‘It is, frankly, dangerous’: Addiction treatment centers claim insurance denials have increased

Four days into a rehab stint, a 32-year-old relapsed opioid addict called her mother to say she was being discharged over an insurance issue.

“She didn’t want to leave. She was crying,” her mother, Terry, recalled about the June conversation.

RELATED: Rehab becomes more accessible to Nevada Medicaid recipients

Her daughter told her, “If I leave now, I know I’m going to use,” according to Terry. The Las Vegas Review-Journal agreed to withhold the mother’s full name to protect her daughter’s privacy.

Her daughter’s insurer, UnitedHealthcare Health Plan of Nevada Medicaid, also known as HPN, had denied additional days of residential treatment, according to Terry and the treatment center. Residential treatment stays typically last weeks, not days.

Terry’s daughter’s experience is not unique, according to two Las Vegas addiction treatment centers that had contracts with the insurer to provide services, including detoxification and residential treatment. They say that in late 2023, Health Plan of Nevada began to deny or reduce services to a degree that was dangerous, putting patients at risk of harming themselves or others through their continued substance abuse.

“They deny claims left and right for no reason. They require chart audits for no reason,” said Tony Renello, an executive with Virtue Recovery Centers, whose Las Vegas facility for Medicaid patients treated Terry’s daughter.

Data provided by Virtue Recovery indicates it disputed reasons given by Health Plan of Nevada for denying or reducing treatment.

“They’re not there to take care of people at all,” Renello claimed. “They’re there for profits.”

Health Plan of Nevada called the allegations “unfounded.”

“Our focus remains on providing access to quality, evidence-based behavioral health care for our members in optimal care settings that are compliant with state and federal rules,” the company said in a statement.

In a fact sheet, it says it pays roughly 90 percent of claims upon submission.

Nevada’s Medicaid division declined to comment on the allegations, citing a state law that makes information confidential that is obtained in an investigation of a provider of services. It later stated that the division “has not had a contractual reason to issue any sanctions or penalties” to any of the current managed-care organizations.

The allegations come at a time when Americans’ outrage at health insurance companies over denials has erupted. The fatal shooting of UnitedHealthcare CEO Brian Thompson in December was as noteworthy for the often-gleeful reactions it received on social media as it was for its violence.

Meanwhile, drug overdose deaths in Nevada are increasing. They climbed by 11 percent over the prior year to an estimated 1,546 by the end of August 2024, according to the Centers for Disease Control and Prevention.

Medicaid as big business

Insuring Medicaid beneficiaries is big business, and costly for taxpayers.

Health Plan of Nevada and three other insurers, or so-called managed-care organizations — Anthem, Molina and Silver Summit — hold multiyear contracts for a combined $11 billion to cover the health care of more than 800,000 Medicaid recipients in Nevada’s urban counties of Clark and Washoe.

With its expansion under the Affordable Care Act, Medicaid now insures 1 in 4 Nevadans, according to Nevada Medicaid’s online dashboard. The Medicaid budget for the current biennium is $15.9 billion, a cost shared with the federal government. Medicaid, which helps pay for health care for low-income people of any age, accounts for about one-third of state expenditures.

In fiscal 2024, Health Plan of Nevada had the largest share of the managed-care market, covering nearly 280,000 Medicaid beneficiaries in the urban counties. It received $867.7 million in payments from Medicaid, according to data from the Nevada Department of Health and Human Services’ office of analytics.

The managed-care organizations have capitated contracts, which means the state pays them a certain amount per enrollee per month, regardless of dollars spent. The organizations are required to spend 85 percent of these funds on claims, activities that improve health care quality, and fraud prevention, according to Nevada Medicaid, which responded to the Review-Journal’s questions through a series of emails.

Nevada is expected later in March to award new managed-care contracts that will cover rural counties in addition to urban counties.

‘This place is a joke’

After she was discharged, Terry’s daughter began staying at a sober living home at her parents’ expense. She told her mother, “Ma, this place is a joke. All they want is their rent. The girls are drunk all day.”

After a few days there, she returned to living on the streets. Because of her drug use, she is not allowed to stay with her parents, who are taking care of her young son.

When Health Plan of Nevada reduced treatment stays, Renello said, the center at its own expense would keep a patient in detox for the length of time needed to avoid serious complications.

After that, “We would be forced to set them up with some sort of aftercare that was good enough,” said Renello, regional director of Arizona for Virtue Recovery Centers, who was tasked by his employer with scrutinizing treatment denials.

Detox involves weaning a person off drugs or alcohol while managing withdrawal symptoms, which can include difficulty breathing and seizures. After detox, a patient may enter residential treatment, living and receiving treatment in a nonhospital setting to support the person’s recovery.

Detoxification may last five to seven days or longer, depending on the substance and the severity of the addiction, said Dr. Neeraz Gandotra, chief medical officer for the federal Substance Abuse and Mental Health Services Administration. Following detox, residential treatment can last 30 days or longer, he said in an interview.

“Residential treatment provides a relatively short term in the person’s whole life story of their recovery, a relatively short window of time where they can achieve some stability and traction in their recovery efforts,” Gandotra said.

There, they are “learning or rebuilding the skills that they need to be successful when they return to the community.”

‘They just slip through the cracks’

Like Virtue Recovery, CrossRoads of Southern Nevada said it began to see an increase in treatment denials by Health Plan of Nevada in late 2023.

“We worked very closely with HPN to develop a whole continuum of care that is going to give the best outcomes,” said Jeff Iverson, the CEO for CrossRoads, which primarily treats low-income people. “They just completely put the whole kibosh on it.”

