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Health care fraud is a growing issue in the United States, with estimates suggesting that it accounts for anywhere between 3% to 10% of the nation’s annual health care expenditure. However, the exact amount of fraud within the behavioral health care sector remains unclear. What is clear, however, is that fraud in this space has become a significant pain point in recent years, especially as the opioid epidemic has led to a sharp increase in demand for services.
As the demand for behavioral health services continues to skyrocket, the regulatory frameworks that were designed to oversee this sector have struggled to keep pace. This mismatch between the need for care and the ability to regulate it has provided fertile ground for fraudulent practices, putting both insurers and patients at risk.
The Challenge of Addressing Fraud in Behavioral Health Care
Carl Reinhardt, director of Anthem’s special investigations unit in the western U.S., discussed this issue at the Payer’s Behavioral Health Management and Policy Summit in Washington, D.C. According to Reinhardt, the growing need for behavioral health services has outpaced the development of policies and regulations to manage it effectively.
“The need [for behavioral health services] has grown up so much faster than the policy and the ability to really think through what’s going to be the best model to use,” Reinhardt said during the panel. “We’re trying to continue to build this edifice based upon a really bad foundation.”
The opioid epidemic, in particular, has placed immense pressure on the behavioral health care system. With skyrocketing demand for addiction treatment services, some unscrupulous providers have exploited this demand, submitting fraudulent claims for services that were never provided or overcharging for services rendered.
As Reinhardt pointed out, Anthem alone faces hundreds of millions of dollars in losses each year due to fraudulent practices in areas like residential treatment and urine drug testing. The impact on insurers like Anthem is just one example of how widespread the problem has become.
Fraud and the Financial Toll on Insurers
Anthem, a large insurance provider based in Indianapolis, is not the only insurer grappling with the financial toll of fraud in behavioral health care. Reinhardt’s statement underscores the magnitude of the issue. The rise of fraudulent practices in substance abuse treatment facilities is a growing concern for insurers, especially as the opioid epidemic has created a perfect storm for fraud to flourish.
The costs associated with fraudulent residential treatment services and drug testing practices alone are astronomical. When looking at the bigger picture, the scale of the problem becomes even more apparent, as insurers across the country are facing significant financial losses due to these fraudulent activities.
The Push for Stricter Regulation
In response to the growing issue of fraud within behavioral health care, there is a strong call for increased regulation. Reinhardt believes that stronger regulations could help curb fraudulent practices and provide a clearer framework for providers to follow.
One step in this direction came in 2018 with the passage of the Eliminating Kickback in Recovery Act (EKRA). EKRA was designed to provide oversight for substance abuse providers who are not reimbursed by federal payers, helping to prevent kickback schemes and other unethical practices. While EKRA has faced some criticism, it represents a step toward creating greater accountability within the addiction treatment space.
At the state level, California has already begun taking action. Just last month, two new addiction treatment bills were signed into law, a move experts believe could signal the beginning of broader state-level regulatory reform. These laws are intended to increase transparency, regulate practices, and ensure that addiction treatment providers follow ethical guidelines.
Reinhardt emphasized the importance of having clear, standardized rules in place. “Rules help what I do because now I can point to a standard and say, ‘You violated the standard,’” he said. “Without that standard, it’s the Wild West.” Having such standards in place not only helps to identify fraud but also ensures that ethical providers can continue delivering quality care without being unfairly targeted.
Whistleblowers: A Vital Part of Fraud Prevention
One of the key ways fraud is detected within the behavioral health sector is through whistleblowers—individuals from within service provider organizations who come forward with information about unethical or illegal practices. Ken Marty, assistant special agent in charge for the Philadelphia regional office of the U.S. Department of Health and Human Services (HHS) Office of Inspector General (OIG), highlighted the importance of tips from insiders.
“People from within that practice come talk to us,” Marty explained. “Some of my best cases come from people within a service provider agreement saying, ‘This is not right.’” Whistleblowers play a critical role in exposing fraudulent activities, and encouraging individuals to report unethical practices is vital for preventing fraud.
Despite the challenges, many providers in the behavioral health care industry continue to operate with integrity. Noreen Vergara, senior vice president of general counsel and chief human resources executive at New Directions Behavioral Health, stressed that the vast majority of providers are committed to offering high-quality, ethical care.
“The reality is the vast majority of providers out there are providing good care, not fraudulent behavior,” Vergara said during the panel.
Moving Toward a More Ethical and Transparent Future
The issue of fraud in behavioral health care is complex, but the way forward is clear: stronger regulations, greater transparency, and a commitment to holding unethical providers accountable. By implementing standards that both protect patients and support ethical providers, there is hope for a future where fraud is minimized, and individuals seeking help for addiction and other behavioral health issues receive the care they need without exploitation.
Legislators, insurers, and providers must continue to work together to create a framework that balances oversight with the need for effective care. The opioid epidemic has already stretched the behavioral health system to its limits, and addressing fraud will be crucial for ensuring that the system remains sustainable and trustworthy moving forward.
As the behavioral health care sector continues to evolve, it’s essential that industry leaders, lawmakers, and insurers remain vigilant in their efforts to combat fraud. Through a combination of strong regulation, collaborative efforts, and ethical practices, there is hope that the system can better serve the millions of individuals who rely on it for support.
