In a landmark case, United Healthcare agreed to pay $15.6 million to settle allegations that it violated the Mental Health Parity and Addiction Equity Act (MHPAEA). Walsh v. United Behavioral Health, et al. was the first lawsuit brought by the U.S. Department of Labor (DOL) to enforce the parity law against a health insurer or group plan in the statute’s 13-year history. The case is a win for mental healthcare providers and patients, and it sends a clear signal that the Biden administration is stepping up enforcement of the MHPAEA. But the $15.6 million settlement is a drop in the bucket for the nation’s largest health insurance company, which earned $4.9 billion in profits in Q1 2021 alone, so it may not be enough to deter large health insurers from continuing to flout the law.
Mental Health Parity Law
The MHPAEA is a federal law that requires health insurers and group health plans to ensure that financial requirements, such as copayments and deductibles, and treatment limitations for mental health and substance use disorder benefits are comparable or on parity with those for medical/surgical benefits. The MHPAEA applies to plans sponsored by private- and public-sector employers with more than 50 employees, and to health insurers who sell coverage to employers with more than 50 employees. The DOL has enforcement authority over plans that are subject to the Employee Retirement Income Security Act (ERISA), which includes most private-sector health plans.
Walsh v. United Behavioral Health, et al.
In Walsh v. United Behavioral Health, et al., the DOL accused United Healthcare Insurance Co. and United Behavioral Health of illegally reducing reimbursement rates for out-of-network behavioral health services and targeting mental health recipients for claim reviews, leading to many denials of coverage. This improper behavior allegedly dated back to at least 2013.
While United reduced reimbursement rates for certain out-of-network mental health treatments, the insurer did not comparably reduce reimbursement for out-of-network medical/surgical treatments. Specifically, the insurer artificially depressed reimbursement rates for nonphysician providers of psychotherapy, reimbursing psychologists 25 percent less and master’s degree-level counselors 35 percent less than physicians providing the same service. In contrast, United did not impose a discount for medical services for most non-physician providers of medical/surgical services, such as nurses or physical therapists. Further, United did not articulate any consistent factors that were used to determine which providers were subject to the reductions, and United hid the reimbursement rate reductions from members and providers by failing to mention them in plan documents and explanations of benefits. The DOL concluded that this inconsistent approach to applying rate reductions for out-of-network mid-level providers violated the comparability and stringency requirements of the parity law.
The DOL’s complaint also alleged that United applied its outlier management strategy disproportionately to mental health benefits. United allegedly applied an algorithm to identify and deny medically unnecessary services to nearly all outpatient psychotherapy services while only using a corresponding outlier technique on a limited group of medical/surgical outpatient services.
In two settlement agreements in August, United Healthcare and its subsidiaries agreed to pay $13.6 million to members who suffered wrongfully denied claims and more than $2 million in penalties and lawyer fees. As part of the settlement agreements, United agreed to cease the violations, improve its disclosures to plan participants and commit to compliance with federal and state laws going forward.
The DOL indicated it is currently investigating multiple plans and issuers for violations of MHPAEA to stop insurers from placing hurdles in the paths of consumers who seek mental health and substance use disorder benefits. This is certainly good news, as this at-risk patient population can be easily victimized and needs protection from the unfair practices of insurance companies. It remains to be seen if the enforcement actions will make enough of a financial impact to deter the practices of large insurers.
Schwartz, Conroy & Hack, PC represents businesses and individual insurance policyholders in claims and litigation against insurance companies. If your claim for mental health or substance use disorder benefits has been denied or is being challenged, give us a call. We make sure insurance companies keep the promises they made to policyholders like you.
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Evan S. Schwartz
Founder of Schwartz, Conroy & Hack