American Addiction Centers: contracting reimbursement rates and payers clawing money back add to company’s troubles
The main trends for this industry were highlighted, with M&A activity, which is a “hot button”, reduced reimbursement rates and client acquisition diversification among those listed. The specialist went into more detail about why reimbursement rates are changing and their impacts. Insurance companies were “paying us a lot of money, and so they started to shift the rates at which they were reimbursing”.
“Claw backs” are also a serious issue. This is “money that payers have paid out for services rendered on claims. However, upon further investigation, medical record documentation does not defend payment of those services, and now they have the right to come back and take their money back.”
Another topic brought up was the total addressable market: “we’re not necessarily seeing an overarching trend where people are getting better and no longer needing services.” Although the market doesn’t seem to have changed, the “pathway to acquire those clients is really what’s interesting at this point in time”, with hurdles “inadvertently been put into place” for patients looking to access treatments.
Some of the company’s other difficulties were covered, including buying rehabs.com, which was “probably the worst acquisition AAC may have made”. And the factors leading to the company’s decline were also listed, for instance: “the entire business structure around how we acquire patients and the incentives we were giving to business development reps was never functional from the very beginning.”
To access all the human insights from Third Bridge Forum’s American Addiction Centers 2020 Outlook Interview, click here to view the full transcript.