California insurance officials are looking into whether Health Net Inc. has improperly withheld payments to addiction treatment centers for months while the company investigates concerns about fraudulent claims.
The California Department of Insurance began an inquiry after receiving numerous complaints from substance-abuse treatment facilities statewide that Health Net had not paid them since at least January, according to providers questioned by the agency. Health Net is California’s fourth-largest health insurer, acquired in March for $6 billion by Centene Corp., a St. Louis-based insurer.
The treatment providers say they can’t afford to accept Health Net patients without reimbursement, and that the insurer is harming its policyholders by limiting their access to treatment. Drug and alcohol treatment centers in Arizona have filed similar complaints about Health Net with insurance officials there.
A Health Net spokesman said “our policy is to not comment on these kinds of inquiries.”
All this comes as the country grapples with an opioid epidemic and more people need help getting sober.
“Health Net has stopped payment for services already provided and it’s unconscionable,” said Stampp Corbin, president of the Addiction Treatment Advocacy Coalition, a nonprofit group in Los Angeles that represents California’s for-profit treatment centers. “The net effect is some small facilities may go out of business if they had a high concentration of Health Net clients.”
The current dispute began in January when Health Net’s director of special investigations, Matthew Ciganek, sent a letter to numerous treatment facilities in California outlining a “number of potential concerns” about “false and/or fraudulent claims.”
In his Jan. 8 letter to providers, Ciganek cited concerns that people who came for treatment from out of state were obtaining benefits for which they were not eligible because they didn’t “continually reside in our defined California service area.”
The letter also said Health Net was looking into allegations that providers had waived deductibles or copayments to attract patients or had paid kickbacks to brokers, testing labs, physicians or other providers who might give referrals.
The company followed up with similar letters to rehab facilities in March and, in addition, contacted patients for information about their treatment.
The letters to patients asked them to show evidence they had paid their deductibles, copays or coinsurance and to furnish a copy of the state license for the treatment facility they visited.
Industry representatives acknowledge that the rehab business has a history of fraud and abuse that warrants close scrutiny, but they say Health Net’s audit goes too far.
“There are bad players in every industry, but this dragnet is too broad,” said Joan Borsten, a co-founder of the Malibu Beach Recovery Center and vice president of the Addiction Treatment Advocacy Coalition.
She said some treatment centers in the coalition report being owed $1 million or more by Health Net for residential or outpatient care. The total amount billed and left unpaid is unclear, she said.
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