The watchdog group points to the estimated $8 billion in annual mental health fraud, including in for-profit behavioral facilities, revealing how they exploit insurance by keeping patients hospitalized for financial gain.
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The Citizens Commission on Human Rights International wants an overhaul of fraudulent practices in behavioral hospitals that put mental health patients at risk. It has launched a campaign asking for current or former employees of psychiatric hospitals, particularly in the for-profit behavioral “troubled teen” treatment industry to report abuses witnessed. The group is posting ads for whistleblowers to confidentially report any observed fraud.
A psychiatrist quoted in Psychiatric Times estimated between 10% and 20% of state mental health funds—$4 to $8 billion—are lost to fraud, waste, and excess profits to for-profit managed care companies. Studies report that the administrative costs of for-profit psychiatric hospitals are 32% higher than non-profit psychiatric hospitals and 83% higher than public psychiatric hospitals.[1] Research also shows psychiatric inpatients with voluntarily legal status were most frequently served in private psychiatric hospitals (46%) and only 6% of patients voluntarily admitted were in state and county psychiatric hospitals.[2]
It makes the potential for fraud in the private sector a high risk. Generally, mental healthcare fraud schemes include facilities paying kickbacks to doctors and others for referral; making inaccurate or untruthful diagnoses to increase payments from Medicaid and Medicare; providing unnecessary treatment; and billing for treatment when the provider was not there to deliver it, or billing for multiple patients over a period in which it would be impossible to deliver that amount of treatment.[3] For example, recently, the U.S.
Attorney General’s Office filed a civil complaint against a behavioral center and its owner, alleging False Claims Act violations by billing Medicaid for fictitious psychiatric services. Thousands of medication management appointments, or “med checks,” were billed, including for more than 84 full-length med checks on the same day, which would amount to at least 21 hours of appointments.[4]
CCHR’s call for whistleblowers, says: “If you are or have been employed at a mental health facility, you have likely witnessed patient abuse, fraud, or other things you felt were wrong or illegal. You may also know of substandard institutional conditions or other situations you feel need to be made known. CCHR can help you. CCHR has been investigating and exposing the for-profit mental health industry and its hospital chains since the early 1990s. These businesses are widely acknowledged as putting profit above patient care and safety, resulting in physical and sexual assaults of patients (including children), deaths, and fraud.”
Medicaid and Medicare are lucrative sources for the for-profit industry. In 2019, Medicaid was the second biggest payer of mental disorder treatment, with expenditures of $27.6 billion, or a little over one-fourth (25.9%) of the total spent for the treatment of adults ages 18 and older. Almost one-fifth (19.1%) of such treatment expenditures were paid by Medicare, for a total of $20.4 billion. Individuals and families paying out-of-pocket accounts for $15.6 billion (14.7%).[5] In March 2024, the Centers for Medicaid and Medicare Services issued proposed payment rates for inpatient psychiatric facilities in 2025 which could see $70 million more in Medicare payments.[6] It’s an incentive to misuse funds, CCHR says.
In 2020, mental health expenditures had reached $280 billion, with nearly 25% from Medicaid. In 2023, Colliers reported the behavioral health market continues to grow and gain steam as a desirable investment sector.[7] That concerns CCHR, which says increased investment is occurring despite the “bad business” models of for-profits in an industry that does not self-correct.
Already, scandals involving for-profit psychiatric care companies are common.
In July 2020, one major for-profit behavioral hospital chain and one of its facilities agreed to pay a combined total of $122 million to resolve civil False Claims Act allegations. Allegedly, facilities knowingly submitted false claims for payment to Medicare, Medicaid, TRICARE, Veteran Affairs, and The Federal Employees Health Benefits Program for, among other things, inpatient behavioral health services that were not medically necessary.[8]
Medicaid accounts for 27% of the revenue of the company involved. In 2015, nearly 40% of $8 billion in its revenue (acute care and behavioral) generated annually, came from Medicare and Medicaid reimbursements.
