California plans deny mental health claims despite new law

More than two years after California passed a law to require more comprehensive mental health coverage, health insurance companies still seem to regularly deny requests for medically necessary treatment, a survey of state data shows.

California regulators reversed 65% of disputed claims for mental health coverage in the last two years, according to a Bloomberg Law analysis of data from the Department of Managed Health Care and the Department of Insurance. Health plans reversed their own initial decisions for another 10% of those claims.

Governor Gavin Newsom (D) signed the law (SB 885), intended to prevent health plans from refusing to pay for necessary treatment, as pandemic-related depression and anxiety skyrocketed. In a Kaiser Family Foundation survey at the time, about 53% of adults reported worsening mental health due to worry and stress about coronavirus.

As the problems of the pandemic subside, the country’s mental health crisis persists. Fall 2022 from the American Psychological Association poll of nearly 63,000 licensed psychologists found a consistently high demand for treatment of anxiety and depression and a growing demand for trauma and substance use disorders.

The 2020 law states that California health plans must provide the same coverage for treatment of mental health and substance use disorders as for physical problems. Coverage decisions about services or items that prevent, diagnose, or treat those mental health conditions or their symptoms must be made according to “generally accepted standards.” The law went into effect in 2021.

California plans are now required to use criteria developed by four nonprofit associations to make coverage decisions instead of relying on their own internal guidelines. The groups that wrote the criteria say many plans still don’t use them.

“Implementation has been spotty,” said Kenneth Minkoff, a psychiatrist who helped develop the American Community Psychiatric Association. criteria determine the level of care in adult mental health disorders. “Not all companies are using the tools.”

Minkoff and Michael Flaum, the immediate past president of the psychiatric association, said they hoped to meet with 42 health plan providers to train staff on applying the criteria. At least a third of the companies never contacted the association, they said in an interview.

The American Society for Addiction Medicine, the American Academy of Child and Adolescent Psychiatry, and the World Professional Association for Transgender Health also established guidelines for medical necessity that California health plans must meet under SB 855.

The associations were commissioned to draft objective criteria, a somewhat difficult goal to achieve in the field of mental health. Unlike medical conditions where objective tests can determine needed care, mental health “seems to rely more on the judgment of individual providers,” said Glenn Melnick, a professor of health care finance at the University of Southern California. .

small percentage

The disputed claims in 2021 and 2022 represent a minuscule fraction of all Californians covered by private health insurance — less than one-hundredth of 1%, according to Mary Ellen Grant, a spokeswoman for the California Health Plans Association.

“Instead of focusing on this small percentage of claim denials, the vast majority of which have no impact on patient care, perhaps the focus should be on the fact that the vast majority of mental health and substance use disorders have and are being covered,” she said. The association represents 44 full-service health care plans that provide coverage to more than 26 million Californians.

“The magnitude of this problem is much greater because this is the small group of people that it attracts,” said JoAnn Volk, co-director of the Center for Health Insurance Reform at Georgetown University’s McCourt School of Public Policy.

Nationwide, about 150,000 behavioral health claims in Affordable Care Act plans were denied because insurance companies deemed them not medically necessary, about one-fifth of all claims of necessity medical, according to a 2020 Kaiser Family Foundation. poll.

Grant, of the California Association of Health Plans, said the data on disputed claims includes claims that are incorrectly submitted to the health plan instead of the provider group, claims that are submitted to the wrong health plan, duplicate claims, or claims They lack complete information. information.

“None of these reasons affect care,” he said.


Still, patients are fighting plan denials through state regulators. In three-quarters of the cases, they are winning, either with the regulators or with the plans themselves. The state’s independent reviewers upheld only a quarter of health plan decisions in 2021 and 2022. The Department of Managed Health Care, which oversees HMOs like Kaiser Permanente, handles more than 90% of disputes.

The 934 people who appealed their denied claims to California insurance regulators sought coverage for services like inpatient substance use treatment or breast augmentation for those experiencing gender dysphoria.

Nearly half of the disputes were due to denials of coverage for residential treatment centers, where patients stay in a home for a set period of time to receive treatment for drug addiction or other health ailments. mental.

“These are high-cost services, for sure,” said Nikole Benders-Hadi, a licensed psychiatrist and chief medical officer at digital health firm Included Health. Add in multiple subspecialists and ever-changing care needs and “that’s going to increase the overall cost of care as well.”

Health plans have progressed in the last two years. In 2020, the year before SB 855 went into effect, more than 71% of independent medical reviews from the Department of Managed Health Care were voided. In the first year of the law’s implementation, that rate dropped to 62%, said Kevin Durawa, a senior media official for the agency.

For Flaum, one of the psychiatrists who helped develop the criteria, the number of reviews and the rate of overturned decisions indicate that the system is working.

“I didn’t find that data problematic, I found it somewhat reassuring,” he said.

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