In this Episode of Family Psych Consumer:
Knowing How Your Insurance Company Thinks, Acts, and Pays For Treatment Actually Helps You Be a Better Advocate
In this episode, Tom provides an overview of how health insurance works in the world of mental healthcare. He provides the key information about the primary pay and contract issues to get the most out of your insurance plan. Parent and family caregivers are always fighting against and cursing insurance companies. That’s a LOT of energy and time that usually gets spent BEFORE you know the inside rules of how they operate. Here, Tom reviews the what, how, when, and why of getting services paid for.
Tom starts with the most important premise EVERY parent or family needs to know – you are paying someone else to pay your bills. And if your loved one needs certain mental healthcare services all the time, your insurance company will want to participate in treatment decisions to make sure whoever you are trusting and they are paying is delivering a sustainable outcome for your loved one. But most importantly, knowing how the insurance company makes decisions and defines quality care actually helps the family caregiver be a better advocate when working with hospitals, residential programs, and addiction services.
Full Episode Transcript
Hi everyone, welcome back to Family Psych Consumer. Today we are talking about everyone's necessary evil partner in mental health care: health insurance. This is another primer on one of the most important things you do as a parent or caregiver; pay for care in the short run and responsibly manage family assets needed for future care later run.
So today is about the business of insurance . . .how you should think about it, how you should use it, and frankly, how you should manage your expectations of your insurance company without going crazy. This starts with knowing what it is and what it is not . . .and speaking of crazy, how in some ways, the insurance industry actually thinks like a parent or caregiver.
Ok, so now that I’ve blown your mind with that statement, lets begin with the most important thing to know about health insurance; the one thing I absolutely want you to remember, so if I get hit by a bus tomorrow you will always act with this in mind.
“Health insurance does not insure your health - it insures your money”.
So what does that mean exactly? It means that when you pay a health insurance premium, you are paying someone else to pay your healthcare bills. Which means if I’m in the healthcare insurance business, I am betting that the cost of paying your occasional healthcare bills will be less than the premiums I have collected from you all those months or years when you were healthy. But what if you are sick all the time? Or you have a chronic condition like bipolar illness or depression that needs ongoing care forever? Well, if you need me to pay your doctor, or worse, hospital bills, all the time, I am losing money while it remains a good deal for you.
Now we live in the era of Obamacare, which means your insurance company can’t drop you from their plan or stop paying for care if you have a chronic condition. So what do they do to not go broke paying your bills?
First, they begin managing or overseeing the decisions your doctors, therapist, or hospitals make to get you well and keep you well. They create guidelines for how doctors and hospitals will provide treatment in order to get paid; they create quality care criteria for treating each psychiatric condition, definitions of the medical necessity for each treatment, criteria for a healthcare provider being qualified to delivery service, and definitions of the what/how/why of your illness for each service. Example: they tell a hospital if your loved one’s symptoms meet their standards for admitting you to the hospital. Then, they start denying payments when they disagree with the decision-making of the hospital about the what/how/why of delivering their treatments. And they don’t mind disagreeing with the hospital treatment team because the doctors have no financial skin in the game; The insurance company is required to pay the bill if you go to the hospital, and then if treatment team does a mediocre job, then let you go, and 2 months later, you need to go back, the insurance company is stuck paying again. (Quick side note: under Obamacare, insurance companies can withhold partial payments to hospitals whose patients cycle back within 30 days; so even the government realized that the person treating you has to be accountable to delivering quality care and outcomes in order to be paid by Medicare and Medicaid.)
So the private insurance companies are always trying to manage the costs of unnecessary or redundant treatments because they have to pay everyone’s bills, pay their own costs, and of course, make a profit, or they have no rationale to exist as a business. Now whether the workings of capitalism should be comingled with delivering the basic human right of good health is another issue. For now, they ARE co-mingled and you have to negotiate its trap doors - and that’s why we are hear together.
So back to my initial premise; health insurance does not insure your health it insures your money. When you turn to an insurance company to pay for a therapy visit, or a hospitalization, or a residential program, or addiction detox… you are asking them, actually expecting them, to fulfill a legally enforceable contract and pay your healthcare provider. However, it is up to that provider to thoroughly document what they did to achieve a medical outcome. You see, in this age of data collection, insurance companies are now learning what does or doesn’t work in mental healthcare. So if a doctor want to keep you in the hospital to change your medication, the insurance company has a data set of 5000 patients who have undergone the same change and can know the success rate of that specific plan, and then approve or deny care based on their knowledge o from other patients. This is how they are developing what are known as “best practices” and judging providers as following or not following them.
