How ‘endless’ insurance reviews threaten CA mental health centers
By Jocelyn Wiener and Byrhonda Lyons, CalMatters
!["A]("https://i0.wp.com/calmatters.org/wp-content/uploads/2025/06/032425-The-Lakes-Treatment-Center-LV_09.jpg?fit=1200%2C800&ssl=1")
This story was initially revealed by CalMatters. Sign up for his or her newsletters.
The letter from Anthem landed on Bernadette Cattaneo’s desk on a sunny day in June 2023.
Starting later that summer time, it mentioned, the dependancy remedy facility she ran within the rural Sierra foothills would not be included in a number of of the insurance coverage firm’s networks.
Confused, she learn it once more.
The transfer might bankrupt The Lakes, one in all few amenities of its sort serving a area struggling beneath a nationwide dependancy epidemic.
Anthem didn’t present a lot clarification in its preliminary letter, merely calling the choice “essential to maintain Anthem’s potential to supply these community merchandise.”
However Cattaneo had her personal speculation.
Over the earlier 12 months, she’d engaged in a relentless quest to get Anthem to pay for care she deemed medically essential for her purchasers.
She repeatedly helped her purchasers attraction to California regulators after the corporate rejected their claims.
The Lakes’ purchasers won 49 of their 54 appeals that 12 months, in response to courtroom data, compelling Anthem to pay tons of of 1000’s of {dollars} for alcohol and drug remedy.
Cattaneo emailed state regulators, saying it didn’t appear coincidental that The Lakes was faraway from Anthem’s community after so many profitable appeals.
“The Lakes works tirelessly to offer stellar remedy and this was actually a slap within the face,” she mentioned.
The battle between one of many state’s largest well being insurers and The Lakes, tucked away within the tiny city of Copperopolis in Calaveras County, displays a wrestle quietly enjoying out round California with probably vital penalties for substance use remedy.
Remedy facilities say Anthem — and different main well being insurers — make use of quite a lot of techniques that threaten their potential to remain in enterprise, at the same time as California faces a scarcity of suppliers. Greater than a dozen facility leaders, in lawsuits, state regulatory filings and interviews say insurers are denying their sufferers’ claims for medically essential protection and utilizing punitive measures that forestall remedy facilities from getting paid in full.
Because of this, amenities say they get strong-armed into accepting decrease reimbursements, go lengthy stretches with out receiving fee, or find yourself not being repaid in any respect.
Sufferers trying to get well from severe dependancy typically wrestle to seek out suppliers who settle for their insurance coverage. In some circumstances, they’ll face the prospect of having treatment yanked away, or wind up saddled with medical bills their insurance coverage firms received’t totally cowl.
Public data obtained by CalMatters present the CEO of 1 LA County-based remedy middle despatched letters to state regulators in 2022 imploring them to research Anthem for not paying claims promptly, saying his middle had been “financially devastated.” One other group with places across the state despatched a letter to regulators in 2024 complaining that Anthem owed them $1.7 million.
In September 2023, Cattaneo sued Anthem, alleging the well being insurer was punishing The Lakes due to how typically workers there appealed protection denials on behalf of sufferers.
Cattaneo believes amenities like hers — family-owned, with no backing from huge firms — are “very a lot taken benefit of.”
“What we’re hoping is that our struggle turns into a struggle for the entire trade,” she mentioned.
CalMatters made greater than half a dozen requests for interviews or feedback from Anthem leaders, however firm spokesperson Michael Bowman declined, as an alternative sending an emailed assertion.
“Anthem is dedicated to making sure our supplier companions and people delivering care to our members are reimbursed correctly and in a well timed method,” he wrote.
In a 2024 letter obtained by CalMatters via the Public Information Act, Anthem’s legal professional, Kenneth Smersfelt, wrote to one in all Cattaneo’s attorneys that the insurer “stays involved about The Lakes’ continued failure to adjust to the insurance policies and procedures set forth within the Facility Guide.”
He additionally mentioned the remedy middle was taking “an adversarial strategy to its relationship with Anthem” that was “inconsistent with a productive and environment friendly contract relationship.”
Mary Ellen Grant, spokesperson for the California Affiliation of Well being Plans, an insurance coverage trade affiliation, advised CalMatters that the measures well being insurers take are essential to forestall fraud, a longstanding drawback that’s “placing sufferers in danger and driving up the price of care.” Taking a second take a look at a requested authorization, she mentioned, ensures providers are “secure and applicable for the affected person.”
Services say their fee challenges aren’t restricted to Anthem. However because the state’s second largest well being plan, with nearly 6 million enrollees, it stands out.
Amongst California’s largest well being insurers, Anthem’s denials for all types of well being care have been most probably to be overturned, in response to a CalMatters evaluation of information from the Division of Managed Well being Care.
