Members Report Uptick in Plans’ Claims Denials, Scrutiny, and Hassles

APA’s Practice Management Helpline is fielding an increased volume of calls from members reporting greater scrutiny of psychiatric claims from commercial insurers. Problems include reduced claims payments, denials, and increasing administrative barriers. Some network-participating psychiatrists are also reporting contract offers for lower than Medicare payment rates.

Ellen Jaffe, manager of APA’s Helpline, said APA is assisting several members with claims problems and encourages impacted members to contact the Helpline, either by email or phone. APA wants to understand the pervasiveness of these types of problems, she said. “We need to have sufficient documentation of this so we can put pressure on the plans to make some serious changes.”

Psychiatrists are reporting a significant increase in utilization review by insurance plans, including prepayment review and postpayment audits, both in and out of network. Others are reporting insurers have “down coded” their evaluation and management (E/M) claims from level four to level three visits, lowering the amount paid with no request for documentation and no explanation.

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Marnie Neill, M.D., clinical director of Silver Lake Psychiatry in Stow, Ohio, told Psychiatric News she participates in five insurance networks because she wants working families in her area to have access to mental health care. She said administrative difficulties with carriers are very labor intensive and, coupled with poor reimbursement, make it hard for her to cover her overhead. “Insurance companies are making it increasingly difficult for psychiatrists to stay in-network. I am very concerned about what this means for our communities and their access to mental health care.”

Neill also cited problems with patient coverage for psychiatric illnesses. “A large proportion of patients at my practice have health insurance that covers certain psychiatric diagnoses—ones that their insurer deems ‘biologically based’ but provides far less coverage for other diagnoses. ... In reality, all mental illnesses are partially based on a person’s biology.”

In addition, one national insurer in her area began cutting payments for telepsychiatry visits as of April 1 to the significantly lower “hospital facilities” rate. Unlike hospitals, however, practices such as Neill’s cannot bill a separate facilities fee to make up the difference. She said she’s heard rumblings that other insurers she participates with will follow suit.

Neill said one national carrier is paying her only 50% to 60% of the Medicare rate in her jurisdiction. “I earned more than double that [rate] while moonlighting as a psychiatric resident, and I didn’t have the overhead,” she said. “We’re a tiny practice so plans won’t negotiate. … We have no choice but to leave that network. I have a lot of patients with that insurance, so I feel horrible about it, but we also want to keep our doors open.”

Psychiatrist Kamala Adury, M.D., founder of the Center for Behavioral Health and Sleep Disorders in Medina, Ohio, told Psychiatric News she has similar challenges. Insurance problems are “a universal issue that no one talks about. Scores of private practices have become extinct or have been exterminated. The income of small practices has fallen drastically, which could lead to cramming more patients per hour to stay afloat—clearly compromising patient care,” she said.

Some national insurers in Adury’s area pay her only about two-thirds of the Medicare rate. “They say ‘Take it or leave it.’ I want to accept insurance, and I keep getting calls from patients who I have to turn down; otherwise, I cannot stay in business.” One insurer paid Adury and then later billed her for hundreds of dollars, saying she had been overpaid and that she needed to return the money or face consequences.

APA’s Jaffe said Medicare rates are considered to be the floor for physician reimbursement to allow practices to operate. Lower payments do appear to be outside the norm, according to a literature review by the Kaiser Family Foundation in 2020. That review found that private insurers’ payments to physicians for office-based care were 43% higher than Medicare’s, on average (with a range of 18% to 79% higher, across studies).

Two psychiatrists in private practice in California said that carriers with whom they participate have made it difficult or impossible to reach their provider relations departments, compounding all the problems, John S. Smolowe, M.D., and Joellen Werne, M.D., told Psychiatric News in a joint interview. “There are many issues that claims reps cannot answer,” Smolowe said. Examples include requesting a reimbursement schedule, reporting a payment check missing, and needing to change an address. “Now these types of issues often drag on for months or go unanswered and unresolved.”

Smolowe said another concern is carriers’ increasing use of subcontractors to manage behavioral health claims, which erects an additional barrier between the psychiatrist and the claims departments. “The patient is unaware of these subcontractors, and by design their contact information does not appear on patients’ insurance cards. Yet if we send the claim to the wrong entity, they disregard it,” he said. Oftentimes, determining who is managing a given patient’s claims takes longer than 90 days, at which time the bills are denied due to lack of timely filing.

