A Pivotal Moment in the Fight for Behavioral Health Equity: New Parity Regulations and More

The NAADAC 2024 Conference & Hill Day is an annual conference that brings together thousands of addiction counselors, educators, and other addiction-focused health care professionals from across the country. The conference aims to provide attendees with the tools needed to deliver the most current, inclusive, and well-rounded care to their clients, help pave the way toward a healthier, client-centered future, and advocate for the future of the addiction profession.

On October 20, 2024, Zuckerman Spaeder LLP partners D. Brian Hufford and Caroline Reynolds, along with David Lloyd, Chief Policy Officer at the mental health advocacy organization Inseparable, presented at the conference and discussed recent legal and regulatory developments, and how providers can protect their legal rights and those of their patients in the ongoing battle for behavioral health insurance coverage. 

Basics of Health Insurance and ERISA

54% of Americans receive health insurance coverage through employer-sponsored plans, of which the vast majority are governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). ERISA is a federal law that was enacted to set minimum standards for most private industry pension and health insurance plans. To achieve this, ERISA imposes fiduciary duties on health plan administrators who make decisions about coverage and benefits, and it allows beneficiaries to sue for benefits and other equitable remedies. 

Under ERISA, it is critical to review the written terms of the plan—a long document usually called a Summary Plan Description or Certificate of Coverage, which set out in detail what the health plan covers and does not cover, and how reimbursement is set for both in-network and out-of-network providers. 

Inadequate Access to Behavioral Health Services and Reimbursement

Beneficiaries in need of behavioral health services have historically faced unique obstacles in seeking covered treatment. Many plan administrators maintain inadequate networks of behavioral health providers and sometimes offer “ghost networks”—where a plan advertises a large directory of behavioral health providers, but the majority of those listed are unreachable, not accepting new patients, or not actually in-network. Because of inadequate networks, behavioral health patients are often forced to seek out-of-network care at a higher cost to the patient. In fact, studies show patients use out-of-network providers 3.5 times more often for behavioral health care than for medical or surgical services. 

The problem is compounded by the fact that many plans reimburse in-network behavioral health providers substantially less—for example, on average 22% less for office visits—than they reimburse in-network medical and surgical providers. Systemic underpayment can drive behavioral health providers to turn down plan beneficiaries or leave the plan altogether. 

A Push for Mental Health Parity

Congress passed the Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA” or the “Parity Act”) to address the access disparities between mental health / substance use disorder (“SUD”) treatment on the one hand, and medical and surgical services on the other. However, despite this legislation, federal agencies have found that compliance by health plans remains deficient. Many insurance plans still impose separate or more restrictive treatment limitations on behavioral health services, including both quantitative limitations, such as reimbursement rate reductions or caps on treatment hours or the number of visits, and non-quantitative treatment limitations (“NQTLs”), like unreasonably strict pre-authorization requirements or clinical criteria. Both types of limitations can affect a plan beneficiary’s access to medically necessary care. 

In response to this, on September 9, 2024, the U.S. Department of Labor, Department of Health and Human Services, and Treasury Department introduced new regulations under MHPAEA to strengthen enforcement and close loopholes. 

Key Changes in the Parity Act Regulations

The new Parity Act regulations seek to reaffirm the legislation’s original goal: to eliminate the disparities in access to mental health and SUD treatment. The updates include:

• A New Purpose Provision: The revised regulations confirm the Parity Act's guiding principle for health plans. Plans and issuers “must not design or apply financial requirements or treatment limitations that impose a greater burden on access (that is more restrictive) to mental health and substance use disorder benefits under the plan or coverage than they impose on access to generally comparable medical/surgical benefits.”
• Prohibition on Discriminatory Data: When analyzing their parity compliance, plans are prohibited from using biased, non-objective factors or evidentiary standards that result in less favorable treatment of mental health and SUD benefits without a legitimate justification.
• Outcomes-Based Compliance Measures: To demonstrate their compliance, insurance plans must now collect and assess the impact of NQTLs on beneficiaries’ access to mental health and SUD benefits, as compared to medical and surgical treatment benefits.
• Broadened Coverage Mandate: Health plans must offer meaningful mental health and SUD benefits across all classifications where they cover medical/surgical services. A plan cannot cover just one service for mental health or SUD conditions, while providing a full range of medical/surgical care options.

Case Highlights: Fighting for Behavioral Health Rights

In 2014, Zuckerman Spaeder attorneys filed a class action lawsuit against United Behavioral Health (UBH) on behalf of over 65,000 people who were denied mental health and SUD treatment. The U.S. District Court for the Northern District of California ruled in 2019 that UBH had denied coverage to the class members using unlawfully restrictive medical-necessity guidelines, and that UBH had prioritized its own financial self-interests when it created the guidelines, rather than acting solely in the interests of the plan members. The district court ordered UBH, going forward for 10 years, to use publicly available criteria developed by behavioral health practitioners' professional associations. The court also appointed a monitor to oversee UBH's compliance, along with other relief.

UBH appealed, and parts of the ruling were reversed by the U.S. Court of Appeals for the Ninth Circuit. The case returned to the District Court for further proceedings, and it is still ongoing several years later. Despite the lengthy legal process, the case has had a significant impact on the legal landscape. Among other things, the district court's findings led directly to the passage of California’s Senate Bill 855, which requires insurers to follow generally accepted standards of care in making medical necessity determinations and to use criteria established by non-profit medical specialty associations in doing so. Other states, including Illinois, Oregon, Georgia, and New Mexico have since followed with similar laws.

How Providers and Patients Can Combat Improper Denials of Benefits

At an individual level, a patient or provider might not recognize that a denial of benefits or an underpayment for covered services reflects a plan’s broader lack of compliance with ERISA, the Parity Act, or other relevant law. However, there are steps patients and providers can take to help achieve favorable outcomes in their own cases and shed light on improper practices that may be more widespread:

• Understand the Plan: Know what the health plan covers and request the plan's parity compliance analysis if an NQTL is used. 
• Document Everything in Writing: Maintain thorough documentation of all communications and decisions from insurers, and insist on obtaining written notification of the reasons for any adverse determinations. 
• Appeal Every Denial: 99% of denials are never contested. But appealing denied claims is critical, especially since a beneficiary's right to sue may be limited, or even eliminated, if the claim is not appealed. The plan document should set forth the appeal procedure. Patients should also seek support from HR departments, advocacy groups, and, when necessary, legal counsel. 
• Helpful Resources: 
  • Guidance on Insurance Appeals
  • Report improper denials or other discrimination:
    • EBSA Benefits Advisors: 1-866-444-3272 
    • https://www.askebsa.dol.gov/WebIntake/