In 2019, the U.S. Attorney settled fraud allegations against another behavioral hospital giant for $17 million in West Virginia.[9] According to that company’s 2023 annual report, 51% of its revenue was from Medicaid, 30% from commercial payors; 15% from Medicare and 4% from other payors.[10]
The U.S. Department of Justice reported False Claims Act recoveries involving healthcare were $1.8 billion in 2023.[11] In 2022, the healthcare industry was far and away the primary driver of civil fraud enforcement activity, accounting for 90% of recoveries.[12] This included a $10.25 million fine against another behavioral services company and three of its psychiatric facilities, which were accused of billing for unnecessary psychiatric hospitalizations and for evaluations that either were not performed or did not meet Medicare’s requirements. It was also alleged that patients were misled into voluntarily admitting themselves.[13]
Numerous cases of patient sexual assault are also reported in the for-profit behavioral industry. In the past year, lawsuits against two companies resulted in combined jury verdicts of over $1.2 billion. One was $485 million about a foster care child sexually assaulted in a New Mexico hospital.[14] Another was $535 million awarded against another hospital chain over the sexual assault of a 13-year-old patient by another patient, which the company is appealing.[15] That same company is also being sued following the sexual assault of an 8-year-old resident.[16]
CCHR says whistleblowers are sometimes the only means by which patients can be safeguarded against fraud and abuse. Whistleblowers should email CCHR’s Director of Legal Affairs at humanrights@cchr.org and visit https://www.cchrint.org/whistleblowers/
About CCHR: CCHR was founded in 1969 by the Church of Scientology and the late Dr. Thomas Szasz, Professor of Psychiatry. It has helped achieve many laws that protect patients from abuse in the mental health system and in the U.S., outlawed private psych facilities “bounty hunting” for patients.
[1] www.psychiatrictimes.com/view/fraud-waste-and-excess-profits
[2] www.nasmhpd.org/sites/default/files/2023-01/Trends-in-Psychiatric-Inpatient-Capacity_United-States%20_1970-2018_NASMHPD-2.pdf
[3] www.beckersbehavioralhealth.com/behavioral-health-news/8-recent-behavioral-health-billing-fraud-cases.html; www.justice.gov/usao-mdfl/pr/universal-health-services-inc-and-related-entities-pay-122-million-settle-false-claims
[4] www.justice.gov/usao-edpa/pr/united-states-files-lawsuit-alleging-medicaid-fraud-philadelphia-mental-health-clinic
[5] meps.ahrq.gov/data_files/publications/st539/stat539.shtml
[6] www.beckersbehavioralhealth.com/behavioral-health-government-policies/cms-proposes-bump-for-inpatient-psychiatric-medicare-payments.html?origin=BHE&utm_source=BHE&utm_medium=email&utm_content=newsletter&oly_enc_id=3257B5846812I1X
[7] knowledge-leader.colliers.com/justin-butler/navigating-the-behavioral-health-market-a-growing-investment-frontier-with-evolving-real-estate-dynamics/
[8] oig.hhs.gov/publications/docs/hcfac/FY2020-hcfac.pdf
[9] www.justice.gov/usao-sdwv/pr/united-states-attorney-announces-17-million-healthcare-fraud-settlement
[10] bhbusiness.com/2023/05/05/how-acadia-healthcare-uhs-are-prepping-for-medicaid-redeterminations/; www.sec.gov/Archives/edgar/data/1520697/000156459023002737/achc-10k_20221231.htm
[11] www.justice.gov/opa/pr/false-claims-act-settlements-and-judgments-exceed-268-billion-fiscal-year-2023
[12] www.klgates.com/The-False-Claims-Act-and-Health-Care-2021-Recoveries-and-2022-Outlook-4-7-2022
[13] www.justice.gov/opa/pr/ohio-treatment-facilities-and-corporate-parent-agree-pay-1025-million-resolve-false-claims
[14] www.abqjournal.com/news/foster-child-sexual-assault-results-in-485-million-jury-award/article_bfdf6e86-1f70-11ee-b4e3-c7c608def4fe.html
[15] www.yahoo.com/news/jury-renders-535-million-judgment-145500758.html
[16] levin-papantonio-rafferty.prowly.com/290507-alabama-youth-facility-sued-over-another-child-sexual-assault-incident
Contact Info:
Name: Amber Rauscher
Email: Send Email
Organization: Citizens Commission on Human Rights International
Address: 6616 Sunset Boulevard, Los Angeles, California 90028, United States
Phone: +1-323-467-4242
Website: https://www.cchrint.org
Source: PressCable
Release ID: 89127029
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