Historically, many behavioral health providers operated on a cash-pay basis due to the limited reimbursement options for mental health and substance abuse treatment. This system was born out of necessity, as many providers were either underpaid or faced challenges in obtaining reimbursement from traditional insurers. However, in recent years, the landscape for reimbursement has drastically changed, creating new opportunities for providers to access payments from commercial payers, Medicaid, and Medicare.
While this expansion of reimbursement options has been a welcome development for many providers, it has also introduced a new challenge: complexity in the compliance requirements that come with these payment systems. With the increasing number of payer types and regulations, behavioral health providers must now navigate an intricate web of rules to ensure they stay compliant. Failing to do so could result in severe financial penalties, business interruptions, or even reputational harm.
As a result, experts like Polsinelli shareholders emphasize the importance of developing robust compliance programs. These programs are not only essential for staying on the right side of the law but also critical for streamlining operations, saving time and money, and minimizing the risk of costly mistakes. In a recent webinar, Polsinelli shareholders Bragg Hemme and Jennifer Evans discussed the increasing complexity of the compliance landscape and how providers can safeguard themselves by establishing effective compliance protocols.
The Shift From Cash-Pay to Reimbursement-Based Models
For years, many behavioral health providers relied on a cash-pay model due to a lack of adequate reimbursement options for mental health and substance use disorder treatment. Medicaid and Medicare were historically limited in coverage for behavioral health services, and commercial payers were not always reliable sources of payment for such care. As a result, providers often had no choice but to charge patients directly.
However, in recent years, several key changes have helped expand reimbursement options. Parity requirements—laws designed to ensure that behavioral health services are covered on par with medical services by commercial payers—have increased the involvement of insurance companies in mental health and substance use disorder treatment. Medicaid and Medicare have also expanded their behavioral health coverage, opening up new opportunities for providers to receive payment for services rendered.
These changes, while beneficial, have made the landscape of behavioral health reimbursement far more complex. Providers who once operated without needing to worry much about regulations are now finding themselves dealing with a growing number of rules and requirements—many of which are difficult to navigate without a proper compliance program in place.
Why Compliance Programs Are More Important Than Ever
As providers are reimbursed by a wider variety of payers, they must contend with an increasing number of compliance regulations at both the federal and state levels. At the federal level, providers who receive payments from Medicare, Medicaid, and commercial payers must comply with various rules, including the Anti-Kickback Statute, the False Claims Act, the Civil Monetary Penalty Law, and the Eliminating Kickbacks in Recovery Act (EKRA), which was passed in 2018. These laws apply to multiple aspects of the business, such as referral processes, employment models, claims filings, and payment structures.
“Basically, every aspect of your business we have to pay attention to to make sure that we’re not running afoul of any of these laws,” Hemme explained during the webinar. This is particularly critical as many providers now deal with government reimbursement, which is subject to intensive scrutiny.
At the state level, the complexity of the compliance landscape continues to grow. Many states have enacted anti-kickback statutes and other consumer protection rules, requiring providers to carefully monitor their relationships with referral sources and ensure that they adhere to state-specific regulations.
While these laws may not directly stem from payer-provider agreements, they add another layer of oversight that behavioral health providers must navigate. Increasingly, states are scrutinizing how providers are reimbursed and whether they are following state-specific rules regarding compensation, billing, and contracting.
Commercial Payers: A New Area of Focus
As the reimbursement landscape evolves, so too does the need for providers to manage compliance with commercial payers. In the past, providers primarily focused on government payers such as Medicaid and Medicare, as these were the main sources of reimbursement for many behavioral health services. However, as commercial payers now play a more substantial role in covering behavioral health care, providers must consider the implications of working with these insurers as well.
Evans pointed out that many providers are now seeing increased audits and enforcement from commercial insurers, as these payers are under growing pressure to ensure compliance with mental health and substance use disorder coverage. Commercial payer audits are becoming more prevalent, and without a comprehensive compliance program in place, providers could face significant challenges when it comes to dealing with commercial insurers.
Evans stressed that a well-developed compliance program designed to meet government standards could also help providers navigate the complexities of working with commercial payers. In fact, many of the same compliance elements that apply to government payers are applicable to commercial insurers. By adhering to the same principles for both, providers can reduce the risk of compliance violations with all payers, thus streamlining their operations and ensuring a smoother reimbursement process.
The Seven Effective Elements of a Compliance Program
Polsinelli’s Hemme and Evans discussed the seven effective elements of a compliance program, which were developed by the Office of Inspector General (OIG) for the Department of Health and Human Services (HHS). These elements serve as a guideline for creating robust compliance programs that ensure adherence to regulations while minimizing legal and financial risks.
- Written Policies and Procedures: Establishing clear, written policies is essential for guiding operations and ensuring that everyone in the organization understands their compliance obligations. These policies should cover everything from billing practices to employee conduct and should be regularly updated to reflect changing regulations.
- Compliance Infrastructure: Having a dedicated compliance officer or team is crucial for overseeing compliance efforts. This infrastructure ensures that compliance concerns are addressed in a timely manner and that the program is functioning effectively.
- Effective Education and Training: Regular education and training programs are necessary to keep staff members informed about compliance requirements. These programs should be tailored to the specific needs of the organization and updated to reflect any regulatory changes.
- Effective Communication: Establishing clear lines of communication within the organization ensures that compliance concerns are raised and addressed promptly. This can include regular meetings with the compliance officer, as well as accessible channels for staff to report potential violations.
- Effective Auditing and Monitoring: Regular audits and monitoring processes help providers identify potential compliance issues before they escalate. These checks should be routine and thorough, covering all aspects of the business, from billing to employee conduct.
- Effective Investigation into Violations: When compliance violations are detected, it’s essential to conduct thorough investigations to determine the root cause and take corrective actions. This process should be transparent and conducted with the utmost integrity.
- Consistent Disciplinary Process: Finally, a clear and consistent disciplinary process should be in place to address compliance violations. This ensures that employees understand the consequences of non-compliance and that violations are handled fairly and equitably.
By implementing these seven elements, behavioral health providers can build a strong compliance program that reduces the risk of enforcement actions, penalties, and reputational damage. Hemme stressed that the tighter and more responsive the compliance plan, the fewer opportunities there will be for violations, investigations, and costly legal issues.
Conclusion: A Proactive Approach to Compliance
As the reimbursement landscape for behavioral health continues to evolve, the need for strong compliance programs becomes even more critical. Providers must adapt to changing payer structures, including commercial insurers, Medicaid, and Medicare, and ensure they are complying with both federal and state regulations.
By taking a proactive approach to compliance, behavioral health providers can avoid costly mistakes, streamline their operations, and maintain their reputation as trusted providers of care. As the compliance landscape continues to grow in complexity, investing in a robust compliance program will save time, money, and headaches in the long run. In this evolving landscape, it’s no longer just about providing care—it’s also about ensuring that care is delivered within the bounds of the law.
