New York State Attorney Gives Insight Into Potential Federal Government Enforcement of New Mental Health Parity Regulations

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New York’s Attorney General recently began pursuing claims against insurers demonstrating an expansive view of New York’s Mental Health Law, known as “Timothy’s Law.”  The law was enacted to address a situation where a minor child, Timothy O’Clair, committed suicide.  The main thrust of Timothy’s Law is to require health insurers to provide in-patient mental health coverage.  Recently, the New York Attorney General seized on the introductory language of Timothy’s Law, providing that “[e]very insurer delivering a group or school blanket policy or issuing a group or school blanket policy for delivery, in this state, which provides coverage for inpatient hospital care or coverage for physician services shall provide as part of such policy broad-based coverage for the diagnosis and treatment of mental, nervous or emotional disorders or ailments, however defined in such policy, at least equal to the coverage provided for other health conditions.” N.Y. INS. LAW § 3221(l)(5)(A)(i) (2007).  The Attorney General also relied on the federal Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) as a basis for this expansive approach.

It seems that a regional and a national health insurance company have been the targets of the New York Attorney General’s recent enforcement.  The Attorney General is not challenging the quantity of benefits or the quantitative limitations, but rather it asserted that these insurance plans are not meeting the nonquantitative parity requirements of Timothy’s Law because the denials of benefits for treatment of mental health conditions based on “medical necessity” are substantially higher than those for health conditions.  Essentially, the Attorney General is arguing that the insurers are not administering the benefits in a way that is consistent with the law.

The N.Y. Attorney General’s position provides a glimpse at possible enforcement actions that the U.S. government may pursue under the MHPAEA.  The final regulations, which are set to take effect on July 1, 2014, require that “the nonquantitative treatment limitation to mental health or substance use disorder benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation with respect to medical surgical/benefits. . .” 26 C.F.R. § 54.9812-1(c)(4). This regulation attempts to compare apples with oranges. 

If U.S. government enforcement is based on the percentage of denials as a basis for finding that the insurance companies have failed to meet the requirements of the MHPAEA regulations, such as the N.Y. Attorney’s General’s approach, it will create much uncertainty about what are comparable benefits with respect to nonquantitative requirements.  The regulations do not require a specified percentage of adverse determinations based on “medical necessity” to be substantially the same between mental health service benefits.  26 C.F.R. § 54.9812-1(c)(4).  The regulations focus on the procedure of the determination, such as the evidentiary standards, who may make the determination, how the guidelines are developed, and the creation of any additional exclusions or bases to deny the services.   

It is clear from the regulations that the best defense to these anticipation claims is documentation.  Coverage guidelines need to be well-supported, including citations to studies and reputable authorities.  See, e.g., 29 C.F.R. § 54.9812-1(c)(4) (Example 8).  The review procedures must be documented clearly for mental health services benefits, showing that they include the same procedures and no automatic exclusions for coverage (i.e., fail-first limitations). Id. (Examples one through eleven).  Even if the percentages are greater in favor of denials of mental health services benefits, it is hard to argue that the plan violates the MHPAEA when the procedures for claim review meet the examples set forth in the final regulations.

 

Topics:  Healthcare, Mental Health, Mental Health Parity Rule, MHPAEA

Published In: Health Updates, Insurance Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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