Several Key Cases Highlight Core Principles Supporting “Generally Accepted Standards of Care”

For years, insurers have been able to deny health benefits by using non-transparent and/or flawed clinical review criteria as part of the utilization management process. Consumers and providers have been frustrated by the failure of regulators, accreditors, and other officials to ensure that “medical necessity” guidelines are actually consistent with generally accepted standards of care and are faithfully applied with respect to coverage for mental health and substance use disorder (MH/SUD) services.

Emerging Court Actions

Last spring, a landmark decision provided a wakeup call to health insurers and their business partners regarding the need to rely on “generally accepted standards of care” when making medical necessity determinations. In Wit v. United Behavioral Health, a U.S. District Court in Northern California found that United Behavioral Health (operating also as Optum, a subsidiary of UnitedHealth Group) illegally denied MH/SUD claims based on internally developed criteria that were far more restrictive than generally accepted standards of care. Specifically, the court found that Optum’s criteria were skewed to cover “acute” treatment, which is short-term or crisis-focused, and disregarded effective treatment for chronic and/or complex mental health conditions that often require ongoing care, including care at intermediate levels, such as residential treatment. The holding has far-reaching implications for insured patients in all 50 states.

Just last week, another important case, Smith vs Health Care Service Corporation, was filed against the country’s fourth largest insurer, Health Care Service Corporation (HCSC), calling into question a similar practice. The complaint filed in the U.S. District Court for the Northern District of Illinois (No. 19-cv-7162) alleges that HCSC is denying medically necessary residential mental health treatment based on overly restrictive clinical guidelines developed by MCG Health (MCG). In addition to HCSC, MCG was named a co-defendant in the case.

“In the mental health context, where regulatory oversight is lax, it is all too easy for insurers to discriminate against patients by denying medically necessary care based on clinical guidelines that reference authoritative sources yet distort or omit the sources’ content,” said Meiram Bendat, founder of Psych-Appeal and co-counsel for the plaintiff. In the complaint, the plaintiffs asserted that “(a)ccepted standards of medical practice, in the context of mental health and substance use disorder services, are the standards that have achieved widespread acceptance among behavioral health professionals. The accepted medical standards at issue in this case do not vary state by state.”

Generally Accepted Standards of Care

In both the Wit decision and the Smith complaint, several key concepts were identified to ensure generally accepted standards of care are used by health plans. The core principles address the following issues:

1. Treating Underling Conditions. Effective treatment requires treatment of the individual’s underlying condition and is not limited to alleviation of the person’s current symptoms. MH/SUD conditions are often long-term and chronic and should be treated as such.
2. Using Complex Condition Management. Effective treatment requires treatment of co-occurring MH/SUD disorders and medical conditions in a coordinated manner that considers the interactions of the disorders and conditions, and their implications for determining the appropriate level of care.
3. Promoting Safety and Effectiveness. Patients should receive treatment for MH/SUD at an appropriate level of care. Placement in a less restrictive environment is appropriate only if it is likely to be safe and just as effective as treatment at a higher level of care in addressing a patient’s overall condition, including the underlying and co-occurring conditions.
4. Erring on the Side of Caution. When there is ambiguity as to the appropriate level of care, the provider should err on the side of caution by placing the patient in a higher level of care, which health plans should cover. Research has demonstrated that patients who receive treatment at a lower level of care than is clinically appropriate face worse outcomes than those who are treated at the appropriate level of care.
5. Maintaining Function and Preventing Deterioration. Effective treatment of MH/SUD includes covering services aimed at preventing relapses or deterioration of the patient’s condition and level of functioning.
6. Avoiding Time Limits. The appropriate duration of treatment for MH/SUD conditions should be based on the individual needs of the patient, and there should not be specific limits placed on the duration of such treatment.
7. Factoring the Needs of Young Patients. The unique needs of children and adolescents must be considered when making decisions regarding level of care involving their treatment. This may include the need to relax the threshold requirements for admission and continued services at a given level of care.
8. Requiring Multidimensional Assessments. The determination of the appropriate level of care for patients with MH/SUD care should be made based on a multidimensional assessment that considers a wide variety of information about the patient.

Intermediate Levels of Care

One of the interesting elements of the Smith complaint is MCG’s role as a co-defendant. The complaint goes into some detail explaining why MCG’s Acute RTC Guidelines do not meet the generally accepted standard of care requirement as outlined by the many of the principles above. In a 2017 white paper, MCG admits that it views “intermediate” levels for MH/SUD and medical/surgical care very differently. The complaint notes that “MCG takes the position that while intermediate care for medical/surgical services is designed to address sub-acute conditions in order to improve functional status, intermediate care for behavioral health services is only available ‘to support acute management’ and ‘to address acute symptoms or provide crisis stabilization.’”

Final Thoughts

Under the Federal Parity Law, insurers must complete a comprehensive comparability analysis to ensure any processes, strategies, evidentiary standards, or other factors used in applying non-quantitative treatment limitations (NQTLs) to MH/SUD benefits must be comparable to, and applied no more stringently than, the processes, strategies, evidentiary standards, or other factors applied to medical/surgical benefits.

How insurers develop and operationalize utilization management criteria for MH/SUD and medical/surgical benefits is considered an NQTL. Parity analyses that simply rely on “reviews” of the “evidence-base” supporting insurers’ MH/SUD and medical/surgical clinical coverage guidelines are inadequate. As part of the goal to level the playing field between MH/SUD and medical/surgical insurance coverage, regulators, accreditors, and the courts also need to ensure the “medical necessity” review criteria are consistent with generally accepted standards of care.

The tide does appear to be turning toward more transparency and accountability by insurers to ensure they are relying on generally accepted standards of care for their MH/SUD coverage determinations. But insurers still have a long way to go in terms of faithfully and meaningfully implementing the eight core principles described above.

Parity Resources from The Kennedy Forum

The Kennedy Forum’s “Don’t Deny Me” campaign empowers patients and their loved ones to report illegal insurance denials of mental health and addiction treatment, and fight for their parity rights. The campaign is sparking a consumer-driven movement that pressures elected officials, insurance commissioners, and attorneys general to enforce The Federal Parity Law. This law requires most insurers to cover illnesses of the brain, such as depression or addiction, no more restrictively than illnesses of the body, such as diabetes or cancer. Learn more at www.DontDenyMe.org and join the conversation using #DontDenyMe.

Parity Track is a website where policymakers, journalists, consumers, and others can track legislative, regulatory, and legal parity activities in all 50 states and at the federal level to monitor implementation and best practices.