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Comment by simonw | Hacker News Reader

This story is an incredible illustration of incentives gone wrong.

The affordable care act mandated that insurance companies cover mental health. Psychiatric hospitals can charge insurers $2,200/day for holding patients who "pose an imminent threat to themselves or others".

So now you get this:

> Once Acadia gets patients in the door, it often tries to hold them until their insurance runs out.

> Acadia goes to great lengths to convince insurers that the patients should stay as long as possible, often around five days.

> To do that, Acadia needs to show that patients are unstable and require ongoing intensive care. Former Acadia executives and staff in 10 states said employees were coached to use certain buzzwords, like “combative,” in patients’ charts to make that case.

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This doesn't explain why the insurance companies don't have an incentive to fight back.

If Acadia is engaged in insurance fraud, the insurance companies have every incentive to stop that.

Health insurance companies aren't incentivised to fight this kind of thing.

Clearly falls into mandatory coverage (if claims are accurate), so all companies are going to have to pay it. Raises costs. Insurance gets to have overhead (profit) based on claims paid.

There's more incentive to deny marginal claims, because some insurance companies won't and then you may attract more customers with a lower price and maybe you get more money that way.

Patients are unlikely to complain to insurance to tell them the treatment/confinement was unjustified... because the patient will then need to pay the bill.

> Patients are unlikely to complain to insurance to tell them the treatment/confinement was unjustified... because the patient will then need to pay the bill.

Honestly, you buried the lede here. This is the horrifying and broken part. Under no circumstances should someone have to be afraid of paying for their involuntary commitment.

Do the patients have to pay in that case?

Like is Acadia really going to sue so they can have the insurance company and the patient testify under oath that Acadia management is guilty of kidnapping at scale, and in this particular case?

As someone who went through this with a child and Acadia’s competitor UHS, yes. Yes, they do. The number of parents in our support group who fought in court to get their kids or relatives out of one of these hospitals only to be presented with a back-breaking bill for their commitment is genuinely nauseating.

This is one of the prime examples of the utter failure of the US for-profit healthcare model.

I wholeheartedly attest to this. I had to stay in an Acadia facility due to a bipolar flare-up. The bill was so bad... I think if I hadn't been in a better place, the bill would have sent me right back in!

The last time I checked, you can simply dispute a bill to get it off your credit report.

If they actually kidnapped you (as is apparently common practice there), I doubt they’d be dumb enough to sue you.

If they were, you can countersue in California, and the civil damages they owe you for kidnapping you will be deducted from whatever court judgement they win (probably making it negative).

Why wouldn't it be the hospital who has to pay?

Patient was treated. If insurance refuses to cover, the hospital bill the patient. If the patient refuses to pay, they'll end up in collections or bankruptcy, depending.

Insurance company profits are capped as a percentage of expenses, so saving money means they make less money. There are bad incentives all over the place in healthcare regulations.

If you're referring to the minimum medical loss ratio provisions in the ACA, most insurance companies are above the minimum, which means any marginal fraud reduction is pure profit for them.

Why? Insurance providers have capped profit margins. The only way to grow their revenue is to grow covered expenses (and correspondingly, premiums).

Insurance executives' pay is limited by a pool of money that is calculated as a % of total expenses. If expenses are higher due to this sort of fraud, have an incentive to ignore it to keep that pool of money available for compensation as large as possible.

For health plan executives the financial incentives run both ways. Most medical "insurance" companies no longer provide much insurance and primarily act as third-party administrators for self-insured employers. In the short term, health plans can make more profit by approving more claims. But in the long term they have to compete for the business of those group buyers and so they try to block waste/fraud/abuse that drives up customer costs.

unless there's a cut to be had

I have worked in Mental Health for 20 years. These kinds of practices have been going on for decades. It did not start with the ACA.

Sure, it didn't start with the ACA, but this story implies that the ACA lead to a growth in this kind of bad behaviour:

> Acadia was founded in 2005 by Reeve B. Waud, a financier, and grew slowly at first. But in 2011, the company went public and embarked on a major expansion.

> The timing was ideal. Over the next several years, Acadia got a lift from Obamacare, which required insurers to cover mental health. Today Acadia has 54 inpatient psychiatric hospitals with a total of 5,900 beds.

I'm not trying to imply that the ACA is bad here - just that the incentive provided by the requirement for insurance companies to cover this form of treatment inadvertently incentivized the kind of fraud described in the article.

This is why legislation needs to be iterated on - to correct for unexpected consequences like this. Ideally the abuse described in this article would be prevented by further legislation - though there's always a chance that could open up further loopholes.

Consider the incentives for therapists.

Which incentives? Therapists can't make the official determination that a patient poses an imminent threat.

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