Wild West’ for Fraudulent Providers

It’s impossible to know just how much the U.S. loses every year to health care fraud, with estimates ranging from 3% to 10% of the annual health care expenditure.

Similarly, it’s unclear just how much of that fraud exists within the behavioral health care sector.

However, one thing leaders in the space and legislators at state and federal levels agree upon is that fraud within behavioral health care has become a pain point in recent years with the rise of the opioid epidemic, which caused demand for services to sky rocket.

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Simply put, need outpaced regulation, according to Carl Reinhardt, director of Anthem’s special investigations unit serving the western part of the country.

“The need [for behavioral health services] has grown up so much faster than the policy and the ability to really think through what’s going to be the best model to use,” he said. “We’re trying to continue to build this edifice based upon a really bad foundation.”

Reinhardt’s comments came Wednesday at the Payer’s Behavioral Health Management and Policy Summit in Washington, D.C., hosted by World Congress and the Association for Behavioral Health and Wellness (ABHW). There, he sat on a panel about fraud within substance abuse treatment.

World Congress is a global provider of health care conferences, while ABHW is a national group that acts as a policy advocate and educational source for payers managing behavioral health insurance benefits.

Indianapolis, Indiana-based Anthem is one of ABHW’s members — and one of many insurers losing money due to fraudulent practices by unscrupulous substance treatment providers.

“Just with residential treatment areas and urine drug testing, it’s hundreds of millions of dollars every year, just from my company,” the panelist told conference attendees. “You can imagine what it’s going to be like when you look at [that fraud figure] in its totality.”

Reinhardt believes increased regulation could fix the problem — and federal and state legislators seem to agree.

Last year, the federal government passed the Eliminating Kickback in Recovery Act of 2018 (EKRA) to provide oversight for substance abuse providers not reimbursed by federal payers — though the law has faced some criticism. And just last month, California signed two addiction treatment bills into law, a move experts believe will be the first of many state dominoes to fall.

“Rules help what I do because now I can point to a standard and say, ‘You violated the standard,’” Reinhardt said. “Without that standard, it’s the Wild West. Part of what we need is standards that are effective but standards that will add to our ability to care for our providers — not argue against them.”

Currently, most successful fraud investigations begin with an employee tip, according to Ken Marty, assistant special agent in charge for the Philadelphia regional office for the Office of Investigations at the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG). Marty was also a panelist.

“People from within that practice come talk to us,” he told conference attendees. “Some of my best cases come from people within a service provider agreement saying, ‘This is not right.’”

And generally, that sense of ethics is shared among providers in the industry, according to Noreen Vergara, senior vice president of general counsel and chief human resources executive at New Directions Behavioral Health.

“The reality is the vast majority of providers out there are providing good care, not fraudulent behavior,” she said during the panel.

Kansas City, Missouri-based New Directions provides managed behavioral health services, an employee assistance program, a student assistance program and organizational consulting and health coaching to private and public health plans.

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