Synopsis: The Strengthening Behavioral Health Parity Act (SBHPA) was a major step toward mental health parity in the US. Before its passage, many Americans were not protected by federal and state mental health parity laws. ERISA-based, self-insured health plans, which frequently bypassed these laws, now must comply with federal protections. This article describes the history of mental health parity and what people can do to advocate for themselves.

BY LEN LANTZ, MD / 12.28.20; No. 43 / 9 min read

Disclaimer: Yes, I am a physician, but I’m not your doctor, and this article does not create a doctor-patient relationship. This article is for educational purposes and should not be seen as medical advice. You should consult with your physician before you rely on this information. This post might also contain affiliate links. Please click this LINK for the full disclaimer.

What is mental health parity and why is it needed?

Most people know that medical care does not occur in America without some form of payment. Mental health parity is the idea that health insurance companies must pay for the medical care that you need for your mental health in the same manner as the care you need for your physical health. There are several challenges to achieving mental health parity. The biggest problem is that, historically, insurance companies have never paid for mental health care at the same level as other medical care. Some health insurance plans create a mental health carve-out, which means that mental health services and claims are managed by a separate company, whose job is to limit costs for the larger health insurance company. For decades, health insurance plans and their carve-out companies have limited their costs by:

Creating small networks: Some health insurance companies limit their costs by having small networks that offer poor reimbursement to providers or have a reputation of being hard to work with. If fewer providers are willing to agree to be in-network with that company, then fewer patients receive care and fewer claims are generated.

Payment delays: The longer a company can delay payment, the longer they can control and earn interest on unpaid money that they owe. Insurance companies also have been known to “lose” claims and refute claims with no evidence to back up their conclusion.

Obstruction of care: Insurance companies frequently create prior authorization forms that are required to be approved before medical care is delivered. If someone forgets to complete a prior authorization form, the company may refuse to pay for any bills resulting from that care. Prior authorizations also allow insurance companies and their carve-outs to block care or to create an approval process that is stacked in the favor of the insurance company, not the patient. For example, when a prior authorization is denied, there might be a “peer review” process in which your doctor appeals the denial. The insurance company hires their own doctor (with questionable ethics, professionalism and morals) to deny payment for care. If the insurance company doctors start to approve care, the insurance companies will replace those doctors with others who will do their bidding. Time-consuming prior authorization forms and procedures are a barrier to care and lead to the burnout of mental health care providers.

Inadequate formularies: Newer psychiatric medications can be very expensive. A brand-name antipsychotic medication, Latuda, has a yearly retail price of around $20,000 and I was told by a patient earlier this year that a new ADHD medication, Jornay, would cost them $1,000 per month. Insurance companies have increasingly limited medications on their formulary of approved medications, denied approval through their prior authorization process or required prior authorization even for cheap medication. The most egregious example I have experienced is requiring a prior authorization for generic Prozac (fluoxetine), which costs about 1 penny per pill to manufacture.

Denial of care: Insurance companies manufacture their own “medical necessity” criteria that are not actually based on medical research, but are concocted by insurance companies to deny payment of mental health care. For example, the Milliman Care Guidelines, which have not been accepted or approved by the field of psychiatry or its governing bodies, are commonly used by insurance companies to deny payment for acute or residential psychiatric hospitalization. The insurance companies use mental health stigma to their advantage and allege that the child’s problems are someone else’s failure (parents or school district) or they report that they will only pay for a form of treatment that is unavailable or does not exist in someone’s community, such as partial hospitalization.

Defiance of the FDA: The US Food & Drug Administration (FDA or USFDA) approves medications and medical devices for the treatment of mental illness. It is a massive undertaking, costing millions of dollars, for a pharmaceutical or device company to get FDA approval because the FDA requires extensive and rigorous scientific proof that medical treatments are safe and effective before they will approve any medication or medical device. Health insurance companies have been known to pay doctors to write company opinion papers stating that FDA-approved devices and medications are still experimental and investigational. FDA approval means that the drug or medical device has been determined by the United States government to no longer be investigational or experimental!

