Psychology associations allege deep Humana rate cuts violate parity

Joint letter signed by APAPO is part of broader reimbursement advocacy strategy

By Legal and Regulatory Affairs staff

July 16, 2012—On July 6, the APA Practice Organization (APAPO) and ten state psychological associations sent a letter to the federal agencies that regulate parity, the Departments of Health & Human Services, Labor and Treasury. The letter asserts that unprecedented rate cuts over the last few months by Humana and its behavioral health subsidiary LifeSynch violate the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).

The letter by APAPO and the state associations for Georgia, Colorado, Florida, Indiana, Minnesota, Ohio, South Carolina, Tennessee, Texas and Utah was signed by APAPO’s Executive Director for Professional Practice Katherine C. Nordal, PhD, and representatives of each association. The letter responds to Humana’s announcing that it will reduce rates for psychologists in those states to $56 to $58 for 45-50 minutes of psychotherapy under code 90806.

In Georgia, where Humana had been one of the highest reimbursers in the state, the rates were slashed almost in half. In other affected states, the cuts ranged from 40 percent down to 12 percent. These latest cuts follow similar Humana cuts last year in Ohio, Florida and Illinois. As stated in the letter, “Humana now has a commanding lead in the nationwide ‘race to the bottom’ in mental health reimbursement rates, a race started last summer by Blue Cross Blue Shield (BCBS) of Florida.”

Nordal and the state associations expressed their concern that the cuts would devastate patient access to mental health care and eviscerate all other protections under MHPAEA. The organizations supported these concerns citing data from surveys showing that prior rate cuts (discussed below) substantially impaired patient access to care.

The organizations argue that Humana’s deep cuts targeting mental health reimbursement rates violate the nonquantitative treatment limitation (NQTL) provisions of the Interim Final Rule (IFR) under MHPAEA. The NQTL provisions require that standards for provider admission to participate in a network, including reimbursement rates must be comparable to those standards for medical and surgical services. Absent evidence that Humana has cut medical/surgical rates, the letter argues that this is a clear parity violation.

Recent APAPO reimbursement advocacy efforts

The July 6 Humana letter is a part of APAPO’s larger reimbursement advocacy efforts on a variety of fronts involving both private and public insurers. In April 2012, before the latest round of cuts, APAPO and the Illinois Psychological Association (IPA) wrote a letter (PDF, 38KB) to the director of the Illinois Department of Insurance requesting investigation of an apparent parity violation by Humana after the company sent 90-day termination letters in late March 2012 to Illinois practitioners who had not signed new provider contracts that lowered reimbursement rates for 90806 to $58, a rate cut of 42 percent. (Because Humana’s Illinois rate cut is before the Illinois regulators, APAPO and IPA decided that IPA should not participate in the July letter to the federal regulators.)

The APAPO’s major parity challenges to rate cuts began in October 2011, when APAPO and the Florida Psychological Association sent a joint letter (PDF, 140KB) to the federal agencies responsible for enforcing mental health parity alleging that CBCS of Florida’s proposed 33 to 54 percent cut in reimbursement rates for psychologists is a violation of federal parity law.

The two organizations followed on March 23, 2012, with an urgent request to Florida insurance regulators to address state law violations such as failure to pay psychologists for over 3 months in violation of the prompt payment law while federal regulators investigated the federal parity issues.

Some of the APAPO letters discussed above have resulted in agency investigations which are currently in progress. The agencies have indicated that they can better perform their investigation outside of the spotlight and accordingly have asked that we not provide details regarding the investigation to our membership. We will provide further information when we are able to do so.

APAPO continues to press for fair and adequate reimbursement for psychologists in both the private sector and Medicare, and we will continue to inform members about significant developments through our PracticeUpdate e-newsletter and other vehicles.

If you are aware of a major rate cut involving psychological services, or for more information, please contact the Legal and Regulatory Affairs office by email or at (202) 336-5886.