The retirement of Don Giancursio — formerly the CEO of UnitedHealthcare of Nevada, Arizona and Utah — ushered in a new era of treatment denials, Iverson said.

UnitedHealthcare executives, including Kim Sonerholm, who replaced Giancursio, were unavailable for an interview, according to the company. Giancursio did not respond to an interview request.

CrossRoads employees said that without warning, mobile assessors from Nevada Behavioral Health Systems, a Health Plan of Nevada contractor, showed up at CrossRoads in late 2023 and began directing the managed-care organization’s Medicaid clients to outpatient clinics.

“We want to do the right thing for the individual,” Iverson said. “But then you have people who say, ‘No, we can do this much cheaper. Let’s cut all the inpatient care out and just use an outpatient model.’”

He said Nevada Behavioral Health “houses them in homeless shelters, gives them bus passes and enrolls them in outpatient clinics where they just slip through the cracks.”

Nevada Behavioral Health said that while the company serves as an adviser to Health Plan of Nevada, decisions related to appropriate level of care, as well as denials, are made by HPN.

Iverson said Health Plan of Nevada also began denying detox services at CrossRoads, directing individuals instead to the emergency room.

Health Plan of Nevada coverage for Medicaid beneficiaries includes detox at a hospital, according to its website.

HPN, which said it provides care in optimal settings in accordance with government rules, stated: “Over the past two years, we have expanded our behavioral health care network by more than 30%, with over 2,750 behavioral health providers … currently in our network throughout the state.”

The most recent compliance review by the state shows that Health Plan of Nevada has a sufficient network of providers for required services.

‘Concerning trends’

Commercial health insurance typically covers residential treatment. Although state Medicaid for a while has required managed-care organizations to provide residential treatment, implementation has been slow.

In December 2022, the federal government approved a waiver requiring managed-care organizations in Nevada to cover residential treatment for up to 30 days, if “deemed medically necessary,” according to state Medicaid. Residential treatment became reimbursable in Medicaid’s system beginning in August 2023. Before the waiver, organizations had the option of covering treatment for up to 15 days.

According to Virtue Recovery, Health Plan of Nevada justified its denials by “cherry picking” from the treatment criteria of the American Society of Addiction Medicine adopted by Nevada Medicaid. HPN focused on acute medical symptoms rather than those that would dictate longer stays to treat the underlying condition.

For example, young fentanyl addicts might not have acute medical symptoms but still be in dire need of treatment, Renello said.

“They’re not sick in the medical sense; they’re sick in the mental sense,” he said.

Although there’s a Medicaid process for disputing denials, the treatment centers said it’s too time- and resource-consuming to be effective.

Virtue Recovery said it began to observe “concerning trends” in denials in late 2023.

The lengths of stay approved for detox and residential treatment “steeply declined,” states a letter from a law firm representing Virtue to legal counsel for Health Plan of Nevada.

“During the first three quarters of 2023, HPN routinely authorized 20 days or more for both detox and residential treatment,” according to a letter in June of last year from attorney Nicole Wemhoff with the Washington, D.C., law firm Arnall Golden Gregory.

The Review-Journal obtained the letter through a public records request to Nevada Medicaid, whose top officials were copied on the letter.

By March 2024, the average length of stay had dwindled to 5.6 days, the letter states.

“This amount of time is not sufficient to appropriately treat HPN members for SUD (substance use disorder). It is, frankly, dangerous,” the letter states.

The state Medicaid division said it did not have data on denial rates but was working on improving its data tracking in accordance with new federal rules.

It also stated, “Nevada Medicaid does not engage in legal matters or disputes between a provider and an MCO regarding their contractual agreement.” MCO stands for managed-care organization.

Virtue Recovery was forced to close a center that it had opened to accommodate Health Plan of Nevada Medicaid clients, Renello said. It continues to operate a treatment center in Las Vegas for people with commercial insurance.

When asked if he faults others in the dispute, Renello responded, “The state, the Medicaid system, the federal government for not jumping in and figuring out what’s going on. Everyone who has keys to the kingdom.”

In response to a reporter’s inquiry, a spokesperson for the federal Centers for Medicare & Medicaid said this month that the agency could not comment. There is a pause on nonemergency communications “to allow the new team to set up a process for review and prioritization,” she wrote in an email.

‘Not caring if she lives or dies’

Terry said her daughter got hooked on sedatives prescribed during an abusive relationship. When the prescriptions dried up, she turned to street drugs.

But after a stay in residential treatment, she stopped using drugs for several years before relapsing. She’s now back on the streets, where police have cited her for solicitation of prostitution, her mother said.

“She hopes, like everybody, to be back to her old self,” Terry said. She described her daughter as having gone from “funny, sweet, kind, loving” to “not caring if she lives or dies.”

The family investigated paying for a new round of residential treatment at a Las Vegas treatment center but was quoted the prohibitive price of $20,000 a month.

“She’s tried many times, and the programs aren’t there for her,” Terry said late last year. “It’s a no-win situation, and the insurance is a joke. I can’t tell you how many people I’ve called. Everywhere I went, it was a dead end.”

Terry spoke of learning of the fatal shooting of the UnitedHealthcare CEO.

“I understand the frustration,” she said. “When I saw that on the news, I turned to my husband and said, ‘I understand. I get it.’”

She in no way condones the shooting. But as a parent of an addict, she said, her voice breaking, “You die a little bit every day. You die a little bit waiting for your child to die.”

Contact Mary Hynes at [email protected] or at 702-383-0336. Follow @MaryHynes1 on X. Hynes is a member of the Review-Journal’s investigative team, focusing on reporting that holds leaders and agencies accountable and exposes wrongdoing.

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