Read More

MHPAEA Enforcement Action Heats Up

In the wake of vigorous Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) enforcement action by the Department of Labor (DOL) and a recent federal court award of penalties for document disclosure shortcomings, employers should review their health plans and practices to ensure similar compliance failures do not exist.

On August 11, 2021, the DOL and New York Attorney General Letitia James announced settlement agreements with UnitedHealthcare (UHC) to resolve allegations of unlawful practices under MHPAEA and New York’s similar state parity law. The settlement also resolves similar class actions brought by private litigants against UHC. MHPAEA prohibits employer-sponsored health insurance plans from covering claims for mental health and substance use disorder (MH/SUD) benefits more restrictively than claims for medical and surgical (med/surge) benefits. It is not illegal under MHPAEA to deny claims for MH/SUD treatment. Rather, assessing MHPAEA compliance requires comparing and scrutinizing the claim administrator’s policies and practices for handling claims. Under the settlement agreements, UHC, the nation’s largest health insurer, will change its claims handling practices and pay approximately $13.6 million in restitution to affected insured members and $2 million in penalties. These settlements come less than a year after a federal judge ordered United Behavioral Health (UBH), a subsidiary of UHC, to reprocess more than 67,000 denied claims for MH/SUD treatment (Wit v. United Behavioral Health). That massive undertaking has been put on hold pending an appeal to the 9th Circuit.

Investigations and Settlement Terms

The settlements follow investigations by the DOL and NY AG’s office on UHC’s claims handling practices going back to 2013. First, the agencies’ investigations revealed UHC’s illegal practice of arbitrarily flagging MH/SUD claims for review without applying a similar frequency of reviews on med/surge claims. For example, continuing outpatient therapy claims were flagged after a member reached 21 visits in a six-month period (fewer than once a week). The more frequently claims are reviewed, the more likely it is that treatment will be denied. In a press release, the NY AG’s office explained the resulting harm to members:

Members who received these denials had to choose between figuring out how to pay hundreds, or even thousands, of dollars for continued care, and abruptly ending necessary treatment… [UHC’s] illegal and discriminatory practices have impeded access to behavioral health services for more than half a million New Yorkers with fully-insured United health plans and many others with self-insured private health plans administered by the company.

UHC has stated it discontinued its MH/SUD review flagging system and will not implement a new continuing claim review system until at least 2023.

Second, the investigations revealed UHC’s practice of reducing out-of-network payments across the board by 25% to PhD-level psychologists and by 35% for masters-level therapists, without similar reductions on payments to med/surge providers. UHC has stated it will change its practice for setting out-of-network outpatient MH/SUD reimbursement rates.

Finally, the settlement addresses UHC’s failure to disclose adequate information about MH/SUD coverage limitations in response to members’ requests. UHC’s prior practice was to provide a summary document with answers to questions on MH/SUD limitations. But that document lacked any information on UHC’s MH/SUD review flagging system or reimbursement reductions. Going forward, UHC has agreed to work with the DOL to ensure its MHPAEA disclosure documentation is complete.

Key Takeaways

For plan sponsors, the UHC investigations are a reminder that MHPAEA is a top enforcement priority for the Biden-Harris administration. This marks the first time the DOL has brought litigation to enforce MHPAEA. In a press release announcing the settlement, the DOL stated:

Plans and insurance companies cannot place special hurdles in the paths of workers and their families when they seek mental health and substance use disorder benefits. The law requires parity between these benefits and medical benefits. We are committed to vigorously enforcing the law’s requirement and making sure workers in need of help are treated fairly…

Notably, the DOL focused on UHC (and its subsidiary UBH) as a fiduciary holding discretionary power to manage benefits without bringing action against the plans or sponsors. As to fully-insured plans, the DOL alleged that “UBH designed all benefits, and the [group health plans] did not have the opportunity to customize.” And as to self-funded plans, the DOL alleged that “UBH recommended the structure of benefits, and the [group health plans], which looked to UBH as the expert, adopted those recommendations.”

Without a doubt, employers hold responsibility as plan sponsors to ensure parity compliance, including completing Comparative Analyses of MH/SUD limitations. The DOL’s investigations and legislative action on MHPAEA compliance demand employers take necessary action. They should work with their carriers and TPAs on MH/SUD claim review and out-of-network reimbursement practices while keeping an ear to the ground for employee MH/SUD coverage complaints.

Along with the Comparative Analyses, plan sponsors should inquire into what document disclosures their carriers and TPAs are making in response to employees’ requests for information on MH/SUD treatment limitations or claims guidelines. For these types of MHPAEA and ERISA document requests, the scope of information required to be produced goes well beyond the plan document and summary plan description. Document disclosure breakdowns leave plans vulnerable to penalties for failing to provide requested documents within 30 days. Recently, in M.S. v. Premera Blue Cross (D. Utah 2021), a federal court awarded the maximum $110 per day in penalties totaling $123,000 against the self-funded employer and TPA for failing to disclose claim criteria and plan documents. All employers, but especially those with self-funded plans, should verify they have adequate procedures in place to respond fully and timely to any ERISA or MHPAEA document requests.

For more information on how to ensure your organization remains compliant, visit OneDigital's Compliance Confidence page.