When sufferers appealed to the division, state regulators reversed Anthem’s denials about two-thirds of the time, in comparison with reversing about half of all insurers’ denials total.
!["Bar]("https://datawrapper.dwcdn.net/yIUZG/full.png")
Since 2021, California has required plans to pay for all medically necessary mental health care — together with the providers offered by residential amenities like The Lakes. These remedy facilities can play a important position at a life-or-death juncture for a lot of sufferers. However a prolonged residential keep comes with a excessive price ticket – The Lakes, for instance, could be paid about $800 a day per affected person, a courtroom exhibit exhibits.
After a remedy facility admits a affected person for detox or different care, insurance coverage firms usually decide inside 24 or 48 hours whether or not to approve the affected person’s keep, facility leaders advised CalMatters. Given the price of residential care, the plans then periodically evaluate a affected person’s eligibility — generally changing their opinion after just a few days.
The Division of Managed Well being Care is investigating suppliers’ considerations about Anthem’s reimbursement practices, mentioned spokesperson Kevin Durawa.
Durawa declined to offer particulars, citing the investigation, and likewise declined repeated requests for an interview.
Remedy facilities advised CalMatters these fee points have worsened in recent times.
!["A]("https://calmatters.org/wp-content/uploads/2025/06/032425-The-Lakes-Treatment-Center-LV_07-1024x682.jpg")
Meiram Bendat, an legal professional representing The Lakes, desires to see extra management from the state, together with extra aggressive monitoring and oversight of well being plans. He mentioned the division ought to preserve higher monitor of sufferers’ potential to obtain well timed care and will utterly revamp the way it handles supplier complaints, a system he describes as “a shame.”
“They’re probably not stepping up to make sure that suppliers aren’t terminated for improper causes,” he mentioned.
What occurred at The Lakes
Bernadette Cattaneo is trim and tan with shoulder-length brown hair and intense inexperienced eyes. At 64, she is disarmingly chatty and has a depraved humorousness – a framed household picture in her workplace features a cut-out of Brad Pitt’s face.
Cattaneo began vacationing in Copperopolis within the Nineteen Eighties together with her now ex-husband and three younger sons. They often stayed at a country, palm tree-studded resort alongside Lake Tulloch. Years later, after including a daughter to the combo, Cattaneo moved her household to Copperopolis full-time.
Nestled within the rolling foothills of Calaveras County, the previous copper mining city has about 4,600 residents. Many work in logging or on the close by jail, though the area additionally receives its justifiable share of retirees, trip owners and distant staff. Median family earnings within the county is about $16,000 a 12 months lower than the state common.
The county is federally acknowledged as having a serious shortage of mental health providers. In Calaveras County, Anthem has three in-network substance use remedy amenities, together with The Lakes, state regulators advised CalMatters. Drug and alcohol use characterize a prime concern for a lot of residents. Excessive drinking has been a rising drawback within the space because the pandemic, Cattaneo mentioned.
When the getting old lakeside resort got here available on the market round 2004, Cattaneo, a former realtor, noticed its funding potential. Her plan: collect traders, knock the entire thing down, construct townhouses.
Then the underside dropped out of the housing market. Round that point, a number of folks near her suffered accidents or different private tragedies and finally developed dependencies on painkillers or alcohol.
As Cattaneo weighed choices for the property, one got here into focus.
In March 2015, The Lakes opened its doorways as a substance use remedy middle.
Licensed for 76 folks, it affords detox, remedy, psychiatry and medical care, in addition to volleyball, kayaking, wakeboarding and the chance to gaze on the lake from one of many gazebos lining the property’s edge.
!["A]("https://calmatters.org/wp-content/uploads/2025/06/032425-The-Lakes-Treatment-Center-LV_14-1024x682.jpg")
!["The]("https://calmatters.org/wp-content/uploads/2025/06/032425-The-Lakes-Treatment-Center-LV_13-1024x682.jpg")
“Issues that may make them understand there’s life past utilizing,” Cattaneo mentioned.
Her youngest son, Travis Wilson, was one in all its first sufferers.
Now 10 years sober, he's accountable for admissions.
In 2017, Cattaneo signed paperwork to go in-network with Anthem, primarily contracting with the insurer.
Earlier than lengthy, greater than three-quarters of The Lakes’ sufferers have been insured by Anthem, courtroom data present.
California requires all well being insurers to keep up networks of suppliers. Well being insurers extensively vet these suppliers earlier than bringing them “in community.” In principle, this could result in a less complicated and extra reasonably priced affected person expertise in contrast with amenities that aren't within the insurance coverage firm’s community.
“If you’re in-network,” Cattaneo mentioned, the method “needs to be simple peasy mac and tacky, proper?”
