This month's announcement of a landmark settlement in which a New York health insurer has agreed to pay a civil fine, adjust the terms of its behavioral health coverage and submit to extensive monitoring represents the most significant government action yet to enforce the provisions of federal and state insurance parity laws. One likely aftereffect of the action by the New York Attorney General's office may force insurers to examine more closely the protocols of their managed behavioral healthcare subcontractors.
“Insurance companies will have to take note—they can't look the other way when they contract out services,” says Karla Lopez, staff attorney with the Legal Action Center.
In addition, this settlement could auger similar enforcement actions elsewhere (including in New York itself, where a broad investigation of insurer practices continues). That's because many of the parity violations cited by New York Attorney General Eric T. Schneiderman regarding MVP Health Care and managed behavioral healthcare company ValueOptions resemble practices being criticized loudly by addiction and mental health treatment providers and advocates nationwide. These problems include more restrictive utilization review protocols for behavioral health treatment than for general healthcare, and requirements that a patient “fail first” in less intensive treatment before having access to residential or inpatient care.
“We're very excited to see that this [federal] law that's been in place since 2008 finally has some teeth,” says Lopez. “We hope it's the beginning of the end of discrimination by insurance companies.”
Broad findings and remedies
The Attorney General announced on March 20 that its investigation found that MVP Health Care, which has more than 500,000 plan members in Albany, central New York and the Hudson Valley, issued 40% more denials of coverage for behavioral health conditions than for general medical issues. A significant component of the findings involved the uncovering of parity violations both in quantitative terms (e.g., discriminatory limits on patient visits) and nonquantitative limitations (e.g., more frequent authorization reviews that often subject behavioral health cases to a review every one or two days).
Lopez says this settlement carries even greater significance for the addiction field because while it is the second one reached by the state Attorney General, the first (with Cigna Corp.) centered on that insurer's policies regarding the treatment of eating disorders.
Schneiderman cited some examples of discriminatory practices by MVP in the news release announcing the settlement. In one case, a young woman with an extensive substance use disorder history was denied coverage for treatment on several occasions, despite recommendations from several care providers for intensive services. Stymied by a bureaucratic appeals process, the woman's family was forced to absorb more than $150,000 in out-of-pocket payments in order to get her the treatment that providers had deemed necessary.
According to the Legal Action Center's Lopez, the state's findings regarding MVP point to the fact that managed behavioral health contractor ValueOptions had been allowed to steer the ship with minimal oversight. “They appeared to have no clue as to what ValueOptions was doing,” she says of MVP. [MVP] wasn't comparing health and behavioral health services.”
Under the settlement agreement, MVP will make several alterations to its claims review process, such as these:
- It will remove visit limits from nearly all behavioral health services.
- It will stop requiring that substance use treatment patients fail in outpatient care before having access to inpatient services.
- It will require the insurer to co-locate claims review staff from the medical and behavioral health operations, to improve care coordination.
- It will mandate that during the internal appeals process for denied claims, plan members continue to have coverage for their treatment services.
Some of the sanctions against MVP include a $300,000 civil penalty and an agreement to submit to ongoing monitoring. “A compliance administrator will need to be in place for three years,” says Lopez.
Also, according to the Attorney General's statement, “MVP Health Care has also agreed to provide members with an independent review of claims or requests that were denied as not medically necessary from 2011 through present, which could result in more than $6 million in reimbursement to members.”
Regarding the overall action by the state, “This is the first [such] action by an Attorney General's office anywhere in the country,” says Sally Friedman, legal director at the Legal Action Center.
Lopez adds that under the groundbreaking settlement, insurance reviews going forward will have to be conducted in accordance with guidelines issued by the state Office of Alcoholism and Substance Abuse Services (OASAS).