Drug and alcohol rehabilitation services are essential in helping individuals recover from substance use disorders (SUD). However, navigating insurance billing for rehab services can be complex. Between federal coverage requirements, payer rules, authorization steps, and billing codes, rehab facilities face unique administrative challenges. Below is a practical guide to help rehabs understand how to bill insurance effectively and compliantly.
Laws That Make Rehab Insurance Billing Possible
Two major federal laws shape how insurance covers addiction treatment:
- Affordable Care Act (ACA): Most health plans must cover SUD treatment as an essential health benefit, meaning rehab services can’t be excluded just because they involve addiction care.
- Mental Health Parity and Addiction Equity Act (MHPAEA): Insurers must offer SUD benefits on par with medical and surgical care, including limits on copays, deductibles, and treatment caps.
Together, these laws help ensure that rehab care is covered and comparable to other medical treatments.
Understand What Insurance Covers
Insurance plans, including commercial, Medicare, and Medicaid, vary in how they reimburse rehab services:
Commercial Health Plans
- Most private plans must cover addiction treatment per ACA rules.
- Coverage often includes evaluations, inpatient/outpatient programs, medications, and therapy.
- Networks matter. In-network rehabs typically cost less for members than out-of-network providers.
Medicaid
- Medicaid generally covers rehab services, though eligibility and reimbursement vary by state.
- Many Medicaid programs use special rates or Medicaid fee schedules for SUD services.
Medicare
- Medicare coverage for SUD services can be more restrictive, especially for freestanding outpatient facilities, unless services are provided by qualified practitioners.
Provider Enrollment and Credentialing
Before billing insurance, treatment providers must:
- Enroll with payers (Medicaid, Medicare, and commercial insurers) and receive a National Provider Identifier (NPI).
- Be credentialed as an SUD treatment provider with each payer you intend to bill.
- Decide whether you will be in-network (contracted) or accept out-of-network payments.
Credentialing can take time and influences reimbursement rates, how claims are processed, and patient financial responsibility.
Verification, Authorization & Medical Necessity
Insurance billing requires verify client coverage and benefits before services begin:
Benefits Verification
- Confirm coverage levels for detox, inpatient rehab, intensive outpatient (IOP), and aftercare.
- Ask about copays, coinsurance, deductibles, and any limits on services.
Pre-Authorization
- Many insurers require prior authorization before covering higher-cost services such as inpatient stays or residential programs.
- Without authorization, a claim, even if eligible, may be denied.
Medical Necessity
- Insurers require documentation that treatment is medically necessary for the individual’s condition.
- This includes clinical assessments, ongoing treatment plans, progress notes, and discharge planning.
Billing Codes & Claim Submission
Accurate coding is essential for getting paid:
Common SUD Billing Codes
Billing codes for substance use treatment include HCPCS and CPT categories, such as:
- H0004 / H0005 – SUD outpatient counseling services
- H0010–H0014 – Detox services (varies by setting)
- H0015 – Intensive outpatient program (IOP) services
- H0018 / H0019 – Residential treatment (short/long-term)
- Group, individual, and case management codes also apply.
Institutional Billing Forms
- Facility billing uses the UB-04 (CMS-1450) claim form with revenue codes for detox, room & board, therapy groups, and more.
- Revenue codes (e.g., 0901, 0944) identify distinct services like detox rooms or behavioral therapy.
Telehealth & Remote Services
- Rehab services may be delivered via telehealth; these use appropriate telehealth CPT/HCPCS codes depending on payer policies.
By submitting claims correctly with appropriate codes, revenue identifiers, and documentation, rehabs improve their chances of reimbursement and reduce denials.
Secondary Payers and Coordination of Benefits
If a client has multiple policies (such as commercial primary and Medicaid secondary):
- Submit to the primary insurer first.
- If the primary pays less than the full allowable amount, send a secondary claim with the Explanation of Benefits (EOB).
- Coordination rules vary by state and payer — including whether Medicaid must be billed.
The Role of Patient Responsibility
Even with coverage, patients may owe:
- Copays or coinsurance
- Deductibles
- Costs for any services not covered or out-of-network charges
Part of billing is ensuring patients understand their financial responsibilities and receive clear Explanation of Benefits (EOB) statements.
Challenges & Compliance Considerations
Rehab insurance billing also involves:
Documentation & Denial Management
- Complete, clear clinical and billing documentation helps support claims and appeals.
Privacy Regulations
- SUD treatment records may require special patient consent under 42 CFR Part 2 for billing claims.
Denials & Appeals
- Claims may be denied if coding, authorization, or documentation isn’t aligned with payer rules.
- Facilities must track denials and submit appeals when needed.
Partnering With Billing Experts Can Make a Difference
Insurance billing for drug and alcohol rehab isn’t a “one-size-fits-all” process; it involves multiple payers, codes, forms, and rules. That’s where a specialized billing partner like Hansei Solutions adds real value.
Hansei Solutions helps treatment providers:
- Credential and enroll with major payers
- Verify benefits and secure authorizations
- Code and submit claims accurately
- Track denials and appeals efficiently
- Maximize revenue while staying compliant
With expert support, rehab facilities can focus on treatment outcomes, rather than administrative hurdles.
Hansei Can Help Simplify Billing
Billing insurance for drug and alcohol rehab services is navigating a combination of regulations, payer requirements, authorization rules, and detailed coding. With the Affordable Care Act and parity laws mandating coverage for SUD treatment, more individuals can access care, and more providers can secure reimbursement. However, success depends on getting credentialed, verifying benefits, coding accurately, and managing claims proactively.
Whether you’re expanding services or refining your front- and back-end processes, Hansei Solutions is here to help you streamline billing, reduce denials, and maximize revenue so you can focus on what matters most: helping clients achieve lasting recovery.
