Small Rehab Forced to Close Due to Pervasive Insurance Fraud



"Tom Horvath, Ph.D., had two small residential treatment programs in California: one had six beds and one had four. The programs, called Practical Recovery, required abstinence while patients were there (Horvath is also president of Smart Recovery, which has mutual support groups around the country in which participants are not required to be abstinent). Charges ranged from $42,000 a month to $54,000 a month. 'We had a number of clients who paid cash to do that,' he told ADAW last month. 'But we weren’t in a mansion, like in Malibu, and a lot of folks are more interested in a man- sion than in treatment.' So Practical Recovery used out-of-network insurance policies as much as possible."

"Out-of-network covers nonparticipating treatment providers, but there is usually a copay. When patients heard they would have to write a check for thousands of dollars for their copay, they told the intake coordinator they had found another facility that would not only forgive the copay, but would send them a plane ticket. 'This is insurance fraud; we don’t do that,' Horvath told us. Un- able to compete with the providers that do this, he shut down his pro- grams. He was not a member of the National Association of Addiction Treatment Providers, because 'I couldn’t join an organization that so explicitly endorsed the disease mod- el as the way to treat this problem,' he said. 'And many of their members are part of the problem anyway.' Horvath said the solution lies with the insurance companies. 'They’re the ones with the money; they set the rules,' he said. If insurance companies made sure that patients paid co- pays, there would be less fraud. 'I think that addiction is such a small piece of what insurance companies do, they don’t pay attention to this,' he said. Currently, Horvath is running an outpatient program with about 10 staffers. 'I’m investigating other options,' he told ADAW. 'In the past I was out-of-network, but I’m going to look at being in-network as well.” 

~ Alcoholism & Drug Abuse Weekly, p. 7-8. DOI: 10.1002/adaw 




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