Private Insurance Circumvents the Mental Health Parity Treatment Act

The Mental Health Parity and Addiction Equity Act of 2008 is a federal law that generally was supposed to prevent group health plans and health insurance issuers that provide mental health or substance use disorder benefits from imposing less favorable benefit limitations on such treatment than on other medical or surgical treatments. So far, it hasn’t come close to accomplishing its goal, although a recent court decision may possibly change that.

Supposedly, if a group health plan or health insurance coverage includes medical and surgical benefits and mental health benefits, the financial requirements (such as deductibles and co-payments) and treatment limitations (such as number of visits or days of coverage) that apply to the mental health must be no more restrictive than those that apply to the medical/surgical benefits.

However, insurers were easily able to "circumvent" the consumer protections intended in the legislation by imposing maximum numbers of doctor visits and/or caps on the number of days an insurer would cover for inpatient psychiatric hospitalizations. They played with the definition of “medical necessity” in psychiatry.

Insurance companies often make doctors and hospitals jump through hoops to even obtain a decision by the insurance company that their proposed treatment is “medically necessary.” For inpatient treatment, managed care companies adopted what amounts to a  code word: dangerousness. If a patient is not specifically and imminently homicidal or suicidal, the insurance company would mandate that  the patients be thrown out of the hospital and onto the street. Science and the best interest of the patients were really non-factors in this decision, which were basically based solely on greed and profiteering.

Suicide rates for patients soon after discharge from a psychiatric inpatient facility are much higher than suicide rates in the general population. This problem has gone up significantly in recent years due to patients having many fewer days in the hospital than they used to.

Yet another trick was companies deciding which psychiatric conditions were severe enough to warrant hospitalization, and which ones were not, irregardless of the severity of a patient’s symptoms and functional capacity. For example, doctors in a hospital near where I work appeared to have been pressured by the facility to make diagnoses that were more likely to be covered by insurance even if their patients did not meet criteria for those disorders. The result was that the patients were often put on medications that were ineffective, not indicated, and/or potentially toxic.

Within my own patient population of people with borderline personality disorder, “bipolar disorder” was the go-to option.

In the recent court decision mentioned above, on February 28, 2019 the US District Court for the Northern District of California found that United Behavioral Health (UBH), the country’s largest managed behavioral health care organization, illegally denied coverage for mental and substance use disorders based on flawed medical necessity criteria (David Wit, et. al. v. United Behavioral Health).

UBH was noted to have internally developed medical necessity guidelines that comprehensively fell short of accepted standards of care to deny outpatient, intensive outpatient, and residential treatment to UBH beneficiaries. They only paid for the alleviation of a patient’s acute symptoms, but not of any underlying condition – particularly chronic conditions.

The court said that the fact that a lower level of care is less restrictive or intensive does not justify selecting that level if it is also expected to be less effective. Placement in a less restrictive environment is appropriate only if it is likely to be safe and just as effective as treatment at a higher level of care in addressing a patient’s overall condition, including underlying and co-occurring conditions.

Effective treatment of mental disorders includes services needed to maintain functioning or prevent deterioration. Appropriate duration of such treatment should be based on the individual needs of the patient and not on some arbitrary guidelines regarding the duration of treatment for a given disorder.

Even though the plaintiffs in Wit v. UBH were enrolled in plans that are exempt from the federal parity law, the court recognized that mental disorders are chronic illnesses and rejected the insurers’ practice of treating only the acute symptoms. This may establish a precedent for plans covered by the parity law.

Will the recent court decision make any difference? I have my doubts. Insurance companies can be experts in not paying for the adequate care of their subscribers.

In an upcoming post, I will be reviewing a book about the even more disgusting horrors currently being inflicted on the severely and persistently mentally ill by the public mental health system.