There’s a strong case to be made that the payer and reimbursement landscape for substance use disorder (SUD) treatment providers is the most challenging in all of behavioral health care due to several deeply entrenched and overlapping issues.
For starters, SUD treatment has, in the past, been viewed as less legitimate than other forms of medical or psychiatric care. That flawed view has caused some to see SUDs as a “social issue,” rather than a clinical one, contributing to chronic underfunding and limited reimbursement.
Added to that is the SUD space’s significant work in Medicaid, which varies significantly by state and often under-reimburses for intensive services like residential treatment. As the Trump administration and GOP lawmakers work to overhaul Medicaid, it’s extremely likely that new funding challenges will emerge, too.
“The burden of the substance use disorder epidemic disproportionately falls on Medicaid beneficiaries and the uninsured,” Stephanie Strong, founder and CEO of Boulder Care, told Addiction Treatment Business at the end of 2024. “With a new administration and leadership at CMS, there could be meaningful changes to Medicaid.”
Higher denial rates, shorter authorizations and limited opportunities to implement value-based care arrangements also present hurdles for SUD treatment providers.
To gain deeper insight into the latest developments and obstacles facing addiction treatment providers, ATB and Behavioral Health Business surveyed dozens of industry professionals from a wide range of roles from April 16 through May 16. The group included C-suite provider executives, consultants, government officials, payers, investors and technology vendors, among others.
More than 75% of the responses came from individuals who actively work for SUD treatment organizations.
About 34% of those respondents said they worked in the outpatient, intensive outpatient program (IOP) or partial hospitalization program (PHP) levels of care. Another 19% said that residential or inpatient care best described the organization that employs them, while 15% said they were with multispecialty providers.
When asked to rate their current relationship with their primary payer on a scale of 1 to 5, with 1 being “very poor” and 5 being “excellent,” the average rating for the group was 3.64. Perhaps somewhat surprisingly, just over one-quarter of respondents said their payer relationship was excellent.
Looking ahead, however, over 40% of the SUD professionals that ATB and BHB polled said they believed provider-payer relationships would worsen over the coming 12 months. About 45% of respondents said relationships would stay about the same, while just over 14% said relationships would improve.
When it comes to the No. 1 payer-related challenge SUD treatment providers face, the bulk of individuals surveyed pointed to persistently low reimbursement rates.
“Lower reimbursement rates challenge being able to provide comprehensive, holistic services,” one respondent said.
The three challenges cited with the second-highest frequency were payment delays, cuts and general uncertainties tied to Trump administration changes, and prior-authorization requirements.
“Unfortunately, sometimes, payers stop authorizing treatment when it would still be clinically necessary,” another respondent said.
“Unpredictable reimbursement imposes massive administrative costs,” a different respondent shared.
When asked whether their organization had entered into any alternative or value-based care contracts in the past 12 months, including anything beyond traditional fee-for-service models, more than 77% of respondents said their organizations had not.
What’s more, just 26% of respondents said they expected their organizations to enter into new alternative or value-based contracts in the coming 12 months.
“Payers are hesitant to enter into non-standard agreements given their inability to track outcomes across multiple contracts,” one respondent said.
About 43% of respondents identified Medicaid as the payer source that accounts for the majority of their revenue mix. Nearly 29% of respondents identified commercial insurance, including both in-network and out-of-network, as their dominant payer source.
“Medicaid managed care plans want to move towards more value-based payment arrangements, but there isn’t agreement on what the right metrics are – let alone clear data parameters, resources, or tech to make it easy,” a respondent emphasized.
Just 8.6% of respondents said self-pay or private-pay accounted for the majority of their revenue.
While ATB and BHB did not ask about the impact of AI on SUD payer dynamics, some respondents went out of their way to highlight it as a growing area of concern.
“More payers are implementing AI, so the pace is increasing with prior auths, denials and audits,” one such individual noted.
This survey was launched as part of the Addiction Treatment Forum. Respondents were eligible to receive a free ticket to the event, taking place July 17 in Chicago. These and other insights from the survey will be discussed during the upcoming event.
