Jocelyn Wiener and Byrhonda Lyons
\n\u00a0|\u00a0 CalMatters<\/p>\n
The letter from Anthem landed on Bernadette Cattaneo\u2019s desk on a sunny day in June 2023.\u00a0<\/strong><\/p>\n Beginning later that summer, it said, the addiction treatment facility she ran in the rural Sierra foothills would no longer be included in several of the insurance company\u2019s networks.\u00a0<\/p>\n Confused, she read it again.\u00a0<\/p>\n The move could bankrupt The Lakes, one of few facilities of its kind serving a region struggling under a national addiction epidemic.<\/p>\n Anthem didn\u2019t provide much explanation in its initial letter, simply calling the decision \u201cnecessary to sustain Anthem\u2019s ability to offer these network products.\u201d\u00a0<\/p>\n But Cattaneo had her own hypothesis.\u00a0\u00a0<\/p>\n Over the previous year, she\u2019d engaged in a relentless quest to get Anthem to pay for care she deemed medically necessary for her clients.\u00a0<\/p>\n She repeatedly helped her clients appeal to California regulators after the company rejected their claims.\u00a0<\/p>\n The Lakes\u2019 clients\u00a0won 49 of their 54 appeals<\/a>\u00a0that year, according to court records, compelling Anthem to pay hundreds of thousands of dollars for alcohol and drug treatment.\u00a0<\/p>\n Cattaneo emailed state regulators, saying it didn\u2019t seem coincidental that The Lakes was removed from Anthem\u2019s network after so many successful appeals.\u00a0<\/p>\n \u201cThe Lakes works tirelessly to provide stellar treatment and this was literally a slap in the face,\u201d she said.\u00a0<\/p>\n The conflict between one of the state\u2019s biggest health insurers and The Lakes, tucked away in the tiny town of Copperopolis in Calaveras County, reflects a struggle quietly playing out around California with potentially significant consequences for substance use treatment.<\/p>\n Treatment centers say Anthem \u2014 and other major health insurers \u2014 employ a variety of tactics that threaten their ability to stay in business, even as California faces a shortage of providers. More than a dozen facility leaders, in lawsuits, state regulatory filings and interviews say insurers are denying their patients\u2019 claims for medically necessary coverage and using punitive measures that prevent treatment centers from getting paid in full.\u00a0<\/p>\n As a result, facilities say they get strong-armed into accepting lower reimbursements, go long stretches without receiving payment, or end up not being repaid at all.\u00a0<\/p>\n Patients attempting to recover from serious addiction often struggle to find providers who accept their insurance. In some cases, they can face the prospect of\u00a0having treatment yanked away<\/a>, or wind up\u00a0saddled with medical bills<\/a>\u00a0their insurance companies won\u2019t fully cover.<\/p>\n Public records obtained by CalMatters show the CEO of one LA County-based treatment center sent letters to state regulators in 2022 imploring them to investigate Anthem for not paying claims promptly, saying his center had been \u201cfinancially devastated.\u201d Another organization with locations around the state sent a letter to regulators in 2024 complaining that Anthem owed them $1.7 million.\u00a0<\/p>\n In September 2023, Cattaneo sued Anthem, alleging the health insurer was punishing The Lakes because of how often staff there appealed coverage denials on behalf of patients.\u00a0<\/p>\n Cattaneo believes facilities like hers \u2014 family-owned, with no backing from big companies \u2014 are \u201cvery much taken advantage of.\u201d<\/p>\n \u201cWhat we\u2019re hoping is that our fight becomes a fight for the whole industry,\u201d she said.<\/p>\n CalMatters made more than half a dozen requests for interviews or comments from Anthem leaders, but company spokesperson Michael Bowman declined, instead sending an emailed statement.<\/p>\n \u201cAnthem is committed to ensuring our provider partners and those delivering care to our members are reimbursed properly and in a timely manner,\u201d he wrote.<\/p>\n In a 2024 letter obtained by CalMatters through the Public Records Act, Anthem\u2019s attorney, Kenneth Smersfelt, wrote to one of Cattaneo\u2019s attorneys that the insurer \u201cremains concerned about The Lakes\u2019 continued failure to comply with the policies and procedures set forth in the Facility Manual.