I don’t want to claim too much expertise here, because my guess is this is very different in different hospitals, in different states, and with different pay structures. But here’s how things work at our hospital:
– If somebody needs to be committed, but has no insurance, we call some kind of government program called CareLink, which gives them temporary mental health insurance. This is all done by social workers so I’m not entirely sure how it works, but I think it’s some kind of means-tested insurance for poor people. I’m constantly confused by this, because it seems to have existed about the same both before and after Obamacare, and “everyone can get their mental health care paid for if they need it” doesn’t fit what I hear about the US health care system. Maybe it’s Detroit-specific?
– If we keep someone more than a few days, their insurance starts calling us and griping about how maybe we should release him and maybe they’re not going to keep paying us. Then we have to argue that we can’t release him because he’s suicidal/homicidal/otherwise dangerous/otherwise really sick. If it’s super-clear this is true, the insurance will usually keep paying us.
– If the insurance company refuses to pay us, but we’re convinced that the person is dangerous and can’t go home, we just have to eat the losses and treat the patient without getting paid. This is partly for ethical reasons, and partly because we could be sued if we discharge and then the patient hurts themselves/someone else. That’s right - we can be legally obligated to treat people without getting paid.
– I’ve been involved in a lot of “should we discharge this guy today or not?” discussions, and never ever has “he’s fine, but we could get more insurance money by keeping him” been involved. Occasionally “our judgment is we should keep him, but insurance won’t pay us” has been involved, but subject to the caveat above. Nobody paying us can weigh as one factor to get rid of someone, but it’s not an overwhelming factor if we think the patient is really ill. It mostly just affects edge cases.
– In theory, we can just keep someone without any insurance and send
them the bill for their own care. We don’t like to do this, both because
it’s not that ethical and because realistically the bill will be tens
of thousands of dollars and they won’t be able to pay. I think usually
what happens in this situation (both for mental health care and normal
medical care) is that the hospital collection department makes all sorts
of threats, the patient makes all sorts of protests that he’ll never be
able to pay, and then depending on how convincing each side was they
settle for some tiny fraction (eg 10%) of the listed price that leaves
everyone unhappy.
– There was one time that one of the new doctors didn’t know how to write documentation, so he looked it up and discovered that we were all doing something called “underdocumenting”, which meant that insurance companies were only paying us about half as much as they would if we were documenting correctly. We started writing our documentation differently and our revenue doubled in the space of a week. We’d been doing it the wrong way for years and nobody had every checked. I bring this up just to point out that this is not the sort of thing that happens in an enterprise with such a dastardly focus on profit that we’re frequently conspiring how to keep people locked up longer to wring a few extra bucks out of the system.
– I don’t know how much it matters that we’re a teaching hospital, and so get a lot of our money from the government and various educational initiatives. Maybe we are unusually non-money-focused.
– I’d be pretty surprised if you could just immediately cancel your insurance from a psych hospital. I would think capacity issues (ie can you make legal decisions while mentally ill?) would come up.
– I’d be pretty surprised if this method worked but hadn’t caught on among frequent-flier patients, who seem pretty clued in about a lot of stuff and are always trying long-shot ways to get out of the hospital.