The hidden cost driving up mental healthcare

The hidden cost driving up mental healthcare

An old scheme previously identified in Long Term Care (LTC) facilities has become routine in residential mental health settings as well. An increasing number of suspect mental health facilities are viewing its residents as revenue streams at the expense of the employers’ health plans and driving up costs.


According to the data we are analyzing in large, self-funded employer member claims, the monetization of substance use disorder (SUD) patients is happening frequently. It’s a recognizable pattern and given the “captive nature” of the SUD population, it is not surprising. We’ve seen this before in LTC facilities where ancillary providers arrive on-site to perform various services. These services run the gamut, but some of the more common services include eye doctors, wound care specialists and podiatrists. The service is often billed as a routine visit, which oftentimes is not a covered benefit. Historically, LTC owners have marketed this relationship as a benefit to potential residents as “free” and a convenience as they don’t have to leave the facility to receive services. The ancillary providers then gain access to residents and their healthcare plan. It is viewed as a win-win for the facility and provider; however, the healthcare plans are frequently paying for services that are medically unnecessary and should not be covered.


Healthcare claims data shows a similar pattern in SUD environments. According to our data, facilities seem to be enticing members to travel (often great distances when there is usually comparable in-network providers closer to home) to enroll in expensive out-of-network treatment plans. The member’s plan is then billed for services such as urine drug screens multiple times per week, mobile chiropractors, and nutritionists. We have even seen pre-admission lab testing for communicable diseases administered and billed after a member has already been admitted. This raises a red flag as revenue generating rather than medically necessary because the member in this scenario was already admitted and therefore the tests are not serving the purpose of limiting the spread of disease upon admission.

Many of these services are low-value or no-value care that do not qualify as mental health services under the plan. Seeing this in the mental health environment is troubling given the positive in-roads that have been made in the acceptance and availability of mental health services. But marketing to patients in captive settings is not a new scheme, it has just found a new opportunity.


Diligent employers can improve mental health benefits in their healthcare plans by taking these three action steps:

  • Obtain access to your healthcare data to understand what the plan is paying.
  • Ensure active prior authorization is engaged for mental health and rehabilitation services.
  • When appropriate, seek services from local in-network providers.