Trend Watch: Usual and Customary Rate on the Decline

by admin on April 12, 2017 No comments

By: Karina Gonzalez

Most of the commercial payors are paying PHP (Partial Hospitalization Plan) and IOP (Intensive Treatment Plan) at a bundled daily rate. Many of the plans are now adding urine drug screens to the bundled daily rate and imposing a cap on the number of screens that can be done during an admission.  Plans are paying rates that are much nearer to a Medicare rates.  Payments based on a reasonable percentage of a provider’s charge are becoming harder to find, as the calculation of what is a usual and customary rate of payment continues to decline.

Yet, a great portion of substance abuse facilities are operating with more clinical staff, at a higher level through licensure, with better Electronic Medical Systems, more programs to combat some of the symptoms of addiction and with a greater awareness of compliance with state and federal guidelines.  Even with these necessary improvements, reimbursements continue to decline.

Despite the public health crises in addictions among the youth and the outcry about the need for treatment, smaller facilities are having a difficult time meeting operating costs and providing quality of care given the continued decline in reimbursement rates. Many providers are operating under corrective action plans after several years of ongoing audit activity. Facilities are engaged in a lot more self-critical review analysis of their processes, documents and staffing trying to determine whether they can survive the onslaught of closures among these facilities as they get hit with large overpayment demands.  Some commercial plans have just stop paying claims, and it has become a nightmare to locate someone, anyone, in the claims departments, special investigative units or legal department who is knowledgeable or willing to take the time to address these issues.

But with these improvements, overall there is a better delivery model, better quality of care, and better outcomes, so at some point we anticipate there will be more targeted approach to reimbursement rates that are more reflective of the level of care rendered.

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