Why don’t all companies just abide by mental health parity?

Another barrier to mental health parity is that the fundamental purpose of a health insurance company is to make a profit. Even nonprofit insurance companies need to make a profit or, in a year of unpredictable costs, they would fold. In the past, insurance companies have managed their costs and leveraged their profits on the backs of people with mental health conditions. If 20% of people have a mental illness in their lifetime, insurance companies will work hard to put a lid on those costs.

Unfortunately, health insurance companies have been too successful in their efforts to contain costs. They have dramatically harmed the psychiatric workforce over the last 30 years, resulting in closures of psychiatric hospitals and accelerating an aging psychiatric workforce. Around 2/3 of practicing psychiatrists are over age 55! This has largely been shaped by poor reimbursement for mental health by insurance companies.

The brain is arguably the most important organ of the body, yet insurance companies have been allowed to deny payment for medical care related to the brain. Suicide rates are rising across the nation. The availability of in-network specialists, like psychiatrists, psychologists and therapists, is shrinking. In 2010, untreated mental health conditions, such as major depression, had a dramatic negative impact on work productivity and the overall economy at an estimated loss of $210.5 billion. Imagine what the cost is today, a full decade later!

Legislation for mental health parity

The biggest steps toward mental health parity have been the passage of state and federal laws. Federal laws have had the greatest impact, but individual states need to continue passing mental health parity laws in case the following federal laws change:

• The 1996 Mental Health Parity Act (MHPA) was signed by President Bill Clinton and was the first law to require insurance companies to cover mental health care.

• The 2008 Mental Health Parity and Addiction Equity Act (MHPAEA) was signed into law by President George W. Bush and essentially replaced the MHPA by expanding the scope and plugging holes in the MHPA, one of which was coverage for addictions.

• The 2010 Patient Protection and Affordable Care Act (ACA) was signed into law by President Barack Obama. Commonly referred to as ObamaCare, it eliminated exclusions of coverage for “pre-existing conditions” and required the same level of coverage for mental health and substance abuse as for medical and surgical needs.

While a lot of progress had been made, many Americans were still not protected by federal and state mental health parity laws. There remained in the law an enormous loophole that was just closed yesterday.

The biggest step forward in mental health parity

On 12.27.2020, President Donald Trump signed into law the Strengthening Behavioral Health Parity Act (SBHPA). Introduced originally as the Mental Health Parity Compliance Act in 2019, the 2020 SBHPA legislation came into existence because of bipartisan leadership from Representatives Joe Kennedy (D-MA), Katie Porter (D-CA), Gus Bilirakis (R-FL), and Fred Upton (R-MI) and Senators Chris Murphy (D-CT) and Bill Cassidy (R-LA). This new law provides critical new protections at the state and federal level. The SBHPA:

• Requires health insurance plans to demonstrate to the US Department of Labor (DOL) or a state insurance commissioner how they are using appropriate standards of care when determining medical necessity and not violating mental health parity.

• Gives more power to the DOL to punish health insurance plans that are not compliant with the MHPAEA.

• Requires the Secretary of the DOL to send an annual report to Congress identifying any health insurance plans that are out of compliance.

• Most importantly includes self-insured, employer-sponsored (ERISA) plans.

What was the big, gaping loophole in state and federal mental health parity law before the SBHPA?

ERISA. The Employee Retirement Income Security Act (ERISA) was passed in 1974. While its stated purpose was to “provide protection for individuals” in retirement and health plans, its power and longevity had harmed and blocked mental health parity for decades. This is because ERISA health insurance plans generally have been cited as being exempt from both federal and state mental health parity laws.

What is an ERISA health insurance plan?

It looks exactly like regular health insurance. You go to your HR department to sign up. You get an insurance card and show it when you go to the hospital or doctor’s office. You pay copays and deductibles. There are doctors and hospitals that are in-network and ones that aren’t. There are medications that are on formulary and ones that aren’t. But because ERISA plans are “self-funded” instead of being provided by an insurance company, they had been exempted from following parity laws. If you work for a city, county, public school/college, or the state or federal government, your insurance is likely an ERISA plan. In a self-funded plan, a third-party administrator (some company that looks and acts like a health insurance company) is doing everything behind the scenes on behalf of the employer.