Now, to be fair to the psychiatrists of the world, they also practice medicine based on solid science, which means good data, and the best practices of their profession; most of the time, the doctors critical thinking and the insurance companies data line up. But when it doesn’t, and a patient is denied extra hospital days, or a certain expensive medicine, an appeal can be made. This means the hospital doctor who wants his or her way gets on the phone with a doctor from the insurance company and they discuss is as peers. This is known as a doc-to-doc.
But I want you to understand that in this troika of patient, healthcare provider and insurance payer, the patient is the least empowered. Their job is to show up, participate in treatment to the best of their ability. The healthcare provider is required to competently deliver those treatments per the rules of the insurer (and their profession), but most healthcare providers frankly don't care who pays their bill - the insurance company or the family. Most would prefer to be paid privately by the family and sidestep insurance altogether. The third player in this dance is the insurance company, who has all the power because even if the first two players perform well, so to speak, the insurer still can decide not to pay based on their own assessment of the healthcare provider’s outcome or the patient’s ability to recover. So the bottom line is since you're paying them to pay your bills, they are going to do everything in their power to control the healthcare delivery process in order to legally that bill. And sometimes that means they say “no” or “make me”.
Remember in our earlier podcast, we discussed the difference between acute illness and chronic illness? Acuity describes an illness cycle that will have a beginning, middle, and an end . . .but chronicity is an illness cycle that doesn’t quite end and the patient remains unwell but medically stable. So if we are managing a loved one living with schizophrenia or bipolar illness or addiction, and he or she needs inpatient care frequently, we are no longer managing an acute condition, we are managing someone with a chronic illness. And remember health insurance companies are in the acuity business; they need a patient to have many more healthy days to pay for the sick ones.
So how do they manage people with chronic illness? Very aggressively with case management, and something called disease management, which is helping people live as healthy as possible despite their chronic condition. So if you are managing a loved one who has a chronic psychiatric condition, or a young adults whose distress and symptoms leave you wondering “is this an emerging chronic condition or an acute event?”, know that your insurance company is asking itself the same thing. So before you have expectations of your insurance company and what they should pay for, you need to look at your loved one or their treatment history and ask yourself the same question - is this more of an acute condition that we're trying to treat and pay for or does my son or daughter or spouse have more of a chronic condition that insurance company may not pay for?
Now under Obamacare, health insurance companies have to keep paying for maintenance care, even for chronic conditions, but they will severely limit investments in treatments for change if they feel that change is not possible. SO your job is to know the bias and advocate for what and how change can be realistic when you are looking for new or better care.
The good news about insurance companies and chronic conditions is that they are legally bound to provide services and have internal support services for caregivers called case management to manage the chronic patient to keep them well. Insurance companies have a contractual duty to serve your loved one with a chronic illness, or as the professionals say, a serious and persistent mental illness. But they will do everything in their power to manage the costs of maintenance services that they know will never end.
Most companies have a case management department to help manage high cost patients who use a lot of hospital days; they case managers can help the patient or family get information about other resources or local community mental health programs that can help that person remain stable outside the medical world. This is because the insurance world pays for medical or therapeutic care but the community mental health world has support services that help with functioning day-to-day and learning to live with disability. But if you have a son, daughter, or spouse who has chronic treatment or support needs, please call your insurer and asked them if they have case management services to help your loved one; almost all will say yes.
Okay so let's take a deeper dive about the who, the what, the how, and the when, and the why of your insurance company’s decisions to pay for treatment. For their perspective, who do you seek treatment from, to deal with what illness symptoms, and how will they help you get better, and when should you go, and why should you go there now? These questions help them figure out what we call the level of care you need.
There are four levels of care your loved one will be treated in at various stages of getting well after being sick - acute care, meaning a hospital for a few days or weeks; residential treatment, meaning going to a ranch or retreat-like place, with doctors, nurses, and therapists (kind of like what we wish every hospital could be) and stay for a few months; day program, meaning he or she is back home but going to a clinic every day Monday through Friday; and outpatient, meaning they are pretty much back to themselves (whatever that is for them) and seeing a therapist and a psychiatrist weekly or less.
Let’s start at the outpatient level and work our way back. When it comes to outpatient psychiatrist or therapy appointments, insurance companies generally pay for blocks of care each year. They understand that these maintenance services, if delivered by competent providers who coordinate with each other, will keep people well (translation: maintain their health at that lower, less expensive level of care). When your loved one is struggling with illness symptoms and needs daily support, maybe even daily oversight by a psychiatrist to adjust medications, your loved one will be referred to a day program. Day programs, or partial hospitalization programs, or PHP, is a structured day of therapies, coaching, doctor appointments, and emotional support to get ready to go back to your life, and usually are on hospital property. This is so hospitals can have a continuity of care and “step down” their patients to their own program so the patient can be seen by staff that knows them and can follow the same treatment plan that began on the inpatient unit.
