Loopholes Leave Gaps in Mandated Coverage for Mental Health

One 16-year-old spent 28 days in treatment for substance abuse but was forced to leave once his parents’ insurance coverage ran out.

Weeks later, he wound up back in the hospital. His parents are now shelling out thousands of dollars for another program, depleting all the money they had saved for his college tuition.

And the family of a dangerously depressed teenager chose to continue hospitalizing their child despite the refusal by their insurance plan, for West Virginia state employees, to cover more than 30 days of hospital care in a year, leaving them with tens of thousands of dollars in unpaid medical bills.

The pandemic has fueled a soaring need for mental health and substance abuse services, revealing deepening gaps in coverage under the Mental Health Parity and Addiction Equity Act of 2008, the landmark law intended to eliminate a double standard in insurance coverage. Exemptions under state or local government coverage for employees like teachers and police officers and potentially illegal workarounds put in place by employers and insurers, coupled with lax oversight, have resulted in unequal access to care for millions of people.

In general, under the federal law, insurers are prohibited from offering plans that treat depression differently than, say, diabetes; no longer can they impose strict limits on treatment, or set up overly stringent pre-authorization policies or exclude categories of care like residential programs.

The Affordable Care Act, which withstood its latest Supreme Court challenge in June, also declared treatment for mental health and substance abuse disorders one of the essential benefits that health insurers had to provide.

In an indication that regulators are taking a renewed interest in enforcing the law, the U.S. Department of Labor, along with the New York state attorney general’s office and individual plaintiffs, reached a settlement with UnitedHealthcare, the giant insurer, in early August over accusations that it had violated the parity law.

But the exemption afforded governments for their employees is widely in use, particularly in strained economic times, maintaining a loophole some advocates have tried to close repeatedly. Dozens of plans across the country have requested an exemption for the current coverage year, according to the most recent list compiled by the federal government.

“This has been unfortunately part of the ongoing struggle to realize the full spirit of the law,” said Patrick Kennedy, an advocate for mental health services and former member of Congress who co-sponsored the law. He is trying to persuade federal lawmakers to close this loophole, which he estimates affects a million people and their families.

Linda Michaels, a psychologist in private practice in Chicago, said, “I just don’t get it, during this pandemic year.” There, municipal employees like police officers and teachers must go through cumbersome steps to get approval for therapy sessions exceeding the limit of seven a year, under the Blue Cross plan offered.

These illnesses are “chronic conditions and pervasive,” Dr. Michaels said. “They are not acute crises.” Chicago officials did not return requests for comment.

“One of the silver linings in a very dark cloud in the form of the pandemic is that people have been converted to the need to pay attention to mental health, domestic violence, substance abuse,” said Representative Brian S. King, a Utah state legislator and Democrat who is interested in fixing the loophole in his state, where several state and local plans opted out of providing coverage.

As a lawyer, he also represents patients in lawsuits against employers and insurers.

“We have to persuade our colleagues that the additional cost we’re talking about is worth doing,” he said.

The pandemic has taken an enormous toll on the well being of Americans, particularly adolescents. An analysis by the Centers for Disease Control and Prevention found a significant increase in emergency room visits for suicide attempts among girls. Roughly half of Americans say the pandemic negatively affected their mental health, according to a recent survey by the Kaiser Family Foundation, a nonprofit research group.

Access remains a critical obstacle to mental health care. While some patients say they were not able to get treated because they could not find a provider, nearly a quarter said the main reason they did not get care was the cost, according to the Kaiser analysis. One in 10 said their insurance did not cover the care.

County and state officials say they are aware their workers have been under tremendous stress, pointing to government plans that are not exempt. “Counties do have a wide range of programs that address behavioral and mental health,” said Teryn Zmuda, the chief economist for the National Association of Counties.

The exception for government plans was aimed at preventing financial burdens on school districts, cities and states operating under strict budgets. The groups are trying to save money, said Jennifer Berman, an employee benefits lawyer and chief executive of MZQ Consulting, which advises companies’ plans on compliance issues. “It doesn’t necessarily mean that they don’t want to provide mental health care,” she said.

But many of the government plans still contain the much-criticized restrictions that existed before the parity legislation was passed. In Michigan, a plan covering state employees places sharp limits on residential treatment for substance abuse and did not cover it for mental health issues.

