Is that insurance company avoiding the parity law?

Several questions for psychologists to consider when determining whether a health insurer is in compliance with new parity regulations

by Legal & Regulatory Affairs Staff

March 31, 2011—Effective January 1, 2011, federal regulations governing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act took effect for most health plans covered under the law. Some psychologists are wondering whether some health insurance companies covering their patients are engaging in certain practices that run afoul of the new rules.

“The main thing we hear are questions about management of the benefit, such as authorization requirements and telephone reviews,” said Alan Nessman, JD, senior special counsel for legal and regulatory affairs, during the APA Practice Organization’s recent State Leadership Conference.  

As part of a workshop panel regarding parity law implementation, Nessman outlined several questions psychologists should ask in assessing whether an insurance company may be involved with questionable practices in light of the federal parity law. The list includes the following questions:

Is the health plan subject to the parity law?

A plan is not required to comply with the law if it covers 50 or fewer employees. While not common, plans that cover state government employees are able to opt out of the federal law. It’s also important to consider whether someone other than an employer is providing the coverage. For example, student health insurance provided by a university is not subject to the law, nor is individual coverage that a consumer obtains directly from an insurer.

Is the company applying more restrictive or intrusive practices to managing mental health benefits than it applies to managing medical benefits? 

For example, does the company impose authorization requirements on outpatient mental health that it does not impose on outpatient visits to physicians? Is the company conducting telephone reviews that seek considerable sensitive personal information related to mental health services that appears to be more intrusive than information the company seeks related to medical services? Such practices may be questionable.

Some important considerations:  

  • Compare services provided in the same setting — outpatient medical services and outpatient mental health services. For example, if you’re considering treatment limits placed on outpatient psychotherapy services, you shouldn’t compare them to limits placed on inpatient medical services.

  • When focusing on an insurance company’s management of multiple sessions of psychotherapy (for example, re-authorization after 10 sessions), compare those practices to medical services such as physical therapy that similarly involve multiple sessions.

  • Psychologists tend to be less aware of how a company manages medical benefits compared to mental health benefits. To fill the information void, psychologists can draw on their own experiences with obtaining medical benefits from the company, check with physicians or other medical professionals who work with the company, and talk with colleagues in practices that integrate medical and mental health services delivery.

  • The determination of whether services are considered the mental health or medical side of insurance coverage is based on the diagnosis, not the profession.  For example, neuropsychological assessment of stroke or brain injury patients is considered medical. So are health psychology services to help diabetes patients with medication and diet compliance, as well as assessment of patient suitability for bariatric surgery.

Is there ‘comparable’ treatment of medical and mental health services benefits management?

The federal parity law requires “non-quantitative treatment limitations” (NQTL) such as treatment authorization requirements to be managed in a “comparable” manner for mental health and medical services. Unfortunately, the parity rule does not clearly define what constitutes “comparability” and companies are interpreting the rule differently.

Insurance companies may defend their NQTL practices by asserting simply that they are comparable. In this event, you should be prepared to ask the company pointed questions related to its claim of comparability. See the following sections for additional details. 

Does the policy create a barrier to patient access?

Perhaps the most crucial question is whether a mental health management practice that appears disparate creates a barrier to patients obtaining mental health care. The parity law is intended to eliminate such barriers. 

For example, does an authorization requirement impede patient access to care because patients or their psychologists have to spend hours on the phone trying to get authorization?  Do telephone reviews intrude so much on the patient’s privacy that patients forego treatment or pay out-of-pocket rather than sharing sensitive personal information with a company reviewer? 

Such considerations should grab the attention of the government agencies enforcing the parity law and help counter companies’ justifications for disparate management.

Another example: An insurance company requirement that a provider must obtain re-authorization every few sessions may be challenged on the grounds of creating barriers to patient care. The uncertainty created by this practice may prevent you from being able to establish a long-term treatment strategy. Further, the uncertainty may make it difficult for the patient to fully engage in the therapeutic process if he or she is concerned that the process is about to end.

What is the company’s explanation for any disparities in coverage practices?

We recommend that you ask the company to explain in writing how the seemingly questionable practice complies with the parity law. As noted above, companies have expressed divergent views on what it means to have “comparable” practices. It is important to know what interpretation of “comparability” the company is using. 

If the company’s answer is insufficient, ask for more information or clarification. For example, if the company claims that it is applying similar utilization management to a number of medical services, ask the company representative to specify what management techniques are being applied to what services.

Do not be satisfied with the answer that a few psychologists have received: “Our lawyers say we are in compliance.”

A future PracticeUpdate article will cover what action to take if the analysis above indicates that a company’s management practices are violating the federal parity law.   

In the meantime, for further information and to report or discuss specific company practices, contact our Office of Legal & Regulatory Affairs by email or by phone at 202-336-5886.

Please note: Legal issues are complex and require expertise that cannot be provided by any single article. The information in this article should not be used as a substitute for obtaining personal legal advice and consultation prior to making decisions regarding individual circumstances.