Psychology mounts further parity challenges to rate cuts

APA Practice Organization and Illinois Psychological Association raise concerns with Illinois Department of Insurance

By Legal and Regulatory Affairs staff

April 12, 2012—The APA Practice Organization (APAPO) and the Illinois Psychological Association (IPA) have written to the Illinois Department of Insurance requesting investigation of an apparent parity violation by Humana and its subsidiary LifeSynch.

The two insurance carriers sent 90-day termination letters in late March 2012 to Illinois practitioners who had not signed new provider contracts that lowered reimbursement rates for psychologists’ most commonly reimbursed procedure code, 90806, to $58.

The April 4, 2012 letter (PDF, 39KB) asserts that the large rate cut – which apparently targets mental health services – violates the non-quantitative treatment limitations (NQTL) provision of 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 IFR specifically lists “standards for provider admission to participate in a network, including reimbursement rates” as one of the NQTLs that must be “comparable” to the same limitation for medical/surgical services. IPA is not aware of Humana rate cuts for medical surgical services in Illinois, much less comparable cuts.

The Illinois letter noted that the new Humana/LifeSynch rate of $58 for 90806 is the lowest paid to psychologists by any major private health insurer nationwide. Overall, Humana’s rates for psychologists are about 50 percent below the fees of other private insurers in the state. For psychologists who had contracts with Humana before the cut, the new reimbursement rates represent a 66 percent reduction for 90801 and a 42 percent reduction for 90806. IPA reported that roughly half of its members surveyed were not signing the new contracts.

IPA and APAPO expressed concern that dramatically reduced mental health rates will decimate Humana’s network, thereby impairing patient access to care. That concern is based on the Ohio and Florida Psychological Association’s recent experience with similar rate cuts by Humana and Blue Cross Blue Shield (BCBS) of Florida, respectively.

The letter warns that if the Department of Insurance (DOI) does not enforce the cited IFR provision regarding network reimbursement:

Humana and other insurers will circumvent all other mental health parity protections simply by slashing provider reimbursement rates to such a low level that mental health patients will have extremely limited access to mental health care. On paper, Humana could have care that looks “comparable” to what medical/surgical patients enjoy. But if patients have great difficulty finding a qualified and experienced mental health professional, other parity protections will be meaningless.

APA Executive Director for Professional Practice Katherine C. Nordal, PhD, notes that the Illinois DOI gave APAPO our first implementation parity victory when it blocked BCBS IL’s pre-authorization requirements for therapy visits and hopes it “can again ride to the rescue of Illinois mental health patients on what we believe is a much more insidious parity violation.” This is APAPO’s second state association letter that we have jointly submitted arguing that a large rate cut singling out mental health rates violates the parity IFR.

Last October, APAPO and the Florida Psychological Association (FPA) wrote to the federal parity regulators seeking action on the large rate cut by BCBS FL. APAPO and FPA followed with a March 2012 letter asking the Florida insurance regulators to address under Florida insurance law prompt payment and network inadequacy issues related to that cut while federal regulators wrestle with the more complex parity issues. Meanwhile, APAPO has been busy fighting reimbursement cuts for psychologists in Medicare. 

Observers cite the recent developments in Illinois as further indication of a downward spiral in reimbursement rates for providers in both public and private sector health insurance plans.

“We are addressing parity and reimbursement issues on multiple fronts,” says Dr. Nordal, “and we need the full support of our practice community in order to maximize our efforts.”