Cornerstone of Southern California, Celebrating 40 Years
Insurance Fraud Prevention Act and How It Affects California’s Rehab Centers
Author: Phil Kosanovich
Published: April 14, 2020
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Medical insurance fraud is a problem that comes in many forms and affects every type of healthcare provider, including addiction treatment centers. In addition to fraud, there are questionable practices that can give drug rehabilitation and addiction recovery centers a bad rap. 

The vast majority of California’s addiction treatment facilities operate within the law — but unfortunately, there have been some fraudulent cases. It’s the “one bad apple” syndrome — a few bad players leave a scar for the rest of us. 

We’ll explain the types of fraud and questionable practices in more detail in a moment. First, however, some perspective about how medical insurance fraud affects individuals, healthcare providers, rehabilitation and addiction treatment centers, and insurance companies.  

Health Insurance Fraud Laws in California

All 50 states classify insurance fraud as a crime, and most states including California have state fraud bureaus or units charged with investigating, prosecuting and preventing insurance fraud. Only 24 states, including California, require companies to have programs that detect and fight fraud. Yet despite California’s strict stance on insurance fraud, it still happens, and it costs taxpayers, insureds, and insurance companies billions of dollars every year (source: Insurance Information Institute). 

The National Health Care Anti-Fraud Association estimates that health care fraud costs tens of billions of dollars annually in the U.S.

California’s insurance fraud prevention act is designed to identify, stop and prosecute cases of insurance fraud. The law applies to automobile insurance, workers’ compensation, and health insurance and aims to make it easier to go after insured individuals, organizations, and insurance companies that practice fraudulent insurance claims.

What is Health Insurance Fraud?

Health insurance fraud comes in many forms, such as:

  • Billing for services that were never rendered 
  • Upcharging for services or “upcoding,” which is billing for a more complicated procedure than the one that was performed 
  • Performing services that aren’t medically necessary
  • Classifying services as medically necessary when they aren’t
  • Faking diagnoses and symptoms 
  • Accepting kickbacks for referrals
  • Waiving copays or deductibles (except in cases of hardships)
  • Over-billing insurance companies
  • Identity theft and using another person’s medical insurance

There are also some gray areas that the Recovery Research Institute refers to as unethical marketing practices. These gray areas aren’t necessarily illegal, but they are unethical, and they can give a bad name to treatment facilities. Two of those areas are patient brokering and patient enticement. 

Unethical Addiction Marketing Practices

Patient brokering: Some treatment facilities pay finders fees when someone refers a patient to their facilities. This isn’t insurance fraud — because insurance companies are generally not involved — but it is a practice that can give rehabilitation centers as a whole a bad reputation. Cornerstone of Southern California does not use such aggressive patient recruitment tactics. We employ 24-hour addiction and recovery experts who are standing by to take your call, but they do not work on commissions and will not pressure you to be admitted.

Patient enticement: Some treatment facilities have been accused of Incentivizing patients to stay longer or agree to additional billable services in exchange for gifts, money, or other perks. Cornerstone does not practice this type of patient deception. Our goal is to customize a treatment program so that you or your loved one can return to a life outside the walls of our treatment center with all the resources needed to live a sober life.

Get help: Addiction Treatment Center Southern California

How to Evaluate a Rehab Facility — Things to Look For

If you are concerned about the ethics or legality of an addiction recovery center, you can use the NIAAA’s Alcohol Treatment Navigator’s five signs that a treatment facility is high quality.

  1. Credentials: The providers’ have advanced degrees, licensing in addiction and counseling, and certifications in addiction treatment. The treatment center is accredited by an independent accreditation agency. The center employs medical doctors with medical degrees and board certifications in their areas of specialty.
  2. Comprehensive Assessment: The rehabilitation facility conducts a complete medical and behavioral history early in the treatment process. They look at your history, your family’s history, your family and social support, legal problems and other factors beyond drug and alcohol use and abuse.
  3. Personalization: The treatment center bases its programs on each individual’s goals and history. They provide a treatment plan that is a “living document,” which means it changes as your needs change. The NIAAA says to steer clear of rehabilitation centers that offer one-size-fits-all programs or guarantees a cure for addiction. 
  4. Science-Based: The treatment center bases its programs on tested and retested methodologies, such as Cornerstone’s medically supervised detoxification process and our treatment program that is based on AA’s 12-step recovery program.
  5. Continuing Support: Your plan should include a long-term strategy for staying sober after you leave the treatment facility. For example, Cornerstone’s program includes resources to help with sober living, returning to work, and what to do if you relapse. 

Ask Us Anything

Cornerstone of Southern California is committed to providing the best care for people who suffer from addiction. If you have questions about insurance coverage for treating addiction, or if you are concerned about the quality of care you might receive during treatment for addiction, ask us anything. Our staff is available 24 hours a day, every day of the year, and we invite you to ask us anything. We can’t answer questions about specific individuals, but we can talk about our methodology, our highly qualified staff, and our treatment center.