Are Mental Health Agencies in Buffalo, NY Pressuring Clients Into Diagnoses for Profit?

Mental health care is meant to prioritize well‑being—but growing concerns are emerging that some agencies in Buffalo, NY, might be incentivizing the behavior they’re treating. Critics argue that pushing formal diagnoses can result in greater billing and revenue, sometimes risking patient care. Let’s take a deeper look.

💊 Why diagnoses can mean dollars

• Billing structure: In New York, Medicaid and OMH‑approved mental health clinics services provided—with significant variation tied to coded diagnoses and service intensity. In Continuing Day Treatment (CDT), for instance, reimbursements are organized by hours and type of visit.

• receive reimbursement based on types of Medicare Advantage abuse: Independent Health, a Buffalo‑area insurer, settled a federal suit in December 2024 for up to $98 million over allegations that it submitted unsupported or inflated diagnoses to claim higher reimbursements. This case illustrates the financial motive linked to psychiatric labeling.

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🏥 Local dynamics and systemic pressure

• Contracting agencies: The Erie County Dept. of Mental Health contracts with dozens of providers (e.g., BestSelf, Endeavor, Catholic Charities). These agencies receive funding based on client utilization, service type, and staff credentials.

• Diagnosis as gateway: With reimbursement rates tied to clinical codes and treatment intensity, agencies may screen for diagnosable conditions more aggressively—sometimes offering therapy only after—or contingent upon—a formal diagnosis. This can make mental illness identification feel transactional rather than therapeutic.

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🧾 Ethical concerns and fallout

• Overdiagnosis and misdiagnosis: Critics suggest that vulnerable community members—especially Medicaid beneficiaries—might be labeled with disorders primarily to qualify for higher-reimbursing codes. This raises ethical concerns about patient autonomy and quality of care.

• Limited oversight: While New York ranks among the highest in per‑capita mental health spending, there’s no guarantee that consumers receive high‑quality care. Funding doesn’t ensure accurate clinical judgment or effective support.

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🧭 What happens next?

• Policy responses: State officials—including the New York Attorney General—have called for stronger enforcement around network adequacy, ghost provider directories, and mental health parity to prevent exploitation.

• Community transparency: Advocates and watchdogs must ensure local agencies aren’t driven by financial incentives at the expense of client care.

• Personal agency: Clients should feel empowered to ask:

  • Do I truly need a diagnosis to receive help?

  • What are the consequences of being labeled?

  • Are there non-clinical or peer-based services available?

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🧾 References

1. New York State Office of Mental Health. (2024). Provider Reimbursement System. Retrieved from https://omh.ny.gov/omhweb/provider_reimbursement_system/report.html

2. U.S. Department of Justice. (2024). Independent Health to Pay $98 Million to Resolve False Claims Act Allegations. Retrieved from https://www.justice.gov

3. Erie County Department of Mental Health. (2025). List of Contract Agencies. Retrieved from https://www3.erie.gov/mentalhealth/list-contract-agencies

4. SAMHSA. (2024). Behavioral Health Treatment Services Locator Data. Retrieved from https://www.samhsa.gov/data

5. New York State Attorney General. (2023). Mental Health Parity Report: Lost in the Fine Print. Retrieved from https://ag.ny.gov/sites/default/files/reports/mental-health-report_0.pdf

6. New York State Office of Mental Health. (2024). Clinical Care Assessment Statistics. Retrieved from https://omh.ny.gov/omhweb/statistics/clinical_care_assessment/