• Articles
  • June 2018
  • 5 minutes

Case Management: Managing Mental Health Claims Costs

Four red flags to watch for in evaluating residential facility claims

Mental Health
In Brief
As awareness of mental health issues grows, insurers are witnessing a corresponding demand for coverage.
Contact us to discuss mental health, case management, and other value-added services.

Over 10 million of them have a serious mental illness, defined as “a mental, behavioral, or emotional disorder resulting in serious functional impairment, which substantially interferes with or limits one or more major life activities."1

The complexity of mental health diagnosis, treatment and associated claims assessment creates additional challenges for insurers. This is particularly true of coverage for residential care facilities, where industry observers have documented significant inconsistency in the quality of care. Over-treatment and overcharging for mental health services – often unintentional – can lead to exorbitant costs for insurers and patients alike.

I reached out to Barbara Center, Medical Director of Prest and Associates, a leading independent review organization specializing in psychiatry, addiction medicine, and behavioral healthcare, who provided these “red flags” that payors should consider when evaluating residential facility claims:

  1. Make sure that the provider is actually a residential treatment facility. It is not uncommon as a reviewer to see requests for programs that are actually wilderness programs or therapeutic boarding schools (which are generally not covered).
  2. Consider intensity of service. How often does the patient see the psychiatrist (most criteria and standards of care would say weekly or more often if needed)? How many hours of treatment are provided per day? How often are they providing family therapy (should also be weekly)?
    See also: In Plain View? Interrupting Violence and Abuse
  3. Monitor progress and need for continued stay.Caregivers need to consider progress on specific, individualized treatment goals. It is not uncommon to see patients stabilize to such an extent that they no longer require treatment in a 24-hour setting but are working on long-term issues such as past trauma. Reviews need to consider whether the care can safely be provided at a lower level of care knowing that many therapy and family issues may require ongoing treatment when patients return to the community.
  4. Pay attention to laboratory charges, especially drug screens. No clinical basis exists for repeated drug screens for patients in a residential 24-hour setting unless there is specific clinical justification such as suspicion of relapse. The extensive drug screens ordered in some cases are not medically necessary. A simple screening point-of-service test on admission (drug test cup) is generally adequate unless there is a specific clinical reason why additional tests are required. Similarly, quantitative levels on drug screens are generally not medically necessary.
    See also: Managing the Opioid Epidemic Q&A: Opioid Use Disorder Case Management Guide
Rising mental health costs and associated claims will remain an ongoing challenge for insurers. Armed with greater knowledge of services, as well as strategies to recognize red flags, claims adjudicators can play a vital role in creating better outcomes for both carriers and the people they serve.

More Like This...

Related Solutions

Meet the Authors & Experts

Melinda Baxter
Melinda Baxter
Director, ROSE® Consulting Group – Healthcare Quota Share and Healthcare Turnkey


To learn more about how we can help you manage claims costs for mental health and other services, contact the ROSE team.