In 2008, Congress enacted the Paul Wellstone and Pete Domenici Mental Health Parity and Addition Equity Act ("Parity Act"). In essence, the Parity Act necessitates that financial requirements and treatment limitations imposed on mental health and substance use disorder benefits cannot be more restrictive than the financial requirements and treatment limitations that apply to medical/surgical benefits. Although Congress enacts consequential patient-oriented legislation such as the Parity Act, that does not mean the provisions contained in the Act are enforced by the government. Eight years after the Parity Act became law, Congress enacted the 21st Century Cures Act ("Cures Act"), which was intended to increase implementation of Parity Act. The Cures Act focused on the simple notion that health insurance companies and group health benefit plans must actually disclose to participating beneficiaries and contracting providers that behavioral health and substance abuse services are covered services under the terms of the participant's health plan. The Cures Act constituted congressional recognition that behavioral health and substance abuse treatment benefits were still not on par with medical/surgical benefits nearly 8 years following passage of the Parity Act.
Non-quantitative Treatment Limitations
A flaw in implementation of Parity Act benefits for health plan beneficiaries was the Act's discretionary authority allowing health insurers and group plans to use non-quantitative treatment limitations to deny coverage on the scope or duration of benefits for treatment of mental health and substance abuse disorders. Non-quantitative treatment limitations are by their nature non-numeric and subjective. Compliance with Parity Act obligations for non-quantitative treatment limitations fundamentally depends on parity in the development of the underlying processes and evidentiary standards used by insurers and health plans to limit coverage for treatment. With this discretionary authority, health insurers and health plans created a myriad of inconsistent, non-transparent standards and classifications of services that, as written or applied, resulted in denial of coverage to beneficiaries based upon faulty medical necessity criteria.
There Is a New Sheriff in Town
The new sheriff arrived in March 2019. Wit v. United Behavioral Health, U.S. District Court Northern District of California. Wit, a class-action filed May 21, 2014, claimed residential treatment and substance abuse services contained in United's Level of Care Guidelines for Treatment did not meet the accepted standard of care for treatment of mental health and substance abuse disorders. In the 106-page Opinion, the Court also found that United's Coverage Determination Guidelines (Coverage and Benefit Decisions) were premised on standards that were more restrictive than the generally accepted standards of medical care for mental health and substance use disorders.
The Court ruled that United's overriding profit motive infected its development of parity for its standards and processes for both its medical necessity guidelines and its coverage determination guidelines prepared by United in 2011. This was accomplished by United's internal financial division, which ensured that through "utilization management," coverage of services would be denied, thereby mitigating the impact of the 2008 Parity Act.
Given the result in Wit, on September 12, 2019, a subsequent class action was filed by behavioral health and substance abuse treatment providers against United asking the Court to order United to re-adjudicate all previously denied or reduced claims for behavioral health and substance abuse treatment services for the period of May 22, 2011 through January 31, 2019 for all provider Class members. The estimated denied and underpaid claims is in the tens of billions of dollars.
The New Sheriff's method to Implement the Parity Act Is the Class Action
The legal mechanism and remedy of class actions is the vehicle to implement the Parity Act. Since the filing of Wit on May 21, 2014, there are more than 20 class action lawsuits challenging the creation, use, and sale of Clinical Coverage Guidelines and Level of Care Guidelines as designated criteria for health insurers and group plans to determine which mental health and substance abuse services are covered benefits or medically necessary for the plans' beneficiaries.
These cases, in general, challenge clinical coverage guidelines regarding non-quantitative treatment limitations for a broad range of mental health and substance abuse services. Five class actions allege wrongful denial of various treatments for children with autism. Three actions deal with denial of treatment for persons suffering from Anorexia Nervosa. Several class actions challenge both quantitative and non-quantitative treatment limitations for outpatient as well as residential treatment for mental health and substance abuse disorders. The defendants in these cases include plan administrators, creators of clinical coverage criteria guidelines sold to and used by health plans and health plan administrators, and health insurance companies. Jurisdiction in federal courts is based on ERISA, the Parity Act, the Patient Protection and Affordable Care Act, and similar state law statutory schemes.
Prioritizing and funding mental health and substance abuse treatment will, in the long run, decrease medical health care costs in this country. Timely and effective treatment for people suffering from mental illness or substance abuse disorders will reduce emergency department boarding of patients and generate effective continuity of care. However, if the new Sheriff fails to achieve Parity Act compliance, the lack of funding for treatment will not attract mental health and substance abuse disorder providers, thereby resulting in a shortage of approximately 250,000 providers in the fields of substance abuse and mental health treatment by the year 2025. If you are a provider of mental illness or substance abuse disorder services and have experienced payment denials for claim which were in your judgement, medically necessary and consistent with generally accepted standards of medical care for mental health and substance use disorders, we can help.
Originally published in Healthcare Michigan, January 2020.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.