Psychiatrists in New York have also reported a significant increase in claims and administrative problems with insurers, Rachel A. Fernbach, J.D., deputy director and assistant general counsel of the New York State Psychiatric Association, told Psychiatric News. For example, several members have reported carriers declining to pay for the E/M portion of a bill. Rather, plans told these physicians they should be billing only for psychotherapy for most visits, Fernbach said. This is in direct conflict with the 2010 guidance issued by the Department of Financial Services (formerly the New York State Insurance Department) requiring all carriers to accept E/M claims submitted by all physicians, including psychiatrists, she added.

Fernbach said she has found other problematic administrative barriers. Insurers request additional claims documentation for audits or prepayment reviews, and once the psychiatrists submit it, some carriers don’t acknowledge it. In some cases, members have faxed, emailed, and even overnighted the information—but insurers do not respond.

Role of Billing Rule Changes

The rise in psychiatric claims problems appears to have coincided with a major overhaul of E/M coding rules for office-based outpatient care that took effect in January 2021. There is now an entirely new framework for code selection and documentation of medical decision-making, which sometimes results in higher-level coding and more costly care for psychiatric patients, depending on their level of complexity and acuity presented. For example, during office visits when psychiatrists are treating unstable patients with at least one chronic illness and also managing medications during that same visit, it is now billed as a level four/moderate complexity visit versus a level three.

“The New York State Psychiatric Association is working with the Department of Financial Services and carriers doing business in New York to ensure that insurers and health plans are aware of these recent changes in the coding rules and are appropriately adopting this new framework in their utilization review efforts,” Fernbach said.

Rebecca Yowell, APA’s director of reimbursement policy, said the organization is in the process of further revising its educational materials about the coding changes, to add more clarity and provide additional psychiatry-specific examples. The revisions are aimed at helping members determine appropriate E/M billing levels and how best to document their services. For example, Jaffe said it is important for members to note that unstable patients are only those defined as “with exacerbation, progression, or side effects of treatment.”

Budgets Driving Decisions

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“So much of what we’re reacting to is anecdotal and not data driven,” Robert L. Trestman, Ph.D., M.D., told Psychiatric News. He is chair of APA’s Council on Healthcare Systems and Financing and chair of Psychiatry and Behavioral Medicine at Virginia Tech School of Medicine. However, such data are hard to come by because insurers are typically the ones who hold it. “Even if one could amass all the claims data from a given state, one could see which claims were denied, but not the reasons why.”

Trestman said insurers’ administrative staff in billing and claims, who are focused on keeping within their budgets, are more likely to be making the day-to-day decisions than are the chief psychiatrists, who are focused on improving the quality of care. “So there’s a predictable disconnect.”

Although the exact numbers are not known, it is estimated that as many as one-third of psychiatrists are already not accepting insurance. “What we would want, given this new pandemic of mental illness that is growing out of a consequence of the SarsCoV2 pandemic, is for insurers to do everything they can to expand access, reduce administrative burden, and encourage psychiatrists to join networks. Insurance companies could then track the data. They could see that our patients were getting better and that the investment was worth it.”

Mental Health Parity Enforcement

Disparities in claims processing or payments for psychiatrists may constitute a violation of mental health parity laws, particularly if the process is more stringent than for other physicians, according to Ellen Weber, J.D., senior vice president for health initiatives with the Legal Action Center. “Reimbursement for psychiatrists at levels significantly below Medicare rates is a red flag, particularly if the reimbursement for other physicians is higher than the Medicare rate for the same codes,” she told Psychiatric News.

Weber added that prepayment claims reviews could also be a parity law violation if insurers are not requiring that same process for medical and surgical office visits. “The level of administrative work required to provide the information is an indication that is suggestive of a more stringent application, such as when practitioners must spend an inordinate amount of time responding to questions.”

In 2021, Congress amended the Mental Health Parity and Addiction Equity Act to allow federal officials to put a greater emphasis on proactive enforcement. Now plans are required to begin providing detailed analyses of their non-quantitative treatment limitations (NQTLs). NQTLs are strategies used by health plans to limit benefits, such as prior authorizations, fail-first policies/step therapy protocols, and insurance network admission standards.

A review by the departments of Treasury, Labor, and Health and Human Services in January of analyses of their behavioral health NQTLs submitted by health plans found that not a single plan complied with the law (“Government Steps Up Efforts to Enforce Parity Law”). Officials issued dozens of enforcement letters to health plans identifying plans’ mental health parity violations as well as deficiencies in plans’ reporting transparency. The report also recommended that Congress amend federal parity laws to ensure that MH/SUD benefits are defined in an objective and uniform manner, for example, using the most recent Diagnostic and Statistical Manual of Mental Disorders. ■