Learn / How to Get Insurance to Pay for Inpatient Drug Rehab

How to Get Insurance to Pay for Inpatient Drug Rehab

Kayla Gill
 May 24th, 2024|   Clinically Reviewed by 
Rajnandini Rathod

If you’re in need of inpatient mental health or addiction treatment, it’s likely that life feels pretty stressful. Add navigating insurance coverage to the mix, and it can feel downright overwhelming. Thankfully, rehab admissions teams are experienced with helping people in your very position through this process. Having some idea of how this works, how you can prepare, and what you can do to maximize your chances of getting treatment covered can help. 

Here’s everything you need to know about securing insurance coverage for inpatient drug rehab.

Understanding Your Insurance Policy

Familiarizing yourself with plan types is a great starting point for understanding your insurance coverage.

Health insurance plans typically cover some form of substance abuse and mental health treatment, often referred to as behavioral health benefits. These benefits may include inpatient rehab, outpatient programs, and medication-assisted treatment (MAT). However, coverage details vary depending on your specific plan. 

There are 4 main types of health insurance plans:1

HMO (Health Maintenance Organization)

HMO plans require you to choose a primary care physician who coordinates your care and refers you to specialized care, including addiction treatment. Inpatient rehab coverage under an HMO might hinge on your primary care physician’s approval.

PPO (Preferred Provider Organization)

PPO plans offer more flexibility in choosing providers. You can visit in-network specialists for potentially lower costs. Out-of-network coverage may also be available, at a higher cost.

EPO (Exclusive Provider Organization)

EPO plans are similar to HMOs, but with a narrower network of providers. Coverage for inpatient rehab depends on whether your facility is in-network.

POS (Point-of-Service)

POS plans are a hybrid between HMOs and PPOs. They usually require you to choose a primary care physician for in-network coverage, but may allow you to visit out-of-network providers at an additional cost. Coverage details for inpatient drug rehab depend on your specific plan and whether the facility is in-network or out-of-network.

You can get details about coverage limitations, required pre-approvals, and potential out-of-pocket costs by contacting your insurance provider directly.

Types of Inpatient Drug Rehab Coverage

Coverage for Detox

Inpatient drug rehab often begins with medically supervised detox. Detox helps rid your body of substances and manage withdrawal symptoms, which can be uncomfortable and even dangerous. 

Coverage details vary, so it’s important to understand how your plan handles detox. Here are some possibilities:

  • Full coverage: Your insurance covers the entire cost, so you have no deductible or coinsurance payments.
  • Partial coverage: Some plans may cover a portion of detox costs. You might be responsible for a deductible, coinsurance (a percentage of the covered costs), or copay (a flat fee for the service).
  • Limited coverage: In some cases, coverage might be limited to a specific number of days. If detox takes longer, you may be responsible for the additional days.
  • No coverage: Some insurance plans exclude detox coverage entirely.

Your detox center can help you confirm coverage details with your insurance provider before beginning treatment. 

Coverage for Therapy and Counseling

Lasting recovery goes beyond just detox. A comprehensive addiction treatment program will help you address the underlying causes of addiction and develop skills for life in recovery. Many insurance plans cover these services under the umbrella of behavioral health benefits.

Under The Affordable Care Act (ACA), “mental and behavioral health services are considered what’s called essential health benefits.”2

Addiction and mental health treatment often involve these therapies: 

…and more. 

The extent of coverage for different therapies can vary, so contact your insurance provider to confirm that the treatment you need is covered. Your rehab’s admissions team can help you with this. 

Preparing to Secure Coverage

A little preparation goes a long way in understanding the insurance process and advocating for the coverage you deserve.

Verify Your Benefits

Review your insurance policy. Find your insurance plan documents or log in to your online member portal. Look for sections on “behavioral health” or “mental health and substance abuse treatment” benefits. This will give you a general understanding of your coverage for inpatient drug rehab.

Contact your insurance provider. Call the customer service number on your insurance card and speak with a representative who can answer questions about your behavioral health benefits. Explain your plans to attend inpatient drug rehab and ask questions about your coverage details, such as: 

Does my plan cover inpatient drug rehab?

Are there any limitations on covered levels of care (like detox or aftercare)?

See if you need a pre-approval. Does your plan require pre-approval for inpatient rehab or specific treatment services?

Ask about in-network facilities. Does your plan have a provider network of rehabs? If so, using in-network facilities often means you’ll pay less out of pocket.

