A Law Without Teeth: The Reality of Insurance for Addiction Treatment

Congress passed the Mental Health Parity and Addiction Equity Act in 2008, requiring insurers to cover mental illness and substance abuse treatment on an equal basis with physical ailments. The law, which passed with substantial bipartisan support, was supposed to eliminate two-tiered systems for co-pays, deductibles, and treatment limitations.

The 2008 law does not require health insurance plans to offer behavioral health coverage, although if they do, it must be on par with benefits provided for medical and surgical care. The ACA does require that all health plans sold on the new health care exchanges eventually offer mental health coverage. Those plans will then be required to observe the federal parity act.

Nineteen years later, we still have no rules and therefore no enforcement… Americans are being denied their rights under the federal parity law.-Myles B. Schlam

The problem, behavioral health advocates say, is that more than six years after President George W. Bush signed the parity bill into law, the Obama administration has yet to complete the federal rules that would enable states to enforce it. As a result, behavioral health may actually have fallen further behind since passage of the law.

In May of 2014, the U.S. Government Accountability Office (GAO) released a report showing that health insurance plans have actually increased the number of exclusions for mental health and addiction treatments since the law was enacted. In 2010 and 2011, for example, 15 percent of the plans surveyed by the GAO were excluding residential mental health, a significant increase from 2008. It took 12 years to pass the Parity Act of 2008, which was originally introduced to the House in 1996. Nineteen years later, we still have no rules and therefore no enforcement. As a result, hundreds of thousands of Americans are being denied their rights under the federal parity law.

Right now, there are no regulations telling the insurance companies how to comply. A law without rules isn’t worth the paper it’s written on. That means that insurance companies can continue to do business as usual. While the law looks good in theory, reality is another story. Without specific requirements spelled out by federal rules, it is very difficult to push insurers to observe parity. Also, without clear-cut guidelines, it is more difficult to make arguments about whether the criteria the insurers are using pass muster or not.

…there are no regulations telling the insurance companies how to comply. A law without rules isn’t worth the paper it’s written on.-Myles B. Schlam

Due to a lack of specificity in the federal laws, enforcement has also been lacking in some states. Other states, including Connecticut, Maryland, Maine, Oregon, and Vermont, have enacted strong laws to beef up coverage of behavioral health, but those statutes do not cover all health insurance plans, including those issued by the many large employers that insure their own workers. Some other states, including Florida, have said they won’t enforce the federal parity law unless their own states pass identical legislation.

The broad outlines of what parity will look like are relatively clear: Insurance companies are not permitted to impose more restrictive spending limits on mental health or addiction benefits than they impose on medical and surgical benefits. They are not able to limit the frequency or duration of mental health treatment more severely than for other forms of care, nor are they allowed to separate deductibles and more restrictive authorization rules.

Substance abuse treatment advocates are particularly troubled by the requirement that people with addictions fail at lower levels of care before they are approved for more intensive treatments.-Myles B. Schlam

It is true that insurance companies have generally eliminated separate deductibles and scrapped unequal spending limits. However, they continue to disallow mental health and addiction treatments in non-hospital based facilities. They also continue to exclude types and levels of treatment for behavioral patients, while covering a full range of treatments for medical patients. In addition, behavioral health patients are often subject to reviews and criteria that are not required of patients on the medical and surgical side. Substance abuse treatment advocates are particularly troubled by the requirement that people with addictions fail at lower levels of care before they are approved for more intensive treatments. They say the “fail first” requirement would never be tolerated for medical and surgical patients. In practice, this means that a patient has to fail at the outpatient level before being given the opportunity for residential treatment.

In the end, this “first fail” requirement costs insurers more money than it would if they had just authorized the recommended residential treatment to begin with. There is also a questionable criteria used to determine “medical necessity.” For example, I have worked with multiple drug-addicted clients who were denied treatment under their health care plan because they had been in jail for a few days or more. The insurers concluded that a “medical necessity” did not exist because the person had already detoxed in jail and had not used in a few days.

Let that sink in for a minute…

This type of criteria flies in the face of the parity act, when a person is deemed to no longer need addiction treatment because they have been in jail (presumably not using). It seems to ignore the fact that the substance abuse is usually the reason the person became incarcerated and without the proper treatment, that person will most likely recidivate, which in turn will cost the tax payers more money than if the person is properly treated from the onset.

More importantly, this decision can cost people their lives.




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