Outcome-Based Insurance Reimbursement for Substance Use Disorder Treatment: Eliminating Fraud and Alleviating Behavioral Healthcare Costs from Desperate Families and Overburdened Insurance Providers
Life of Purpose has recently accepted its first two in network contracts in an effort to increase accessibility to academically focused treatment and reduce the costs associated with substance use disorder treatment for both families and insurance providers. While this is a tremendous step in the right direction, it is, quite frankly, not sufficient to address the larger systemic problems facing our society in the midst of the current opioid pandemic that is tearing through an entire generation, leaving a wake of dead young people, broken families, and financially distressed communities. The treatment industry, as a whole, needs to move to single code billing and outcome based reimbursement—and it needs to do so yesterday if we want to actually start addressing this crisis in a meaningful way at the scale which is warranted.
The treatment industry, as a whole, needs to move to single code billing and outcome based reimbursement—and it needs to do so yesterday if we want to actually start addressing this crisis in a meaningful way at the scale which is warranted.
Over the course of my recovery, I’ve been told, once or twice, to “keep it simple.” This philosophy is the cornerstone upon which so many of us in long-term recovery have built lives of meaning and purpose. Within the recovery community, the phrase “keep it simple” has been adopted as a colloquialism to effectively describe a very easy and useful formula for identifying a specific problem, identifying a straightforward solution to that problem, and then subsequently implementing that solution. While this time tested and true approach has worked repeatedly in my own life and the lives of millions of fellow recovering individuals we, as a society, seem to have incredible difficulty scaling this philosophy up to effect systemic change both in the treatment industry and in the larger way that we view and address substance use disorder within our country as a whole.
It is often assumed, incorrectly so, that because a problem is extremely complex, the solution needs to be equally complex. This assumption has had the unfortunate consequence of leaving us with an ever-growing pile of symbiotically related problems that at first glance appear unsolvable, rather than with a few, broad reaching, easily implemented solutions. Solutions, in fact, need to be as simple as possible to have any hope of actually being implemented. The larger the scale of the problem, the greater the simplicity required of the solution to effectively address that problem.
So let’s talk candidly about the problem. Substance use disorder has clawed its way from the tragedy of unfortunate individuals all the way up to the summit of the most significant issues facing our country today. The opioid epidemic alone now officially accounts for 144 deaths per day in the United States. The numbers are actually higher because we don’t have a particularly good system for tracking these numbers, but the official numbers should be more than enough to warrant a widespread systemic change. To put these numbers in perspective, opiates alone kill more Americans per year than guns, than cars, than natural disasters, than terrorism. They kill more Americans than Americans died during the entire Vietnam war. If we include alcohol in the equation, we add another 100,000 deaths per year. Between just the substance use disorder-related deaths associated with these two substances, we are losing more Americans each year to the drug war than we lost Americans on average each of the four years that we fought the Civil War. If we add tobacco to the equation, it only takes us 24 months now to kill more Americans with substance use disorders than have died in every single war in the history of our nation combined.
Opiates alone kill more Americans per year than guns, than cars, than natural disasters, than terrorism. They kill more Americans than Americans died during the entire Vietnam war.
But just in case millions upon millions of deaths and the devastation wrought upon tens of millions of grieving family members isn’t enough to move both our government as well as the treatment and insurance industries to action, and let’s be clear it hasn’t been thus far, let’s discuss the economic impact of substance use disorder in America. The economic impact of substance use disorder is now north of $750,000,000,000 per year (that’s billion with a “B” and that’s the conservative estimate). Some of that staggering number is pretty easy to calculate. For example, over 50% of the U.S. prison population is incarcerated on drug charges (up from 16% in 1970 and not including other crimes perpetrated for drug related purposes); and as found in The Economic Burden of Incarceration in the U.S. study out of the Brown School at Washington University in St. Louis, the aggregate burden of incarceration is $1,200,000,000,000 (that’s trillion with a “T”) in the U.S. when you factor in the cost to families, incarcerated persons, children, and communities. Some of the costs are significantly more difficult to calculate though. How much productivity is lost by American workers while they’re fighting it out tooth and nail to get their child with a substance use disorder off the streets and into treatment? How does it affect their work performance when they have to bury that child because the insufficient system we have in place failed to effectively interrupt that child’s death? How many of our nation’s insurance providers’ limited resources are burned up and wasted by the fraudulent billing practices of overpriced and ineffective pseudo drug treatment facilities that operate under the premise of don’t leave until the miracle happens and the duration of time for that miracle is directly correlated to the socioeconomic status of your family and the strength of your insurance policy? What does it cost hospital emergency rooms and police departments to deal with the fallout of ineffective treatment episodes that are laser focused on maximizing payout per day instead of stretching resources to ensure appropriate lengths of stay and highest probability of successful outcomes? What is the cost associated with having to conduct those ineffective interventions 14-17 times instead of 1-3 times in the case of effective clinical interventions?