Gather Necessary Documentation

Medical records: Collect any relevant medical records that document your substance use disorder diagnosis and history. This strengthens your case for the medical necessity of inpatient treatment.

Doctor’s recommendation: A formal letter from your doctor outlining your diagnosis, the severity of your addiction, and why inpatient treatment is medically necessary can improve your chances of getting coverage.

Additional documentation: If needed, gather documentation supporting the negative impact of your addiction on your work, relationships, or overall health. This strengthens your case for the need for inpatient treatment.

Pre-Authorization Process

Some insurance companies require prior authorization3 before approving coverage for inpatient drug rehab. This allows them to assess the medical necessity of your care and make sure it aligns with your plan’s coverage guidelines.

Applying for Prior Authorization

Reach out to your insurance provider to start this process. They might have specific forms to complete or require a phone call with a nurse or case manager. Be prepared to provide any requested information:

  • Your personal information (name, date of birth, member ID)
  • Your diagnosis and history of substance use disorder
  • The recommended treatment plan from your doctor or rehab facility, including the level of care (detox, residential, etc.) and expected duration
  • Medical records supporting the need for treatment
  • A letter from your doctor recommending inpatient rehab

How to File a Claim

Once you’ve received prior authorization and confirmation of your coverage details, it’s time to file a claim for your stay in residential rehab. To do that, reach out to your insurance provider’s billing department to initiate a claim. They may have specific forms to complete or provide instructions on how to submit the claim electronically. 

Payment and Out-of-Pocket Costs

Once the insurance company processes your claim, they’ll determine your financial responsibility. This might include a deductible, coinsurance (a percentage of the covered costs), or copay (a flat fee for the service).

Your rehab will typically bill you for the remaining balance after processing the claim with your insurance. Many rehab facilities offer payment plans for out-of-pocket costs, or can connect you with financing options to help manage payment.

Common Reasons for Denials

Unfortunately, insurance claims for inpatient drug rehab can sometimes be denied.4 Here’s why that usually happens: 

  • Lack of medical necessity: The insurer might determine inpatient treatment isn’t medically necessary based on your diagnosis or the severity of your addiction. Having a doctor’s recommendation and documentation outlining the negative impact of your addiction can strengthen your case.
  • Out-of-network facility: If you choose a rehab outside of your insurance network, coverage might be limited or non-existent. Consider in-network facilities for lower out-of-pocket costs.
  • Pre-existing conditions: Some plans may have exclusions for substance abuse treatment related to pre-existing conditions. Carefully review your plan documents and discuss any concerns with your provider.
  • Treatment level mismatch: The authorized level of care might not match the facility’s recommended plan (for example, you need residential treatment but pre-authorization is only for detox). Work with your rehab facility to make sure your treatment plan aligns with your insurance requirements.
  • Incomplete information: Missing documentation or inaccurate information can delay or deny your claim. Gather and submit all necessary documents promptly and ensure everything is filled out correctly.

If your request is denied, you can choose to appeal the decision. Your rehab can help you with the appeals process by providing additional documentation or clarifying the medical necessity of your treatment plan.

Appealing Insurance Denials for Rehab

When you’re ready to start recovery, having your claim can be frustrating. Here’s how the appeals process works, and how you can increase your chances of a successful outcome:5

Understanding Your Right to Appeal

Most insurance companies have a formal appeals process for denied claims. This allows you to present additional information and advocate for coverage you believe is rightfully yours. Your insurance provider should provide clear instructions on how to initiate an appeal—they’re usually outlined in your denial letter. If not, you can request them by contacting customer service.

Tips for a Successful Appeal

Act fast. Most insurance companies have strict deadlines for filing appeals, often within 30 to 60 days of receiving the denial letter. Missing this deadline can weaken your case.

Have your documentation ready. Review the denial letter carefully to understand the specific reason for your claim’s rejection. Provide any additional documentation that strengthens your case. This might include:

  • A letter from your doctor detailing the severity of your addiction and the medical necessity of inpatient treatment
  • Medical records supporting your diagnosis and history of substance use disorder
  • Documentation of how your addiction has negatively impacted your life (work, relationships, or health)
  • Any communication with your insurance provider about attempts at prior authorization

Write a clear and concise appeal letter stating the reason for your appeal. Emphasize the medical necessity of inpatient treatment, supported by documentation. Maintain a respectful and professional tone.

Meet deadlines. Submit your appeal letter and any supporting documents as soon as possible.

