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INSURANCE DENIALS – MENTAL HEALTH EATING DISORDERS


The California Mental Health Parity Act, enacted in 1999, required coverage of medically necessary treatment for nine enumerated severe mental illnesses as well as serious emotional disturbances of a child. The list was criticized as incomplete, out-of-date and failing to encompass the full range of mental health and substance use disorders. It required, among other things, outpatient services, inpatient hospital services, partial hospital services, and prescription drugs, but only if the contract or policy included coverage for prescription drugs.

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Newly enacted SB 855 requires health care service plan contracts and disability insurance policies issued, amended, or renewed on or after January 1, 2021, to provide coverage for medically necessary treatment of mental health and substance use disorders as defined in the Diagnostic and Statistical Manual of Mental Disorders (DSM). Health plans and disability insurers may no longer limit coverage to short-term or acute treatment. The law revises the covered benefits to include basic health care services, including intermediate services and prescription drugs. It makes willful violation of these requirements a crime.

YEARS IN THE MAKING

Still too recent to have sparked much litigation, the latest expansion of insurance coverage for eating disorders was the product of years of lawsuits. In 2012, in Harlick v. Blue Shield of California,  the Ninth Circuit held that the Parity Act required coverage of residential treatment for a woman suffering from anorexia nervosa, even though the policy, itself, did not.

Similarly, in 2014, in Rea v. Blue Shield of California the California Court of Appeal ruled that the Parity Act required Blue Shield to provide all medically necessary treatment for people suffering from severe mental illnesses, including anorexia and bulimia. In the same year, in Wit v. United Behavioral Health, the District Court for the Northern District of California, further expanded the definition of “medically necessary treatment” and level of care criteria.

THE HUMAN COST OF EATING DISORDER INSURANCE CLAIM DENIALS

Although eating disorders can affect people of any gender at any age, they are most often reported in adolescents and young women. Up to 13 percent of youth reportedly experience at least one eating disorder by the age of 20.

Natasha Wit (through her parents since she was a minor) sought coverage for treatment for a number of chronic conditions including depression, anxiety, obsessive-compulsive behaviors, a severe eating disorder and related medical complications. Her parents and medical providers determined that residential treatment was the best option.

United Behavioral Health (UBH), however, denied coverage stating that “the member's treatment does not meet the medical necessity criteria for residential mental health treatment per UBH Level of Care Guidelines for Residential Mental Health treatment.” Natasha’s parents contested the denial, but once their internal remedies were exhausted paid nearly $30,000 out-of-pocket for her care.

The District Court found that UBH’s coverage determination guidelines, were “unreasonable and an abuse of discretion” and “infected” by financial incentives meant to restrict access to care. Among other failures, the Court found that UBH manipulated its internal guidelines and failed to use the national, evidence-based criteria for outpatient, intensive outpatient, and residential treatment of mental health and substance use disorders that have been developed by the American Society of Addiction Medicine.

Natasha is not alone; but she was fortunate. Her parents had the means to pay for her treatment. For many who need mental health or substance use disorder treatment and who have no such resources, an insurer’s flawed criteria can be catastrophic. Hopefully, the new thinking represented by SB 855 will prevent some of the potentially tragic consequences.
 

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Published on Jan-20-21


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