Within the substance use disorder treatment industry, under the current fee for service model, the cost of relapse has been pushed onto desperate families and, rightly so, increasingly disenfranchised insurance companies. The way these two groups have and do respond out of necessity to this burden is different but equally problematic from both a clinical and economic standpoint.
Let’s start with the families. It has become increasingly difficult for families to differentiate legitimate high quality treatment facilities from what has effectively sprung up as a parasitic parallel industry fueled by human traffickers (Yes, it’s illegal to buy and sell humans here in America. Check the 13th Amendment for reference.) and fraudulent systems more interested in diagnosing and treating insurance policies than the people to which those policies belong. In response, many families affected by substance use disorders have completely lost faith in the treatment industry and, typically after several failed episodes and the cost of a house, many are turning the clock back 30 years and taking a “tough love” approach. This draconian last measure is typically preceded by years of frustrating letdowns and stems from two primary factors. The first is that bad treatment or even fake treatment now is worse than no treatment. When you receive bad treatment, you think that you’ve already tried treatment and treatment doesn’t work for you. As an adolescent, I personally had a horrific yearlong “treatment” episode in Western Samoa in the 90s which involved getting physically abused, locked in wooden boxes, never seeing a therapist a single time, and relapsing within three hours of discharge. Needless to say, I wasn’t particularly keen on treatment after the experience, and it took another 4 years before I was able to accept good clinical services and achieve lasting recovery. The second is that families simply run out of money because the cost of repeated and continuous treatment episodes is enough to strain even the most financially stable of middle-class households. The consequences of this absence of support are often extreme. Obviously, if a young person with a substance use disorder isn’t making it with support, they’re not typically going to turn around and make it in the absence of support. We describe this end of the metaphorical road with the saying “jails, institutions, and death” within the recovery community. Institutions (in their modern form) obviously being the most desirable of those three options.
Bad treatment or even fake treatment now is worse than no treatment. When you receive bad treatment, you think that you’ve already tried treatment and treatment doesn’t work for you.
The way the insurance providers have responded to this is by increasing out-of-pocket maximums, increasing deductibles, and shortening covered lengths of stay. It is, of course, easy to shake our fists at the insurance industry and call them monsters. After all, how could people in the healthcare business cut coverage of the sick and suffering in the midst of the worst health pandemic to hit the U.S. since the Spanish Flu? Well here’s the thing, they didn’t. They’re spending more for shorter stays and getting worse results. Doesn’t seem like a particularly good model? That’s because it’s not. But it’s our side of the street, not their side which needs cleaning. We’re the ones who allowed all of the fraudulent lab billing and unnecessary ancillary services to gouge the insurance companies and create the current landscape. Even those of us who do everything by the book and don’t engage in the fraud have been either ineffective in stopping the practices within the treatment industry or have taken the stance of, “I’m going to stay in my own lane and let this sort itself out.” Everyone knows it’s happening, but not enough people have stepped forward and demanded an end to it. Well, now we don’t have a choice in the matter. We have stood by and allowed empires to be built on fraud and the suffering of families in their darkest hour. We have stood by and allowed a human trafficking industry to masquerade as the treatment industry. We have stood by and allowed unethical lawyers to maintain the profitability of the human trafficking industry by pretending to stand up for the rights of individuals with substance use disorders. We have stood by and allowed the illusion of a system of care to develop which pays for sickness instead of wellness. We have allowed for the first time in the modern era, the statement that “recovery doesn’t work” to go unanswered. No one gets to sit this one out anymore. The fact that we allowed the development of an industry so dysfunctional that insurance has been forced to cover drug testing while people are in a substance use disorder treatment center at a higher rate than it covers actual provision of treatment, has directly limited access to treatment in the midst of a health crisis and is deplorable to say the least.
It is of course easy to shake our fists at the insurance industry and call them monsters. After all, how could people in the healthcare business cut coverage of the sick and suffering in the midst of the worst health pandemic to hit the U.S. since the Spanish Flu? Well here’s the thing, they didn’t. They’re spending more for shorter stays and getting worse results.