Be patient and persistent in following up. If your initial appeal is denied, you may choose to file another appeal, called an external review.6 This involves an independent third party who will reassess your claim.

Working With Inpatient Rehab Facilities

Inpatient drug rehab facilities are used to dealing with the complexities of insurance coverage.  Here’s how they can help:

  • Verifying coverage: Many rehabs offer insurance verification services. They can contact your insurance provider to confirm coverage details and potential out-of-pocket costs for their specific treatment programs.
  • Pre-authorization support: They can help you through the pre-authorization process and communicate directly with your insurance provider.
  • Direct billing: Once your coverage is confirmed, some rehabs bill your insurance company directly, simplifying the process for you.

Alternative Funding Options

If insurance falls short, there are additional options:

Payment Plans and Sliding Scales

Inpatient rehab facilities know that addiction treatment can be a financial burden. They often offer flexible payment plans that allow you to spread out the cost of treatment over a set period. 

Some rehab programs offer sliding scale fees based on your income and ability to pay. Don’t hesitate to ask about this during your initial consultation.

Scholarships and Grants

Some scholarships and grants are designed to help cover the cost of drug rehab.

  • Rehab scholarships: Many rehabs have a scholarship fund available on a case-by-case basis for those who can’t afford treatment. Inquire about this with your rehab’s admissions team. 
  • Government grants: Several government grants offer financial assistance for substance abuse treatment. The Substance Abuse and Mental Health Services Administration (SAMHSA) website is a good starting point for researching available grants in your area.
  • Non-profit organizations: Many non-profit organizations are dedicated to supporting people struggling with addiction. They may offer scholarships or grants specifically designed to help cover the cost of rehab. Search online for organizations in your area.

Additional Considerations

  • Crowdfunding: Crowdfunding platforms allow you to raise funds directly from friends, family, and the broader community. This can be helpful if you have a strong support network willing to contribute to your recovery.
  • Personal loans: Taking out a personal loan for addiction treatment can be an option, but it’s important to approach this cautiously and factor in the additional debt burden.

Mental Health Parity and Addiction Equity Act (MHPAEA)

The Mental Health Parity and Addiction Equity Act (MHPAEA)7 is a federal law requiring insurers to offer coverage for mental health and substance abuse treatment that’s comparable to coverage for medical services.

MHPAEA has some key benefits for those seeking inpatient drug rehab:

  • Reduced out-of-pocket costs: MHPAEA prohibits insurance companies from imposing stricter financial limitations (deductibles, coinsurance, copays) on substance abuse treatment compared to medical treatments. 
  • Equal access to coverage: The law prevents insurance plans from offering significantly less coverage for mental health and addiction treatment compared to medical care. This ensures that individuals struggling with addiction have access to necessary treatment without facing unreasonable financial barriers.

Seeking Legal Advice

Getting insurance coverage for inpatient drug rehab can be complicated, and denials can be frustrating. While you can handle many aspects of this process yourself, there are situations where legal advice may be helpful:

  • Complex denials: If your claim is denied for unclear reasons, consulting with an attorney who specializes in healthcare law can be helpful. They can analyze the denial letter, identify potential legal grounds for appeal, and advise you on the best course of action.
  • Exhausted appeals process: If you’ve exhausted the internal appeals process with your insurance company and they still deny your coverage, a lawyer can help you file an external review.
  • Pre-existing condition concerns: If you’re worried about your insurance provider using a pre-existing condition to limit coverage for addiction treatment, a lawyer can advise you on your rights under MHPAEA and how to advocate for fair coverage.
  • Cost considerations: Consulting with a lawyer can involve upfront costs. But their expertise can potentially help you secure the coverage you need, which could amount to significant savings in treatment costs. Some legal aid organizations may offer free or low-cost consultations for people facing financial hardship.

Inpatient Rehab: Investing in a Happier, Healthier You

Costs are a primary concern for most people attending rehab. While these concerns are completely valid, it’s also important to keep in mind that overcoming addiction is an investment in your health and well-being. The costs of an ongoing active addiction—financial and otherwise—can often amount to far more than the cost of care. 

Don’t let financial obstacles deter you from getting the help you need at this important time in your life. Understanding insurance basics and being prepared can expedite this process and get you on the road to recovery sooner. Many rehab facilities are happy to help you work with your insurance provider to help you get maximum coverage and explore avenues for covering out-of-pocket costs. 

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