Within the early years, the ability’s relationship with the well being insurer was nice, Cattaneo mentioned. However over time, she began noticing Anthem denying care, claiming remedies weren’t medically essential.
In 2019, she and her workers began submitting appeals on behalf of their sufferers to the Division of Managed Well being Care at any time when they felt insurance coverage firms had wrongly denied protection.
In 2022, The Lakes appealed to the state 17 instances, in response to paperwork her attorneys later filed in Calaveras County Superior Court docket. Within the first 5 months of 2023, that quantity almost tripled to 49. Virtually all concerned Anthem members insured via Coated California; The Lakes’ sufferers prevailed greater than 90% of the time.
Information on the division’s web site supply thumbnail sketches of the sufferers making these appeals: A bartender ingesting a half pint of whiskey and laborious seltzer each day. A person utilizing fentanyl each day for years. A lady with cirrhosis relapsing after her pets handed away.
All have been initially denied protection by their well being plans.
The Lakes received every of them on attraction.
The load of denial
Bradley Tungseth recollects being “an entire wreck” when he first arrived at The Lakes final July. He advised CalMatters he had spent some 30 years within the clutches of meth, alcohol, and different medicine. He had gone via a “full psychological breakdown” and landed within the hospital. Regardless of that, he’d by no means been in remedy earlier than.
“I wanted assist,” he mentioned.
!["A]("https://calmatters.org/wp-content/uploads/2025/06/032425-The-Lakes-Treatment-Center-LV_21-1024x682.jpg")
Tungseth’s good friend labored at The Lakes as a counselor. Tungseth determined he was able to strive remedy for the primary — and, he hoped, the final — time.
A month into his keep at The Lakes, he mentioned, Anthem decided he was accomplished. The well being plan by no means spoke with him immediately, he mentioned.
“They have been saying I didn’t want the remedy,” mentioned Tungseth, who lives in close by Jamestown. He mentioned Anthem decided he didn’t require long-term 24-hour care as a result of he was coming off of meth, and had minimal withdrawal signs. Tungseth felt sure he’d use once more if he left The Lakes.
After protection is denied, a affected person can attraction to their insurer. If that doesn’t work, they've the fitting to attraction to the state or federal authorities, relying on which company regulates their well being plans.
However research present most patients never appeal.
In California, customers and state regulators stay largely in the dead of night about how typically insurers are denying protection. In an effort to carry them extra accountable, legislators are pushing a bill that will require well being plans to report knowledge to the state about denials.
“Will probably be very impactful to formally look beneath the hood and see what’s taking place with these denials,” mentioned Scott Wiener, the Democratic state senator from San Francisco who additionally authored the 2021 regulation that expanded psychological well being protection.
One other bill would put limits on how often insurers can reassess sufferers’ eligibility for protection.
Within the absence of public knowledge on denials, personal knowledge from one billing firm affords a uncommon window into how typically medical doctors overturn preliminary medical necessity denials when sufferers attraction to their well being insurers.
The corporate, which works with remedy facilities across the nation, offered CalMatters with 4 years of information capturing greater than 2,000 appeals by sufferers requesting psychological well being remedy. CalMatters agreed to not title the corporate in trade for the information, which in any other case wouldn’t be publicly accessible.
The info confirmed well being plan reviewers denied the vast majority of these appeals. Three medical doctors who reviewed such appeals on behalf of Anthem not often overrode an preliminary protection denial, CalMatters discovered.
They ranked among the many prime 10 within the nationwide knowledge set in upholding preliminary denials, with charges starting from 73% to 87%.
Such denials can put amenities in a sophisticated place. In the event that they disagree with the denials, they have to select between discharging their affected person towards suppliers’ higher judgment or treating a affected person with the chance that they won't get reimbursed.
The Lakes, Cattaneo mentioned, chooses the latter.
“We’re within the enterprise to assist folks,” she mentioned.
After Tungseth’s protection was denied, he mentioned The Lakes helped him attraction. He received. A month later, Anthem denied his protection once more. He appealed and received once more. As soon as Tungseth was discharged after 90 days, he mentioned, he nonetheless wanted help. The Lakes stored him on as a volunteer, then provided him a job doing upkeep work.
Virtually a 12 months later, he credit the remedy middle with serving to him save his personal life.
“I put myself of their fingers,” he mentioned. His voice grew quiet, and he paused. With out them, “I wouldn’t be right here.”
!["A]("https://calmatters.org/wp-content/uploads/2025/06/032425-The-Lakes-Treatment-Center-LV_25-1024x682.jpg")
How plans punish suppliers
A 12 months earlier than The Lakes obtained the preliminary letter from Anthem, one other facility was additionally complaining to state regulators concerning the insurer. In 2022, Jeffrey Schwartz, the CEO of Concord Place, a Los Angeles County remedy middle, requested the state to research Anthem, saying that the insurer owed the corporate greater than $860,000.