\u201d<\/p>\n He also said the treatment center was taking \u201can adversarial approach to its relationship with Anthem\u201d that was \u201cinconsistent with a productive and efficient contract relationship.\u201d<\/p>\n Mary Ellen Grant, spokesperson for the California Association of Health Plans, an insurance industry association, told CalMatters that the measures health insurers take are necessary to prevent fraud, a longstanding problem that is \u201cputting patients at risk and driving up the cost of care.\u201d Taking a second look at a requested authorization, she said, ensures services are \u201csafe and appropriate for the patient.\u201d\u00a0\u00a0<\/p>\n Facilities say their payment challenges aren\u2019t limited to Anthem. But as the state\u2019s second biggest health plan, with almost 6 million enrollees, it stands out.\u00a0<\/p>\n Among California\u2019s largest health insurers, Anthem\u2019s denials for all forms of health care were most likely to be overturned, according to a CalMatters analysis of data from the Department of Managed Health Care.<\/p>\n When patients appealed to the department, state regulators reversed Anthem\u2019s denials about two-thirds of the time, compared to reversing about half of all insurers\u2019 denials overall.<\/p>\n Anthem has the highest rate of coverage denials overturned by the state<\/p>\n California\u2019s independent medical review process allows patients under state-regulated plans to appeal denials. Among the largest health insurers regulated by the Department of Managed Health Care,\u00a0Anthem<\/strong>\u00a0was the most likely to have its coverage denials for all forms of health care overturned.<\/p>\n Since 2021, California has required plans to pay for\u00a0all medically necessary mental health care<\/a>\u00a0\u2014 including the services provided by residential facilities like The Lakes. These treatment centers can play a critical role at a life-or-death juncture for many patients. But a lengthy residential stay comes with a high price tag \u2013 The Lakes, for example, can be paid about $800a day per patient, a court exhibit shows.\u00a0<\/p>\n After a treatment facility admits a patient for detox or other care, insurance companies normally determine within 24 or 48 hours whether to approve the patient\u2019s stay, facility leaders told CalMatters. Given the cost of residential care, the plans then periodically review a patient\u2019s eligibility \u2014 sometimes\u00a0changing their opinion after just a few days<\/a>.\u00a0<\/p>\n The Department of Managed Health Care is investigating providers\u2019 concerns about Anthem\u2019s reimbursement practices, said spokesperson Kevin Durawa.\u00a0<\/p>\n Durawa declined to provide details, citing the investigation, and also declined repeated requests for an interview.\u00a0<\/p>\n Treatment centers told CalMatters these payment issues have worsened in recent years.\u00a0<\/p>\n Meiram Bendat, an attorney representing The Lakes, wants to see more leadership from the state, including more aggressive monitoring and oversight of health plans. He said the department should keep better track of patients\u2019 ability to receive timely care and should completely revamp how it handles provider complaints, a system he describes as \u201ca disgrace.\u201d<\/p>\n \u201cThey\u2019re not really stepping up to ensure that providers aren\u2019t terminated for improper reasons,\u201d he said.\u00a0<\/p>\n Bernadette Cattaneo is trim and tan with shoulder-length brown hair and intense green eyes. At 64, she is disarmingly chatty and has a wicked sense of humor \u2013 a framed family photo in her office includes a cut-out of Brad Pitt\u2019s face.\u00a0<\/p>\n Cattaneo started vacationing in Copperopolis in the 1980s with her now ex-husband and three young sons. They sometimes stayed at a rustic, palm tree-studded resort alongside Lake Tulloch. Years later, after adding a daughter to the mix, Cattaneo moved her family to Copperopolis full-time.