In 1996, the Mental Health Parity Act required insurance companies to provide the same benefits for substance abuse and mental healthcare services as they do for ordinary medical care. In 2010, the Affordable Care Act imposed penalties for not providing such comparable coverage. Due to the expansion in requisite coverage, there has been an expansion in the number of addiction treatment facilities. Consequently, insurance companies and state and federal governments are increasingly scrutinizing the industry for fraudulent or abusive practices and the consequences of noncompliance are gravely significant, whether you are dealing with a costly and time-consuming audit, or you find yourself or your facility the subject of a criminal investigation.

Some of the most common fraudulent trends in the addiction treatment industry are as follows:

  1. Up code (or down code) billing practices. Up coding is the practice of billing for more than the service(s) that were actually provided. Down coding consists of billing for a lower level of care, commonly where a patient has exceeded their maximum days at a certain level of care, so a provider chooses to down code to receive at least some amount of reimbursement. Both billing methods are improper and will be considered false claims that constitute fraud.
  2. Paying marketers on a per patient basis. Instead, marketers should be paid fair market value for their time and effort, regardless of the number of successful referrals they procure.
  3. Routine waivers of coinsurance, copayments and the offering of cash discounts.
  4. Providing incentives (anything of value) to patients who treat at your facility. This includes but is not limited to free plane tickets and/or transportation to and from the facility, free medication copays or discounted room and board.
  5. Requiring patients to participate in aftercare. It is okay to encourage aftercare and make a clinical recommendation based upon an individual patient’s diagnoses and future needs, but the ultimate decision as to if and where a patient participates in aftercare, must be the patient’s.

The implementation of proper compliance procedures such as the utilization of thorough patient intake forms and development of internal policies and procedures are crucial to maintain compliance in the addiction treatment industry. As healthcare attorneys, we see it time and time again where facilities belatedly engage legal counsel after an audit or investigation has already been initiated; and it typically involves matters that were completely avoidable had proper compliance measures been previously put into place. If you or your practice are interested in developing compliance on the front end, please do not hesitate to reach out for a consultation with the Florida Healthcare Law Firm.