A federal judge recently ruled that a company administering mental health and substance use disorder benefits for ERISA-covered health benefit plans breached its fiduciary duty when it applied its own flawed medical review guidelines in rejecting plan participants’ claims for behavioral health services. ERISA requires fiduciaries to administer benefit plans solely in the interest of participants and beneficiaries and in accordance with plan documents.
Because the case, Wit v. United Behavioral Health (No. 14-cv-02346-JCS [as well as a related case, No. 14-cv-05337-JCS]), was decided by the U.S. District Court in the Northern District of California, it applies only to the parties involved. An appeal is possible, perhaps after the remedy phase of the case is completed and a final judgment is issued.
The court noted that the administrator abused its discretion when it adopted its guidelines in several ways, such as:
- Having a conflict of interest because a large portion of its revenues came via pressure to keep expenses down
- Not insulating the individuals who developed, revised, and approved the guidelines from financial considerations
- Refusing to adopt generally accepted clinical guidelines despite the recommendations from clinicians to do so and against some states’ requirements stipulating standards of care
A key issue raised by the case was the coverage for behavioral and substance use disorders as chronic, rather than acute, conditions. Thus, the plaintiffs argued, the guidelines limited coverage once a patient’s symptoms subsided and did not cover services needed to stabilize his or her condition over a longer term. Furthermore, the court noted that the 2008 Mental Health Parity and Addiction Equity Act requires coverage of depression or addiction no more restrictively than other medical conditions. And yet, in the court’s opinion, the administrator’s guidelines adopted appropriate standards of care for medical conditions but not for the mental health conditions.
Employers that sponsor healthcare coverage should review the implications of the case and discuss any concerns with their behavioral management administrators.
For additional information about the court’s ruling, please contact your Milliman consultant.
What has happened to utilization and costs for mental health and substance use disorder benefits as the mental health parity laws and associated rules were slowly rolled out? This paper by Milliman consultants presents an analysis of healthcare utilization and cost patterns during the six-year period from 2008 through 2013 and suggests that the Mental Health Parity and Addiction Equity Act has driven increases in access to, and benefit richness for, mental health and substance use disorder benefits.
We’ve blogged before about mental health parity. A new reform briefing paper looks at the safe harbor for outpatient benefits and augments an earlier discussion about the steps group health plans face as they respond to the new rules.
More than a year after the enactment of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), the Departments of Labor, Health and Human Services, and Treasury issued interim final rules (IFR) prohibiting group health plans and insurance from applying more restrictions on mental health or substance use disorder benefits than they do for medical/surgical benefits. In the absence of formal guidance until the publication of the IFR and with the MHPAEA requiring compliance for plan years starting on or after October 3, 2009, many group health plans have been operating under a good-faith compliance standard. The IFR from the federal agencies provides significant guidance in some areas, and several of the requirements will necessitate additional steps to ensure compliance. Understanding how the IFR may affect the business of behavioral healthcare and the decisions that follow will be of great importance to all interested parties, including health insurance companies, health plans, employers, providers, and consumers of behavioral healthcare. This new health reform briefing paper by Steve Melek explores these implications.
The Wall Street Journal today offers a look at the cost of mental health parity and the role that employee assistance plans (EAPs) may play. These plans are in some cases being optimized to work alongside mental healthcare, with particular focus on the transition from one to the other. Note this excerpt from a recent case study:
…the employer also determined that many employees were not taking full advantage of the resources available to them, due to a lack of integration between the two vendors. In this case, the EAP was responsible for the first seven days of mental health care, with the health plan covering services after that. The employer had the two vendors develop detailed transition plans to ensure that employees would continue to have assistance when the EAP’s services ceased and the health plan’s responsibility began.
Employers are trying to mimimize any cost impact from parity. Here is an excerpt from the WSJ article:
It’s unclear just how costly mental-health parity will be for companies to provide. A 2007 actuarial analysis conducted by consulting firm Milliman Inc. suggested that costs under parity for employers may increase 0.6%, or $2.40 a month for each employee in 2008 dollars. A 2007 Congressional Budget Office study estimated that premiums would rise by an average of 0.4%.
For more insight on this topic, read the latest white paper by Steve Melek about preparing for mental health parity. Here is Melek’s Congressional testimony, which includes the 2007 results.
May is Mental Health Awareness Month, and earlier this month Milliman Principal Steve Melek released a new white paper, “Preparing for Parity,” which addresses some of the key issues for insurers as they look to implement the new mental health parity requirement. The requirement could have cost and business benefits for employers:
Isn’t this a great opportunity to change for the better? An investment in more effective behavioral healthcare treatment is an opportunity to improve not only mental health but also physical health in our insured populations. Such health improvements can lead not only to lower healthcare costs, but improved productivity among employees.