<\/p>\n Nestled in the rolling foothills of Calaveras County, the former copper mining town has about 4,600 residents. Many work in logging or at the nearby prison, although the region also receives its fair share of retirees, vacation homeowners and remote workers. Median household income in the county is about $16,000 a year less than the state average.\u00a0<\/p>\n The county is federally recognized as having a\u00a0serious shortage of mental health providers<\/a>. In Calaveras County, Anthem has three in-network substance use treatment facilities, including The Lakes, state regulators told CalMatters. Drug and alcohol use represent a top concern for many residents.\u00a0Excessive drinking<\/a>\u00a0has been a growing problem in the area since the pandemic, Cattaneo said.<\/p>\n When the aging lakeside resort came on the market around 2004, Cattaneo, a former realtor, saw its investment potential. Her plan: gather investors, knock the whole thing down, build townhouses.\u00a0<\/p>\n Then the bottom dropped out of the housing market. Around that time, several people close to her suffered injuries or other personal tragedies and eventually developed dependencies on painkillers or alcohol.<\/p>\n As Cattaneo weighed options for the property, one came into focus.<\/p>\n In March 2015, The Lakes opened its doors as a substance use treatment center.<\/p>\n Licensed for 76 people, it offers detox, therapy, psychiatry and medical care, as well as volleyball, kayaking, wakeboarding and the opportunity to gaze at the lake from one of the gazebos lining the property\u2019s edge.<\/p>\n \u201cThings that can make them realize there\u2019s a good life beyond using,\u201d Cattaneo said.<\/p>\n Her youngest son, Travis Wilson, was one of its first patients.\u00a0<\/p>\n Now 10 years sober, he is in charge of admissions.\u00a0<\/p>\n In 2017, Cattaneo signed paperwork to go in-network with Anthem, essentially contracting with the insurer.\u00a0\u00a0<\/p>\n Before long, more than three-quarters of The Lakes\u2019 patients were insured by Anthem, court records show.<\/p>\n California requires all health insurers to maintain networks of providers. Health insurers extensively vet these providers before bringing them \u201cin network.\u201d In theory, this should lead to a simpler and more affordable patient experience compared with facilities that are not in the insurance company\u2019s network.\u00a0<\/p>\n \u201cWhen you\u2019re in-network,\u201d Cattaneo said, the process \u201cshould be easy peasy mac and cheesy, right?\u201d\u00a0<\/p>\n In the early years, the facility\u2019s relationship with the health insurer was great, Cattaneo said. But over time, she started noticing Anthem denying care, claiming treatments weren\u2019t medically necessary.\u00a0<\/p>\n In 2019,<\/strong>\u00a0she and her staff started submitting appeals on behalf of their patients to the Department of Managed Health Care whenever they\u00a0 felt insurance companies had wrongly denied coverage.\u00a0<\/p>\n In 2022, The Lakes appealed to the state 17 times, according to documents her attorneys later filed in Calaveras County Superior Court. In the first five months of 2023, that number nearly tripled to 49. Almost all involved Anthem members insured through Covered California; The Lakes\u2019 patients prevailed more than 90% of the time.<\/p>\n Records on the department\u2019s website offer thumbnail sketches of the patients making those appeals: A bartender drinking a half pint of whiskey and hard seltzer every day. A man using fentanyl daily for years. A woman with cirrhosis relapsing after her pets passed away.\u00a0<\/p>\n All were originally denied coverage by their health plans.\u00a0<\/p>\n The Lakes won each of them on appeal.\u00a0<\/p>\n Bradley Tungseth recalls being \u201ca complete wreck\u201d when he first arrived at The Lakes last July. He told CalMatters hehad spent some 30 years in the clutches of meth, alcohol, and other drugs. He had gone through a \u201ccomplete mental breakdown\u201d and landed in the hospital. Despite that, he\u2019d never been in treatment before.<\/p>\n \u201cI needed help,\u201d he said.\u00a0<\/p>\n Tungseth\u2019s friend worked at The Lakes as a counselor. Tungseth decided he was ready to try treatment for the first \u2014 and, he hoped, the last \u2014 time.