Next is residential. Most residential programs are geared to persons with addiction or what we call dually diagnosed, meaning addiction and a mental illness. So the majority of people who are suited for residential have medical conditions that need separation from their day-to-day life AND a lot of time to learn new coping skills to manage life without substances or learn better self-management of the trauma or stressors they overwhelm them each day. Residential treatment is generally the Holy Grail of most insurance policies; it's highly expensive and it is rarely paid for unless someone needs to detox from substances (30 + days) or can’t stay stable and keeps going back to the hospital.
Lastly, there is the acute care or hospital level, used for short-term stabilization of an illness event,
So again think of levels of care as a vertical scale: acute care at the top, residential below it, day programming services below that, and then outpatient. As you hear me describe your love in each level, you can hear that each level has a sweet spot for serving a particular intensity of symptoms and medical needs. So your job is to know that when your loved one is in distress, his or her psychiatrist will be trying to assess if they need a day program or to go to the hospital. Likewise, if he or she goes to a hospital for evaluation, that hospital staff will be evaluating if they need to be at that acute level of care of a level below. And your input as the recent historian and past historian of treatments, medications, and period of wellness matter greatly to the hospital staff trying to get it right.
Okay so let’s pivot to healthcare cost. Insurance companies will always want to share healthcare costs with you; it's the way they make sure that you are a stakeholder in managing those costs. This is where deductibles, co-pays, and premiums come it. You pay a monthly premium for your health insurance; then they make you pay a co-pay, or small charge, every time you see a doctor or therapist in their network. If you see someone who is NOT in their network, you usually have to pay that provider yourself and then file a claim to get paid back. Finally, you have to pay a certain large amount each year of all the healthcare costs (not premiums) called an annual deductible, usually several thousand dollars at the beginning of each year. This is the insurance company’s way of further incentivizing you not the chase unnecessary treatment (in their view).
Okay so this get back to the question how do they decide what to pay for? First the insurer wants to know if your loved one is being treated at the right level of care and if so, for how long? If they don't need to be in the hospital, do they need to be in a day program? Or can they make it at the outpatient level of care? When your loved one sees the provider at any level, they need to provide the insurer with a treatment plan that substantiates that your loved one is at the right level of care and the plan for a favorable outcome; if the insurer thinks it's the wrong level or a incomplete plan, they will deny payment. And almost always, this denial comes when your loved one is at a higher level of care that the insured feels should end. I’ve never heard an insurance company say to a therapist “we’re not paying you because your patient belongs in a hospital”; on the contrary, they continue to pay the therapist, not always knowing what is happening, but happy paying at that lower level of care . . .until the patient decompensates and goes to the hospital.
This is an example of how the insurance companies used to operate – provide minimal oversight, make more money on the front end, then get burned on the back end, and point the finger at the healthcare delivery system. Now they are getting more intrusive with following patients through levels of care to stay ahead of breakdowns in wellness.
Now a few words about the insurance company’s way of defining how any given treatment is “medically necessary". Ok, here’s where I get a little in the weeds, so listen closely, or better yet, hit the rewind button and listen again; Every insurer has publishes definitions of the medical necessity for each level of care. This means the characteristics of your loved one’s clinical presentation that makes that healthcare provider’s service, delivered at their level of care, medically necessary to stabilize or recover the patient. There is how your loved one looks, sounds, feels and reports what they need; then, there is what treatments the provider can offer at their level of care; and then there is the compatibility of those two things (what the patient needs and what the provider can give); and finally there is the insurance company’s agreeing or disagreeing with that compatibility.
Now here's some of the so-called good news; insurance companies are getting very exact in defining best practices, medical criteria and characteristics of quality and service delivery, to make sure that they are paying for services that deliver outcomes, not just maintenance that has no chance of sustained change for the patient. Even the federal government has gotten in on this act, as Obama care has implemented rules that allow insurance companies, and Medicaid and Medicare, to limit payments to hospitals if they discharge a patient from a psychiatric unit who cycles back to that hospital unit within 30 days as result of poor treatment or discharge planning. So hospitals are working harder to make sure that patients who leave the hospital stay out of the hospital, if only to avert the 30 day penalty window.
So even though we hate them for not paying all our healthcare bills - on our terms - they are slowly but surely defining very good rules of the how when where and how long to drive quality treatment that it's worth their payments. You should go online and look at your insurers definitions of medical necessity, levels of care criteria, and definitions of quality and frankly arm yourself with that information as you look at healthcare providers.
Okay so why should you understand all this geek speak from insurer standpoint? Because as you read their -
standards and guidelines for care
the medical necessity of why someone should be in the hospital
their descriptions of quality hospital care
the considerations a physician should make or take for admitting your loved one to a hospital
the expectations of progress
how a patient’s family should be involved in the assessment process
how family therapy and discharge planning needs to be done
how there needs to be an individualized treatment plan that's clear and specific in its goals
. . . you will find yourself thinking “this is exactly how I would want a hospital to operate if I was paying the bill. But more importantly, their standards is your roadmap for how any provider at any level of care does (or should do) their job; in essence the insurance company is arming you with the ‘behind-to-curtain’ look of the how when where and what of delivering quality, measurable mental healthcare.