Anthem had flagged Concord Place for extra scrutiny, a course of referred to as prepayment evaluate, he mentioned. The remedy middle had been in-network with Anthem for seven years; till the prior 12 months, he advised state regulators, 80% of Concord Place’s income got here from sufferers who had Anthem insurance coverage.
Below prepayment evaluate, insurers require amenities which have had errors up to now to offer them with vital documentation earlier than they receives a commission. Concord Place mentioned that they had shortly corrected billing errors as soon as they turned conscious of them.
However facility leaders advised state officers that Anthem stored shedding data they submitted; when workers members tried to name to clear issues up, the customer support brokers they reached have been largely unable to assist.
Insurers say insurance policies like prepayment evaluate supply necessary safeguards to catch and stop fraud.
In his assertion, Bowman, the Anthem spokesperson, mentioned that the well being insurer strives to “course of and pay claims shortly and effectively and in accordance with state and federal legal guidelines in addition to the contractual agreements we've with our supplier companions.”
However amenities say they often discover themselves in Catch-22s, unable to free themselves from prepayment evaluate for a number of months or longer resulting from uneven and subjective requirements, together with frequent errors and poor communication by the well being plans.
In January 2024, Kelly Priegnitz, the chief authorized and compliance officer of Pinnacle Remedy Facilities, despatched a letter to state regulators alleging Anthem owed the corporate about $1.7 million in excellent funds.
Referring to what she described as Anthem’s “brazen denial of fee with out clarification or treatment,” she mentioned that her firm would not stay in Anthem’s community and would start transitioning sufferers out.
About 5 years in the past, Stampp Corbin, the president and founding father of the Habit Remedy Advocacy Coalition, had his group survey greater than 100 substance use remedy amenities, most of them in California. The coalition discovered that, within the prior three years, Anthem had positioned greater than half of detox, residential and partial hospitalization amenities on prepayment evaluate. That was about eight instances extra possible than non-substance use suppliers the group surveyed.
Within the case of Concord Place, the CEO advised the state the dearth of fee induced “large monetary pressure,” and briefly led the remedy supplier to shut a facility and lay off 15 workers and to pause accepting Anthem members.
“It’s actually designed to maintain you trapped on this limitless nightmare,” Rebecca Abel, Concord Place’s regulatory affairs and compliance coordinator, advised CalMatters.
For assist, Concord Place turned to Samuel Blackmar, an legal professional who had beforehand labored in substance use billing – and located the expertise so upsetting he enrolled in Georgetown Legislation Faculty to tackle the trade.
He calls the burden that prepayment evaluate places on amenities “insane.”
With the assistance of Blackmar and the Division of Managed Well being Care, Concord Place was capable of exit prepayment evaluate standing and finally get its claims reimbursed. It as soon as once more accepts Anthem members.
The way forward for The Lakes
After The Lakes pushed again towards Anthem, the insurer withdrew its preliminary notifications of termination. However, in response to courtroom paperwork, Anthem nonetheless continued to cut back or withhold funds. Anthem later attributed that to an administrative error, in response to a courtroom declaration.
The insurer later despatched over a brand new notification that the contract can be canceled — simply at a later date.
!["The]("https://calmatters.org/wp-content/uploads/2025/06/032425-The-Lakes-Treatment-Center-LV_04-1024x682.jpg")
Over time, state regulators have often dinged the remedy middle for deficiencies, such for instance of failing to carry out each day important assessments, in response to state public data. However the Lakes has by no means misplaced its license or been suspended.
By January 2024, The Lakes laid off a number of workers and reduce the hours of remaining workers by 20%, in response to a declaration by Cattaneo filed with Calaveras County Superior Court docket. By then, the remedy middle estimated that the insurer owed them greater than $400,000.
A number of months later, Cattaneo reached out to the Division of Managed Well being Care requesting “pressing regulatory intervention.”
The division, she wrote, can't “flip a blind eye to Anthem’s brazen betrayal of the well being care system.”
This fall, The Lakes and Anthem head into arbitration, a course of by which authorized disputes are dealt with outdoors of courtroom. Bendat, the legal professional for The Lakes, is important of the truth that the Division of Managed Well being Care permits insurers to insist on arbitration. He says the confidentiality clauses in these agreements take away “your complete course of out of the regulator’s eye.”
Cattaneo factors to The Lakes’ success with appeals to the division as proof that their sufferers’ claims are legitimate.
If their appeals have been spurious, she mentioned, why would the division overturn so many denials?
CalMatters knowledge reporter Erica Yee contributed to this story.
This text was originally published on CalMatters and was republished beneath the Creative Commons Attribution-NonCommercial-NoDerivatives license.
2025-07-22 12:35:00
