New York State Attorney General (AG) Eric Schneiderman in July announced a settlement with New York City–based EmblemHealth Inc., requiring the insurer to reform its behavioral health claims-review process, cover residential treatment, and charge the lower primary care copayment for outpatient visits to mental health and substance abuse treatment providers.
The settlement also requires the company—which has 3.4 million members, 1.2 million of whom are New York City employees and retirees—to submit previously denied mental health and substance abuse treatment claims for independent review. That review could result in more than $31 million being returned to members wrongfully denied benefits, according to a statement from the AG’s office.
It is the third such settlement this year by Schneiderman’s office with an insurer for failure to comply with parity laws and stems from a broader and ongoing investigation into health insurance companies’ compliance with the laws. Earlier settlements were reached with Cigna and MVP Health.
In the most recent investigation of EmblemHealth’s claims data, the AG’s Health Care Bureau found that since at least 2011, EmblemHealth, through its behavioral health subcontractor, Value Options, issued 64 percent more denials of coverage in behavioral health cases than in other medical cases.
The disparity is especially pronounced in more-intensive levels of care. The plan denied 36 percent of its members’ claims for inpatient psychiatric treatment and 41 percent of its members’ claims for inpatient substance abuse treatment.
The investigation also revealed that before 2014, EmblemHealth did not cover residential treatment for behavioral health conditions; in one case, the company denied coverage of residential treatment for a young woman with anorexia nervosa, according to the AG’s office.
Additionally, the investigation found that EmblemHealth charged some members a higher, specialist copayment for psychotherapy than for other treatment services, a violation of the parity law.
New York State Psychiatric Association Executive Director Seth Stein, J.D., told Psychiatric News that he believes the use of a large claims dataset to analyze patterns of claims denial is unprecedented. “What’s interesting about the Emblem case is that the AG identified a discriminatory practice by virtue of analyzing the rate of claims rejections for treatment of mental illness compared to all other illnesses,” he said. “Schneiderman concluded on the basis of the significant disparity in rejection for claims for mental illness that were there was a discriminatory practice. To my knowledge, this is a first time that macro data on a systemwide basis have been used to identify discriminatory practices. In the past people have looked at individual denials of service that might indicate a pattern of discrimination. This was more about looking at overall performance.”
NYPSA has been vigilant about monitoring parity violations, and Schneiderman’s office has been unusually aggressive—more so than any other state AG office in the country—in enforcing compliance. Stein also told Psychiatric News that a separate, ongoing issue of concern to NYSPA is what he called “insurance company manipulation” of the relative value units for new CPT psychotherapy codes, resulting in diminished payment to psychiatrists using the new codes (see box).
NYSPA President Seeth Vivek, M.D., echoed Stein in hailing Schneiderman’s work in enforcing compliance with parity and said that in his role as NYSPA president he has written to the AG’s office to officially honor him with a Distinguished Service award from NYSPA.
“We applaud Attorney General Eric Schneiderman and his staff for taking on those insurance companies that have been outrageous in their violations of [New York] parity laws,” Vivek said. “Insurance companies are initially able to block, delay, or dilute parity laws. When the laws are eventually passed, they are able to flagrantly ignore them. Patients and their families are engaged in a very uneven battle when advocating against the policies of insurance companies with deep pockets and enormous lobbying capability. We are grateful to the AG for siding with those suffering from psychiatric issues, including substance abuse, and who are generally not able to advocate effectively for themselves.
“It is my hope that the organization of all state attorneys general will coordinate their efforts and replicate the success of New York state to all the states,” Vivek said.
Under the agreement with EmblemHealth, the company has agreed to provide members with an independent review of claims or requests that were denied as not medically necessary since 2011 and to reimburse members for residential treatment costs that the plan did not pay due to its exclusion of coverage for this service.
EmblemHealth has also agreed to cover residential treatment for mental health conditions, including eating and substance abuse disorders, for all of its members. And the company has agreed to charge all members the lower, primary care copayment for outpatient visits to mental health professionals. ■