Ruling Raises Questions for Mental Health Coverage

When the 9th U.S. Circuit Court of Appeals in San Francisco ruled on Aug. 26 that Blue Shield of California must cover a policyholder’s treatment for anorexia nervosa, the decision sent a ripple of uncertainty through the behavioral health community. Insurers, physicians, patient advocates and other stakeholders have speculated on whether the ruling could lead to more extensive coverage of mental illness.

The appeals court reviews cases that fall under the federal Employee Retirement Income Security Act, or ERISA, the law that governs employer-provided health plans. Overturning a lower court’s ruling, a panel of judges for the 9th Circuit concluded that Blue Shield is obligated under the California Mental Health Parity Act of 1999 to pay for policyholder Jeanene Harlick’s residential care at a Missouri facility.

Blue Shield has filed a petition for a rehearing in front of the same appellate court panel. Stephen Shivinsky, vice president of corporate communications for the company, said he doesn’t know when the court will respond.

Harlick’s attorneys, Kantor & Kantor of Northridge, said on their website that Harlick’s physicians determined residential treatment to be “perhaps the only option” for her. After initially agreeing to coverage, Blue Shield refused to pay because Harlick’s policy did not cover residential care, according to Kantor & Kantor.

However, the policy lacks clarity on this point, according to Harlick’s lawyers. The insurer vacillated on a decision numerous times, the lawyers said, and “never explained” why the parity act did not require it to pay Harlick’s claim.

The act requires insurers to provide coverage for 10 mental health conditions, including anorexia, at the same level as they do for physical conditions.

“This is an extraordinary ruling in the sense that it helps give patients and advocates a much stronger tool to ensure that plans actually do what we think the law should be doing,” Randall Hagar, government affairs director for the California Psychiatric Association, said. “Plans will have to react, for this makes it clear there is now a particularly high standard. We feel the implications are very broad, but we expect there will be an attempt by plans to minimize the impact,” Hagar said, adding, “Residential care does occupy a unique niche.”

As advocates, Hagar said, “we’ve been looking for leverage for a long time. Our members are saying, ‘hmmmmm,’ now since because of one thing or another, plans are always finding ways to make it tough to get authorization to get claims paid.”

Attorney Lisa Kantor told the publication Behavioral Healthcare, “Even though [Harlick] may not be the biggest beneficiary of her own legal battle, she is gratified that her struggle will allow others access to timely and effective treatment.”

Care Close to Home

Sheree Kruckenberg, behavioral health vice president at the California Hospital Association, said California’s managed care plans have done a robust job on paper of developing structural and operational changes required by the parity statute.

She added, “But I didn’t feel then and don’t now that it translates so well into patient care. I hope that they go back now and look at their parity policies and procedures and put renewed focus on making sure the services people need to actually get better are available.”

Plans have to meet “very rigid access requirements” defined by the California Department of Managed Health Care, Kruckenberg said. “Because we don’t have a robust behavioral infrastructure in California, it sometimes means people have to go out of state. No one should have to leave their home community, their natural support system, to get care. Everyone Ms. Harlick called gave her a different answer, resulting in a lot of confusion. Why should that be? Parity was passed a long time ago.”

Kruckenberg added, “I’m optimistic [the ruling] creates enough concern within the delivery system that others will look to decide if coverage meets the intent of the law.”

However, Health Access Executive Director Anthony Wright cautioned, “We should not make too broad or sweeping a statement about this ruling.” He added, “It’s totally appropriate for this to be weighed and looked at treatment by treatment, given the medical evidence and research that continually evolves. In many of these situations, even if there is expense at the front end, that can often save costs down the line. Eating disorders can then provoke all sorts of other co-morbidities. Sometimes there is a reason to deal with an issue before it becomes more serious.”

NIH says anorexia can occur along with depression, anxiety disorders and substance use, as well as cause heart and kidney problems and even death. “Getting help early is important. Treatment involves monitoring, mental health therapy, nutritional counseling and sometimes medicines,” according to the federal agency.

Responses to Ruling Are Measured

Insurers are watching and waiting. “Most of Aetna’s plans have a residential treatment benefit for anorexia and there are criteria in place to determine when residential treatment is necessary,” Anjie Coplin, Aetna’s western region communications director, said. “When the court ruling is final, we will review those criteria to see if any changes need to be made.”

The California Department of Insurance is also on pause. “We are aware of the suit and the decision. Depending upon the outcome, our department would certainly look to see if that particular case can provide basis for broader application,” deputy press secretary Pat McConahay said.

At the Department of Managed Health Care, spokesperson Lynne Randolph declined to provide any perspective, “as the DMHC was not a party to the matter and the matter is still being litigated.”

Patrick Johnston, president of the California Association of Health Plans, said the parity act was not intended to increase coverage.

“The regimen and services may have value for the individual, but the clear intent of the parity act was to treat serious mental illness on a par with physical medical treatment with respect to copayments and deductibles and length of stay,” Johnston said. “It was not to establish a separate higher level of benefits to be exercised upon the order of any health care provider.”

The association filed an amicus curae or “friend of the court” brief, saying the panel’s decision “will have a dramatic effect on the scope and cost of health care for California consumers” because “California health plans must now cover all medically necessary treatments for severe mental illnesses, apparently without any exclusions, save for the same monetary limits that apply to coverage for physical illnesses. The decision represents a drastic expansion of health care coverage for severe mental illnesses.”

Association attorneys also wrote that exclusions remain permissible for physical conditions, creating an unfair situation in which coverage for residential care would be mandated for anorexia, for example, but could be excluded for traumatic brain injury.

The brief, which asks for a panel rehearing, states that “the Panel decision is based on an erroneous interpretation of the Parity Act that is inconsistent with its plain language and legislative history.”

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