<\/p>\n A month into his stay at The Lakes, he said, Anthem determined he was done. The health plan never spoke with him directly, he said.<\/p>\n \u201cThey were saying I didn\u2019t need the treatment,\u201d said Tungseth, who lives in nearby Jamestown. He said Anthem determined he didn\u2019t require long-term 24-hour care because he was coming off of meth, and had minimal withdrawal symptoms. Tungseth felt certain he\u2019d use again if he left The Lakes.\u00a0<\/p>\n After coverage is denied, a patient can appeal to their insurer. If that doesn\u2019t work, they have the right to appeal to the state or federal government, depending on which agency regulates their health plans.<\/p>\n But studies show\u00a0most patients never appeal<\/a>.<\/p>\n In California, consumers and state regulators remain largely in the dark about how often insurers are denying coverage.In an effort to hold them more accountable, legislators are\u00a0pushing a bill<\/a>\u00a0that would require health plans to report data to the state about denials.\u00a0<\/p>\n \u201cIt will be very impactful to officially look under the hood and see what\u2019s happening with these denials,\u201d said\u00a0Scott Wiener<\/a>, the Democratic state senator from San Francisco who also authored the 2021 law that expanded mental health coverage.<\/p>\n Another\u00a0bill<\/a>\u00a0would put limits on how frequently insurers can reassess patients\u2019 eligibility for coverage.\u00a0<\/p>\n In the absence of public data on denials, private data from one billing company offers a rare window into how often doctors overturn initial medical necessity denials when patients appeal to their health insurers.\u00a0<\/p>\n The company, which works with treatment centers around the country, provided CalMatters with four years of data capturing more than 2,000 appeals by patients requesting mental health treatment. CalMatters agreed not to name the company in exchange for the data, which otherwise wouldn\u2019t be publicly accessible.\u00a0<\/p>\n The data showed health plan reviewers denied the majority of those appeals. Three doctors who reviewed such appeals on behalf of Anthem rarely overrode an initial coverage denial, CalMatters found.\u00a0<\/p>\n They ranked among the top 10 in the national data set in upholding initial denials, with rates ranging from 73% to 87%.<\/p>\n Such denials can put facilities in a complicated position. If they disagree with the denials, they must choose between discharging their patient against providers\u2019 better judgment or treating a patient with the possibility that they might not get reimbursed.\u00a0<\/p>\n The Lakes, Cattaneo said, chooses the latter.\u00a0<\/p>\n \u201cWe\u2019re in the business to help people,\u201d she said.\u00a0<\/p>\n After Tungseth\u2019s coverage was denied, he said The Lakes helped him appeal. He won. A month later, Anthem denied his coverage again. He appealed and won again. Once Tungseth was discharged after 90 days, he said, he still needed support. The Lakes kept him on as a volunteer, then offered him a job doing maintenance work.<\/p>\n Almost a year later, he credits the treatment center with helping him save his own life.<\/p>\n \u201cI put myself in their hands,\u201d he said. His voice grew quiet, and he paused. Without them, \u201cI wouldn\u2019t be here.\u201d\u00a0<\/p>\n A year before The Lakes received the initial letter from Anthem, another facility was also complaining to state regulators about the insurer. In 2022, Jeffrey Schwartz, the CEO of Harmony Place, a Los Angeles County treatment center, asked the state to investigate Anthem, saying that the insurer owed the company more than $860,000.\u00a0<\/p>\n Anthem had flagged Harmony Place for additional scrutiny, a process known as prepayment review, he said. The treatment center had been in-network with Anthem for seven years; until the prior year, he told state regulators, 80% of Harmony Place\u2019s revenue came from patients who had Anthem insurance.\u00a0<\/p>\n Under prepayment review, insurers require facilities that have had errors in the past to provide them with significant documentation before they get paid. Harmony Place said they had quickly corrected billing errors once they became aware of them.