Psychology organizations allege parity violation by major Florida insurer

APAPO and Florida Psychological Association allege that large reimbursement rate cut by BCBS Florida violates federal parity law

By Legal and Regulatory Affairs Staff

October 14, 2011—On October 5, 2011 the American Psychological Association Practice Organization (APAPO) and the Florida Psychological Association (FPA) sent a joint letter (PDF, 140KB) to the federal agencies responsible for enforcing mental health parity, alleging that Blue Cross Blue Shield of Florida’s (BCBS) proposed 33 to 54 percent cut in reimbursement rates for psychologists is a violation of federal parity law.

The letter argues that the cut – apparently applied only to mental health services – violates the Interim Final Rules (IFR) on parity, the regulations issued in February 2010 to implement the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008.

The October 5 letter, signed by APAPO Executive Director Katherine C. Nordal, PhD and Florida Psychological Association Executive Director Connie Galietti, was addressed to the Secretaries of the US Departments of Labor, Health & Human Services and Treasury. Copies were sent to the Florida Department of Insurance Regulation and the Florida Agency for Health Care Administration, as well as Sen. Bill Nelson (D-FL) and Rep. Debbie Wasserman Schultz (D-FL), both of whom had expressed concerns about the company’s actions.

The letter notes that the IFR specifically lists “standards for admission to participate in a network, including reimbursement rates” as an example of a Non-Quantitative Treatment Limitation (NQTL) that must be “comparable” to the same type of limitation for medical and surgical services. (NQTLs are distinct from quantitative limitations like annual session limits and co-payment amounts that set a numerical limit on the amount of the benefit paid or provided directly to the patient.) 

Having no indication that BCBS FL imposed a similar reimbursement rate cut on medical/surgical services, APAPO and FPA request that the agencies verify that the cut is being applied only to mental health services; confirm the interpretation that such a cut violates the NQTL provisions of the IFR; and ask the company to correct this disparity. 

APAPO and FPA argue that the “network reimbursement” NQTL provision of the IFR “prevents plans from eviscerating mental health benefits through massive reimbursement cuts that harm patients.” The letter goes on to describe the harmful effects for patients that the associations believe are likely, including reduced access to services, caused by decimation of the mental health network.

The associations express concern that the rate cut by BCBS FL is part of a larger wave of rate cuts by other non-profits BCBS companies that APAPO is investigating. (After learning of the Florida rate cut in early August, APAPO has heard of other substantial rate cuts by the Texas, Illinois, Michigan, South Carolina and Kansas City BCBS companies. APAPO is working with the state associations affected by these cuts to determine whether these cuts should also be brought to the regulators’ attention.)

Background and Prior Advocacy

In early July 2011, BCBS FL sent letters to its network mental health professionals stating that the company would be terminating all of their contracts and that providers would need to apply to join the network of a company new to them, New Directions. Psychologists received no assurance that their applications would be accepted.

BCBS FL presented New Directions as if it were an unrelated company; it did not disclose that it is a part owner of New Directions (BCBS Kansas City and BCBS Kansas are the other co-owners). 

Psychologists then received a letter from New Directions indicating large reductions in the reimbursement rates and containing a provider contract with troubling contract provisions, for example, prohibiting psychologists from making out-of-network referrals. Psychologists seemingly were given just 15 days to decide whether to accept the new contract.

These developments led FPA (in collaboration with APAPO) to write an urgent August 10, 2011 letter to the Florida Office of Insurance Regulation (FLOIR). The agency promptly responded, assuring FPA that psychologists would have more time to decide whether to accept the new contract.

The letter further indicated that FLOIR is working with BCBS FL to correct problematic language in the provider contract. FLOIR did not, however, take action on the rate cut concerns raised in FPA’s letter. Thus, APAPO and FPA turned to analyzing the parity implications of the cut, which led to the October 5 letter from both organizations.