Blues Rescind Authorization Mandate After APA, District Branch Protest

At the end of 2010, Blue Cross and Blue Shield of Illinois (BCBSIL) rescinded a policy issued last June requiring all outpatient behavioral health services to have prior authorization starting January 1. Under the revised policy, the only behavioral health services that require prior authorization are ECT, psychological testing, neuropsychological testing, partial-hospitalization admissions, and extensive outpatient programs.

In fall 2009, apparently in response to the passage of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, BCBSIL issued a new prior-authorization requirement for all mental health services to begin on January 1, 2010. The Illinois Psychiatric Society (IPS), working with APA's Office of Healthcare Systems and Financing, responded to these new requirements, communicating to BCBSIL that implementation of this across-the-board policy would violate the parity law.

In December 2009, APA and IPS asked for a meeting with BCBSIL to discuss concerns about the policy. In attendance were Irvin “Sam” Muszynski, director of APA's Office of Healthcare Systems and Financing; Lisa Rone, M.D., then president of IPS; and other IPS representatives. As a result of the meeting, the policy was tabled.

Muszynski said, “There was a verbal agreement that all parties would meet again in the future to take a look at BCBSIL's concerns about how the parity law would affect its health plans, but this second meeting never occurred.”

In June 2010, BCBSIL once again announced that it would implement a prior-authorization requirement for outpatient mental health services for its PPO subscribers, this time scheduled to begin on January 1, 2011. IPS sent a letter of protest to BCBSIL and received an e-mailed response it did not consider satisfactory. Consequently, in early July, Muszynski and representatives from IPS and APA met with the Illinois director of insurance, Michael McRaith, to raise their concerns about the policy and its conflict with Illinois insurance law and the federal parity law.

Last October, IPS and APA sent a follow-up letter to H. Scott Sarran, M.D., the vice president and chief medical officer for health care management at BCBSIL. The letter explained the specific requirements of the parity law regulations and asked Sarran to respond to questions clarifying how the policy was in violation of the regulations. Copies of this letter were sent to the Department of Labor, which is charged with enforcing the parity law, and to McRaith. Federal regulators do not notify involved parties when an investigation is undertaken, so it is not known whether the Department of Labor took any action, but IPS and APA learned that McRaith was looking into the matter.

On January 5, the State of Illinois Department of Insurance issued a press release from McRaith stating in part, “The Department of Insurance is committed to the principle set forth in Wellstone-Domenici that coverage for mental health or substance use disorder benefits must be equivalent to coverage for other benefits. In the event that ambiguity is argued to exist in the implementation of Wellstone-Domenici or its regulations, the Department will resolve such ambiguity in favor of the patients and families for whom the law is meant to protect. The Department recognizes and appreciates those interested parties that have offered views on these topics and welcomes expressions of concern on any insurance issue at any time.”