<\/p>\n But facility leaders told state officials that Anthem kept losing records they submitted; when staff members tried to call to clear things up, the customer service agents they reached were largely unable to help.<\/p>\n Insurers say policies like prepayment review offer important safeguards to catch and prevent fraud.\u00a0\u00a0<\/p>\n In his statement, Bowman, the Anthem spokesperson, said that the health insurer strives to \u201cprocess and pay claims quickly and efficiently and in accordance with state and federal laws as well as the contractual agreements we have with our provider partners.\u201d<\/p>\n But facilities say they frequently find themselves in Catch-22s, unable to free themselves from prepayment review for several months or longer due to uneven and subjective standards, along with frequent mistakes and poor communication by the health plans.\u00a0<\/p>\n In January 2024, Kelly Priegnitz, the chief legal and compliance officer of Pinnacle Treatment Centers, sent a letter to state regulators alleging Anthem owed the company about $1.7 million in outstanding payments.\u00a0<\/p>\n Referring to what she described as Anthem\u2019s \u201cbrazen denial of payment without explanation or remedy,\u201d she said that her company would no longer remain in Anthem\u2019s network and would begin transitioning patients out.\u00a0<\/p>\n About five years ago, Stampp Corbin, the president and founder of the Addiction Treatment Advocacy Coalition, had his organization survey more than 100 substance use treatment facilities, most of them in California. The coalition found that, in the prior three years, Anthem had placed more than half of detox, residential and partial hospitalization facilities on prepayment review. That was about eight times more likely than non-substance use providers the organization surveyed.<\/p>\n In the case of Harmony Place, the CEO told the state the lack of payment caused \u201ctremendous financial strain,\u201dand temporarily led the treatment provider to close a facility and lay off 15 employees and to pause accepting Anthem members.\u00a0<\/p>\n \u201cIt\u2019s really designed to keep you trapped in this endless nightmare,\u201d Rebecca Abel, Harmony Place\u2019s regulatory affairs and compliance coordinator, told CalMatters.<\/p>\n For help, Harmony Place turned to Samuel Blackmar, an attorney who had previously worked in substance use billing \u2013 and found the experience so upsetting he enrolled in Georgetown Law School to take on the industry.<\/p>\n He calls the burden that prepayment review puts on facilities \u201cinsane.\u201d\u00a0<\/p>\n With the help of Blackmar and the Department of Managed Health Care, Harmony Place was able to exit prepayment review status and eventually get its claims reimbursed. It once again accepts Anthem members.<\/p>\n After The Lakes pushed back against Anthem, the insurer withdrew its initial notifications of termination. But, according to court documents, Anthem still continued to reduce or withhold payments. Anthem later attributed that to an administrative error, according to a court declaration.\u00a0<\/p>\n The insurer later sent over a new notification that the contract would be canceled \u2014 just at a later date.\u00a0<\/p>\n Over the years, state regulators have occasionally dinged the treatment center for deficiencies, such as an instance of failing to perform daily vital assessments, according to state public records. But the Lakes has never lost its license or been suspended.\u00a0<\/p>\n By January 2024, The Lakes laid off several employees and cut the hours of remaining staff by 20%, according to a declaration by Cattaneo filed with Calaveras County Superior Court. By then, the treatment center estimated that the insurer owed them more than $400,000.\u00a0<\/p>\n A few months later, Cattaneo reached out to the Department of Managed Health Care requesting \u201curgent regulatory intervention.\u201d<\/p>\n The department, she wrote, cannot \u201cturn a blind eye to Anthem\u2019s brazen betrayal of the health care system.