Prior to the passage of the SBHPA, third-party administrators used ERISA to bypass state and federal mental health parity protections. Whenever people pointed to a law that was passed in their state that protected them, their ERISA plan pointed to the federal ERISA law and denied payment for care.

According to the Kaiser Family Foundation, it is estimated that 61% of covered American workers are in a partially or fully self-funded ERISA plan. The SBHPA has now closed an enormous loophole!

Improving mental health parity through lawsuits

Beyond federal and state legislation, the fight for mental health parity has been through lawsuits. To date, lawsuits have led to change in just a few states, and individual state lawsuits are probably the most expensive and least efficient means of accomplishing mental health parity for all Americans.

Over the past several years, there have been over 100 lawsuits related to mental health parity. Most of these lawsuits were related to insurance companies or third-party administrators allegedly violating state mental health parity laws by abusing the ERISA loopholes in federal law. The violations often were related to low payments and blocking needed psychiatric hospitalization and residential treatment. Many of these lawsuits have occurred in California (Smith v. United Healthcare Insurance Co; Wit v. United Behavioral Health; Danny P. v. Catholic Health Initiatives), Utah (Kerry W. v. Anthem Blue Cross and Shield; Roy C. v. Aetna Life Ins. Co.), New York (Richard K. v. United Behavioral Health) and Illinois (Craft v. HCSC; Doe v. HCSC).

On 11.3.2020, a major victory occurred in Wit v. United Behavioral Health when a federal judge ordered court-appointed supervision and a 10-year injunction against United Behavioral Health (UBH) for using pervasive, flawed medical necessity criteria to illegally deny medical coverage for mental and substance use disorders. The judge also required UBH to reprocess nearly 67,000 mental health and substance use disorder benefit claims.

How to advocate for yourself

If you believe that your health insurance plan is not following the law, especially considering new state and federal protections under the SBHPA, here are some steps you can consider taking to advocate for yourself:

• Know your rights: https://www.paritytrack.org/know-your-rights/common-violations/

• Spread your story in your community and social networks.

• Go to the media to tell your story and publicly call out those in authority who are choosing to violate mental health parity.

• Talk to your HR department. Your HR specialists and their families are living with the same insurance you are. Ask them to change the plan to uphold mental health parity law or hire a new third-party administrator if you have an ERISA-based plan.

• Talk to your state’s federally-mandated civil rights protection and advocacy system. Every state and territory in the US has a Protection and Advocacy System (P&A), which is an organization staffed with lawyers whose job is to advocate for people with disabilities, and, if necessary, sue the offenders in your state.

• Advocate for even stronger state mental health parity laws. These laws incrementally protect more and more people and will get your state ready for future changes in mental health parity law.

• Talk to your state and federal senators and representatives.

• If your legislators don’t take action for mental health parity, work to replace them with legislators who will.

• File complaints with your state insurance commissioner. Employers who create self-funded, ERISA-based health insurance plans might not be regulated at the state level, but third-party administrators are. You could consider filing a complaint against a third-party administrator with your state insurance commissioner.

• File a complaint with the US Department of Labor (DOL), which enforces the SBHPA and investigates civil and criminal violations of ERISA.

We can achieve true mental health parity

We have made progress in mental health parity in the last 20 years. The passage of the SBHPA was a giant leap forward. Regardless of political beliefs, our employers and elected leaders care about mental health. Everyone has been affected in some way by mental illness or suicide. We need to continue our progress and solidify gains in mental health parity at the state and federal level. Americans with mental health problems should be able to access needed and potentially life-saving therapy, medication and hospitalization without being discriminated against by their health insurance plan.

For further reading, check out:

• My article “Psychiatric Stigma and 2018 Game Changer”

• My article “Does a Psychiatric Diagnosis Even Matter?”

• Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition (DSM-5) by the APA (See Len’s Book Review)

• ICD-10-CM 2020 the Complete Official Codebook by the AMA

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