Sometimes the insurance company is not paying because the healthcare provider is not providing the records needed to pay the bill, or if their treatment services are mediocre, the records indicate a subpar level of competency and the payment requests get rejected.
Here's a good example of that. I was working with a young woman I referred to a Florida residential treatment facility some years ago and the insurer wanted to pay for residential treatment. Now, did they really want to? Of course not, but they understood that residential treatment, if done properly, could keep this young woman out of the hospital. Residential treatment was less expensive than being in the hospital. But the facility would not provide accurate nursing and treatment notes of what exactly was happening day to day for the young woman. So the insurance company kept denying the claims by the facility - not because they did not have to pay under the contract, they kept denying because the facility was not providing information that describes what they were doing, how they were doing it, and how the young woman was progressing. Now eventually after a lot of beating about the head and shoulders, I was able to get the residential facility to document what I knew were their quality treatments; and the insurer paid. And of course, we all wanted them to produce a quality medical record because when the young woman moved on to her next LOWER level of care, her next healthcare providers can know everything about what worked to get her well and sustain her recovery.
Okay next insurance topic. Bringing your best critical thinking and advocacy to dealing with your insurance plan. Understand what battles you can fight and win and the ones you will never win. With private insurance, the main battle to fight is getting their case management service to help your loved one who uses a lot of hospital days. In these situations, you and the insurance company have the same agenda – keep your loved one out of the hospital and remain stable at a lower level of care. AND connecting with the case management staff gives you a better chance at getting residential care paid for; sometimes, the insurance company will make an exception to the policy, called a single case agreement, to pay for residential care to keep them out of the hospital.
Another battle you should fight is being bullied by a hospital to discharge your loved one home early if there is not a safe discharge plan. Remember, the hospital wanting to discharge and the hospital being paid are two unrelated events in our view. So if you have evidence they will not be safe at home, or coming home is actually going to destabilize your loved one, advocate to the hospital that you will not accept them home at that time. When the hospital wants to discharge him or her, they will put extreme pressure on you to take them (even say things like “well, we will discharge her to a shelter”) but don’t get shaken by that; tell them calmly and factually why their timing is bad, or you need another day to arrange the right support. My mother always said, “the answers always no unless you ask”. But in this case, the answers always no unless you stand your ground . . . . especially when it comes to plans to discharge someone home before the a quality aftercare plan is in place.
The main fight you never will win is having your insurance company pay for providers out of network if there is no out-of-network benefit in your plan. Some plans require you to only use only their doctors and hospitals, known as a health maintenance organization or HMO, while other plans allow you to use any doctor or facility you want. So if you're in an HMO and you want to go outside that network, don't ever expect them to pay for anything that is not the contract unless they have a compelling financial incentive to do so.
Lastly I want talk about when to spend your private dollars on mental healthcare and when to spend the insurance company’s money. Residential treatment is one of those things that may be a good investment of your family dollar when your policy will not pay. Especially if your loved one can’t stay sober or out of the hospital for more than a couple months, or cannot gain any momentum with independently living skills because unmanaged trauma has eroded emotional stamina to live in the world at large. In these cases, going away for several months to get fully stable or fully sober and then learn life skills can the best and most necessary service at that time in their life. Sometimes a very targeted investment in residential treatment can gain a sustained outcome that allows someone to remain well for a long time and feel normal again, which itself feeds momentum in the recovery process.
Another service that can be critical to recover planning but rarely paid for by insurance companies is a neuropsychological evaluation. This type of evaluation happens with a psychologist administering paper and pencil tests and other tasking that measures neurocognitive or executive function abilities; essentially, to understand how the brain is working. The neuropsychological evaluation also helps understand psychiatric or psychological processes in one’s thinking so we can have a fuller understanding of what is happening beyond just how your loved one is verbally reporting what’s going on. Insurance companies will pay for neuropsychological evaluations when someone's had a brain injury from an accident or a stroke but rarely for the psychiatric patient. We are doing another installment of our Shrink Rap series soon with a psychologist Dr. Siobhan Hannes to explain this more fully.
Okay so to wrap up on this talk on insurance - we discussed a bit about the culture of insurance and how I want you to think about it; what it is and what it's not; we talked a bit about how I want you to use it as a financial tool in your toolkit, and bringing your critical thinking to it. Please go to the family psych consumer podcast page and give us some feedback about this episode; tell us about some of your insurance stories and let us know what else in the insurance realm you want to talk about. I’m Tom O’Connor, saying until next time, take care.