\u201d<\/p>\n This fall, The Lakes and Anthem head into arbitration, a process by which legal disputes are handled outside of court. Bendat, the attorney for The Lakes, is critical of the fact that the Department of Managed Health Care allows insurers to insist on arbitration. He says the confidentiality clauses in those agreements remove \u201cthe entire process out of the regulator\u2019s eye.\u201d\u00a0<\/p>\n Cattaneo points to The Lakes\u2019 success with appeals to the department as evidence that their patients\u2019 claims are valid.\u00a0<\/p>\n If their appeals were spurious, she said, why would the department overturn so many denials?<\/p>\n CalMatters data reporter Erica Yee contributed to this story.<\/p>\n The data supporting this story comes from three main sources: public records, state agency data on independent medical reviews and a private billing company.<\/p>\n Public records:\u00a0<\/strong>CalMatters requested copies of complaints and investigations from the Department of Managed Health Care and the Department of Health Care Services, correspondence between the Department of Managed Health Care and The Lakes, Harmony Place and Anthem and independent medical review online reports. CalMatters also combed through hundreds of state and federal court records related to The Lakes and other treatment centers.<\/p>\n State data<\/strong>: One way of comparing Anthem Blue Cross\u2019 denials to other health plans is through data on appeals made to the state. In response to patient appeals, state regulators can uphold a health plan\u2019s decision or reverse it, or the plan can also opt to reverse its own decision. CalMatters analyzed the most recent available data for full service plans from the Department of Managed Health Care, which\u00a0oversees<\/a>\u00a096% of state-regulated commercial and public health plan enrollees. Out of 1,637 denials by Anthem for medical necessity coverage over a three-year period, 1,087 were overturned by the state, 379 were upheld and Anthem reversed 171. More detailed information on these reviews by plan or type of care are available on the\u00a0DMHC website<\/a>\u00a0and in\u00a0annual reports<\/a>.<\/p>\n Billing company data:\u00a0<\/strong>In a\u00a0prior story<\/a>\u00a0on mental health coverage, we obtained data from a billing company that provided a limited window into the appeals process, finding that some doctors appeared to deny almost every appeal they reviewed. (Read more details in\u00a0our methodology<\/a>). In this story, we identified three California-based doctors reviewing appeals on behalf of Anthem whose denial rates ranged from 73% to 87%. We normalized and confirmed doctors\u2019 names in the data based on the\u00a0Medical Board of California<\/a>, court records, LinkedIn and reporting.<\/p>\n","protected":false},"excerpt":{"rendered":"Jocelyn Wiener and Byrhonda Lyons \u00a0|\u00a0 CalMatters The letter from Anthem landed on Bernadette Cattaneo\u2019s desk on a…\n","protected":false},"author":3,"featured_media":85764,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[2106,40226,1582,57948,276,40225,40231,15948,10891,3189,10000,57949,210,1141,3168,10667,1142,3584,38679,7337,50,153,3190,9226,646,67,132,68],"class_list":{"0":"post-85763","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-health-care","8":"tag-alcohol","9":"tag-audience","10":"tag-ca","11":"tag-ca-content-sharing-central","12":"tag-california","13":"tag-ccj","14":"tag-ccj-audience","15":"tag-centers","16":"tag-central","17":"tag-content","18":"tag-drug","19":"tag-drug-u0026-alcohol-treatment","20":"tag-health","21":"tag-health-care","22":"tag-health-insurance","23":"tag-health-policy","24":"tag-healthcare","25":"tag-hospitals","26":"tag-hospitals-u0026-treatment-centers","27":"tag-insurance","28":"tag-news","29":"tag-policy","30":"tag-sharing","31":"tag-treatment","32":"tag-u0026","33":"tag-united-states","34":"tag-unitedstates","35":"tag-us"},"share_on_mastodon":{"url":"","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/85763","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=85763"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/85763\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/85764"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=85763"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=85763"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=85763"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}