Optum Coverage Changes Leave Residential Treatment Providers With More Questions Than Answers

Optum has changed the way it covers out-of-network benefits for certain members in California, leaving many residential behavioral health providers unsure where they stand and what the changes means for future payments, Behavioral Health Business has learned.

Part of the multinational managed healthcare and insurance company UnitedHealth Group, Optum detailed the policy changes in a recent notice obtained by BHB.

Those changes, effective July 1, reduce the availability of out-of-network coverage for UnitedHealthcare Fully Insured plans. Specifically, the notice says those plans will now exclude out-of-network benefits for medical and behavioral services provided to members “outside of their service area.”


For Optum-administered behavioral health services, the update applies to non-emergency, sub-acute inpatient or outpatient services received at:

  • -PHP and IOP alternate care facilities
  • -Freestanding psychiatric and substance use disorder (SUD) treatment facilities
  • -Residential psychiatric and SUD treatment facilities
  • -And inpatient rehabilitation facilities for psychiatric care and SUD

While there is still a lot of uncertainty around what the coverage update means, attorney Zachary Rothenberg said the changes could have a huge impact on California’s SUD treatment industry, which admits a large number of out-of-state patients.

“What it means is that primarily residential treatment programs … are going to be at risk of not getting paid by Optum for treating those out-of-state patients, depending on the kind of insurance that they have,” Rothenberg, a partner at Nelson Hardiman LLP, told BHB.


Based in California, Nelson Hardiman is a specialty healthcare law firm that serves clients across the nation. Behavioral health is one of the main focuses for the firm, as well as for Rothenberg.

Since the Optum notice began circulating, Nelson Hardiman’s “phones have been ringing off the hook,” Rothenberg said, with California-based providers calling asking for advice.  

“They want to know what to do next,” he said. “People are asking, ‘Does this mean I need to get these out of state patients with this kind of insurance out the door to some other provider? Or does this mean the folks I already have in house are okay for now, but I can’t admit anyone like that in the future?’”

Rothenberg said the answers to those questions remain unclear. As such, he’s encouraging clients to keep reaching out to Optum directly until they get answers. 

A representative for Optum told BHB that beyond California, “the change will be phased in based on the specific plans and on plan renewal or with new customers in states where this is approved.” Additionally, the representative defined a “service area” or “coverage area” as the “state where the covered individual is currently a legal resident, plus any geographically bordering state. For students, the state of residence is defined as where the student attends school during the school year and any bordering states.”

In the notice announcing the news, Optum called the new policy an issue of “quality and cost-share.” However, Nelson Hardiman in a client alert newsletter said the change is more likely a cost-saving measure that will limit patient choice and hurt behavioral health providers.

“[Behavioral health providers] typically are either unable to secure contracts with payors like Optum despite efforts to do so, or they opt to stay out-of-network because they do not want to accept the lower reimbursement rates demanded by the major payors when contracting to be an [in-network] provider,” the newsletter said. “Furthermore, many insureds intentionally choose plans that have [out-of-network] benefits, paying substantially higher premiums, precisely because they want the flexibility of accessing providers who are outside the network and who may provide superior quality, convenience, or both.” 

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