“Boom, after 28 days, you have to pick up your son now or pay $2,000 a day,” said the father of the 16-year-old, who asked not to be named to protect his family’s privacy. His son was depressed and struggling with drug and alcohol abuse, exacerbated by the pandemic-related stress and isolation that has troubled his generation. The family is insured under a plan covering Michigan state workers.

The end to coverage required the family to take their son home before he finished treatment, but he quickly relapsed. His parents are now spending tens of thousands of dollars on another program with the plan paying for a small fraction of the total cost.

The Michigan Civil Service Commission, which oversees coverage for state employees, declined to comment.

In West Virginia, one doctor working for the state health system paid roughly $110,000 for a treatment program for his child that he knew was not covered, only to face a $50,000 hospital bill last year because his child’s hospital stay had exceeded the plan’s limit — in spite of the fact that his child was too ill to be discharged. The hospital lost its appeal to the insurer for payment, he said.

“This was a real surprise,” said the father, who asked to be identified only by his middle name, Paul, to protect his family’s privacy. “They had never seen this before.”

West Virginia lawmakers have since passed legislation requiring parity for coverage for mental health and substance abuse disorders, although the plan covering the doctor still operated under an exemption in the government’s most recent lists. State plan officials did not respond to requests for comment.

Even relatively inexpensive treatment can be hard to get. In Chicago, one of Dr. Michael’s former patients, Julia, whose husband worked for the city and asked not to be identified by her last name to protect her family’s privacy, compared coverage in recent years to treat her anxiety.

In contrast to her previous policy with another Blue Cross plan, a new one overseen by an outside company required cumbersome pre-authorizations for therapy, she said. She had to provide detailed information that formerly had been supplied by her therapist, including the exact diagnosis code and the so-called NPI number used to identify the provider. The company began approving fewer visits at a time, she said.

“It just forces you to jump through the hoops, calling back and keeping track,” she said. If you missed an authorization, you had to pay the full cost of the session.

She also said she was pressured to estimate the length of the treatment or when it might end, a timetable sought in stark contrast to any questions about her other medical conditions. “I don’t have to get my dermatology appointments preapproved,” she said. “Rosea is never going away. No one is asking my dermatologist to cure rosea.”

She stopped therapy when she felt she could adequately manage her condition.

Advocates and patients say that enforcement of the law has often been lax, and that many insurers and employers resist paying for expensive treatments for mental health. But the involvement of both state and federal regulators in the $14 million settlement with United “is very significant,” said D. Brian Hufford, a lawyer with Zuckerman Spaeder, whose firm represented the individuals in the private lawsuits. His firm also represented the plaintiffs in another lawsuit against United that resulted in a 2019 ruling against the company in which a federal judge in Northern California said that one of its units had created internal policies aimed at effectively discriminating against patients to save money. United said the care provided to its customers was appropriate, and the case is now being appealed.

In the latest case, the insurer was accused of reducing how much it paid for out-of-network mental health services, resulting in patients being overcharged, and imposing stricter treatment limits than for medical and surgical services. Martin J. Walsh, the U.S. labor secretary, said in a statement, “Protecting access to mental health and substance use disorder treatment is a priority for the Department of Labor and something I believe in strongly as a person in long-term recovery.”

United said it was “pleased to resolve these issues related to business practices no longer used by the company.”

These suits underscore the reluctance by insurers responsible for handling claims to cover this care, Mr. Hufford said. Unlike a broken bone or cancer diagnosis, where insurers have little discretion, “behavioral health is not so cut and dried,” he said.

Congress has also taken some steps to increase enforcement. As part of the budget package passed last December, lawmakers required plans to evaluate how well they were complying with the law and authorized the Department of Labor to conduct reviews.

And some members of Congress are calling for a closing of the loophole. “Every insurance plan needs to cover mental health care — no exceptions,” Senator Chris Murphy of Connecticut, a Democrat, said in a statement. “This should be a no-brainer,” he said.

Unions that represent these employees are also calling for change. “We have been working to fix this issue for quite some time,” Lee Saunders, the president of the American Federation of State, County and Municipal Employees, said in a statement. “It comes down to the fact that we want all workers to be treated equally and fairly under the law — that means closing this loophole in mental health care.”