Deadly Checks from Blue Cross
Blue Shield Supervisor: “A mental health/substance revenue code should immediately trigger payment to the provider, even if out-of-network, and not to the mentally ill patient or addict in early recovery.”
When Samantha (not her real name) entered treatment at a nearby Malibu rehab after 10 days of medical detox at Huntington Hospital, her body was literally spotted from repeated heroin injections. She spent 6 weeks at the facility and made such progress that she was allowed to visit with the 10-year-old daughter she had not seen for over 6 months. Three days after leaving treatment she was dead from a heroin overdose.
Jack was a star client at another Malibu rehab. He completed treatment and a few days later went missing. They eventually found him in his car, dead from a heroin overdose.
What did Samantha and Jack have in common? They both were treated at “out of network” substance abuse treatment facilities and although they had assigned their benefits to that provider before a notary, and the provider had checked the appropriate “benefits assigned” box on the claim form submitted to Blue Cross/Blue Shield, when they discharged they both found large checks awaiting them at home.
Neither John or Samantha forwarded payment to the rehab that had provided treatment. Instead they cashed the checks and bought heroin. Anthem Blue Cross provided the cash, i.e. the “weapon,” both addicts used to kill themselves.
According to the CEO of the treatment center, “without those funds [Samantha] would have been unable to leave the facility and purchase the level of narcotics that was required to kill her. Our personal feeling is that it wasn’t just negligent it was criminal.”
Sometime in early 2012 Blue Cross/Blue Shield adopted a national policy of sending payment due to “out of network” substance abuse and mental health providers directly to patients, even if the patients suffer from mental illness and/or are in their first days of recovery still struggling against intense cravings. We previously wrote about this on February 10, 2012 but noted no improvement so we took the case to the State Assembly and the Department of Insurance.
“The carriers do this to put pressure on out of network providers to contract,” said Carol K. Lucas, a California health care attorney. “The theory seems to be that if they make it really difficult to be out of network, the providers will accept their contract terms.”
Out of network providers are not formally advised when payment is remitted to the patients, or sent an explanation of benefits which details what amount was paid and why. According to some out of network providers, they have been 1099-ed at the end of the year even if, as in the case of Samantha and Jack, the patient never forwarded payment to the provider.
How insane is that? Here’s more…
In August 2012 the American Society of Addiction Medicine (“ASAM”) caught up with science and redefined addiction as a “chronic brain disorder.” Inexplicably it was only a few months later that Blue Cross/Blue Shield began sending payment for to addicts in early recovery instead of to their out of network providers.
I believe that even one death caused by putting a Blue Cross check meant for a provider into the hands of an addict renders the policy a public safety issue. I made two phone calls and found evidence of two deaths. California has more than a thousand alcohol and drug treatment centers, many of which take insurance. Imagine how many more deaths there must have been.
While death may be the worst and most tragic consequence of the Blue Cross/Blue Shield policy, there are others.
The CEO of the treatment center attended by Samantha reports that another client, was covered through his mother, an active alcoholic. “He was with us for 60 days and making amazing progress recovering from an 8-year heroin addiction,” said the head of the treatment center. “Then we received word that his insurance had started paying and discovered that once again even though he had made an assignment of benefits the insurance company paid out the check to his mother who cashed it and went on a spending and drinking binge. Unfortunately thanks to Blue Cross/Blue Shield’s policy, we had to send the client back into an unhealthy and unsupportive environment before he was ready to handle it, which led to a relapse.”
Jeff Schwartz, formerly President of Healthcare Consulting and Advocacy, reports about his efforts to retrieve $50,000 in checks from family of an addict treated in Beverly Hills. “It took me personally driving to the member’s residence, knocking on the door and pleading with them to turn the checks over to me. In this instance was able to secure the funds for the facility, but it was not without tremendous struggle.”
An Anthem executive who does not want to be named, said he personally opposes the policy of putting large checks meant for out of network providers into the hands of addicts and alcoholics. “My decades of clinical experience tell me that this can only lead to unnecessary relapse and recidivism, which means additional unnecessary costs for the insurance carrier.”
Which brings up the question, does Blue Cross/Blue Shield issue 1099s for the checks sent, and if so, to whom? We have had many BC/BS clients, or their families receive checks which they then forward to us. They have not been 1099’d for this income, and neither have we. And what about the addicts or their families who cash the checks and use them to buy drugs, gamble, shop or pay off debts. Are they ever 1099’d on the windfall? If undeclared, aren’t the IRS and those states which tax are losing significant revenues?
I checked with Peter S. Muffoletto, C.P.A. whose firm specializes in the development and guidance of proper procedures and internal, and oversight of controls in the rehab industry. He believes: “The medical payments should be 1099’d to the recipient, but further the payor should either enter into an agreement with the provider to be paid directly based upon an assignment signed as a mandatory requirement prior to starting services, or at the minimum but as a lesser line of internal control — as the patient may convert the payment for their own use — issue the payment as payees to both the patient and the recipient. Payments to the patient is due to sloppy or nonexistent procedures… Allowing already known to be problematic individuals receive any kind of payment only enhances the possibility and probability of the conversion of funds.”