Which brings us to the solution—outcome-based reimbursement, single code billing, and low-cost subacute level care recovery support systems to keep people in recovery. Recovery itself is relatively cheap to initiate and extremely inexpensive to maintain; it’s relapse that is so astronomically expensive. Outcome-based reimbursement is simple and consequently relatively easy to implement. Here’s how it works. Insurance providers pay 50% of the single code billable rate during the course of treatment and then pay an additional 100% of the billable rate (for a total of 150%) if there are no acute level care episodes in the following 12 months after the initiation of treatment. Twelve months is used as the metric to define a successful treatment episode based on SAMHSA’s Treatment Episode Data Sets, which show that 83.3% of the often quoted 90% relapse rate that occurs in the first five years takes place from 0-12 months. This is, of course, because when the statistic 90% is tossed around, we fail to take into consideration the fact that we are dealing with aggregate data rather than a lottery of misfortune. We similarly fail to take into account the order of magnitude higher success rates for young people in recovery who end up in a collegiate recovery program pursuing a life of meaning and purpose, than those who are railroaded into an artificial welfare state built on insurance fraud that just endlessly recycles them through a corrupt system devoid of concern for their wellbeing. In the event that there is a reoccurrence of use warranting another acute level care treatment episode, the treatment facility keeps the 50% of the billable rate that it has already been paid for services, does not collect the additional 100% of the billable rate for producing a successful outcome, and a new treatment episode begins either at the same facility or a different facility depending on the clinical needs of the client. To be clear, outcome-based reimbursement is a financial model rather than a clinical model. This is particularly significant in that it does not require extensive research to review and implement the way a new clinical model does. It simply requires a calculator, a green visor, and existing data sets—all of which the insurance companies have in abundance. The outcome-based reimbursement model significantly alleviates the burden to insurance providers, eradicates the ability of fake treatment providers to commit fraud, disperses resources over a longer period of time to produce more successful outcomes, allows insurance providers to defer two-thirds of the already lower cost of a successful treatment episode for 12 months, and incentivizes the implementation of effective clinical interventions within the treatment industry. Importantly for the families being pushed to the edge of bankruptcy simply for trying to save their child’s life, it reduces out-of-pocket expenses, deductibles and highly motivates treatment centers to support effective subacute-level services such as recovery high schools, collegiate recovery communities, alternative peer groups, and recovery community centers. These subacute care services are accessible to the communities in which they are based, and in turn, become an astronomically valuable resource to disadvantaged populations coming out of woefully underfunded public facilities and even the criminal justice system. Most significant from an economic impact standpoint though is the way in which this financial model affects the cost of treatment over multiple treatment episodes. If an individual receives two treatment episodes before achieving sustainable long-term recovery, the cost of two treatment episodes is still paid (50% for the first unsuccessful episode and 150% for the successful second episode). If, however, the individual receives 20 treatment episodes, only the cost of 11 episodes end up being paid out (50% of 19 unsuccessful treatment episodes and then 150% of the 20th successful episode).
To be clear, outcome-based reimbursement is a financial model rather than a clinical model. This is particularly significant in that it does not require extensive research to review and implement the way a new clinical model does. It simply requires a calculator, a green visor, and existing data sets—all of which the insurance companies have in abundance.
This concept of paying for success is not new or unique. There’s at least one very big place where we already do it—education. Both in K-12 and higher education, we focus on metrics such as student retention, GPA, and graduation rates. The pressure to produce successful outcomes is so great now that entire systems have shifted to accommodate the need to produce graduates instead of dropouts. The question we are faced with when we’re talking about outcome-based reimbursement in the treatment industry then shouldn’t be, “Can we do this?” The question should be, “Can we continue to afford not to?” Spoiler alert. The answer is no. We simply cannot continue to overpay for failure in our society.
I have always, and continue to believe, that people with substance use disorders are worth fighting for. We have the capacity to become valuable contributing members of society and go on to live productive and meaningful lives if we can just get the support we so desperately need at the beginning. Not only do we contribute significantly to our communities, but to society as a whole. Some of us, for example, just laid out a clear-cut relatively easily implemented way to cut billions of dollars off behavioral healthcare costs over the next decade and finally start getting people the help they need at the scale society needs. We can and do recover. Never let them tell you that we don’t.
Andrew Burki, MSW
CEO, Life of Purpose