Insurers Criticized for Shortchanging Mental Health Care Coverage Despite Federal Law

by Ella

In a climate of rising overdose deaths and escalating youth mental health concerns, the Biden administration is intensifying its efforts to hold insurers and state regulators accountable for improving mental health care coverage. This move comes as many individuals, especially those from communities of color, grapple with limited access to mental health services, further exacerbated by inflation and a shortage of mental health care providers.


One such story highlights the profound impact of this issue: Michelle Romero, a mother of three from the Houston area, found herself in a desperate search for mental health care for her daughter’s depression. Her frantic search for mental health clinicians within her daughter’s insurance network turned up empty. Unable to find a psychiatrist or psychotherapist who accepted her daughter’s insurance and was conveniently located, the family resorted to paying approximately $300 per week out of pocket for their daughter’s psychotherapy and psychiatry sessions. These out-of-pocket costs have led Romero to max out her credit cards.


In December of the previous year, Romero’s daughter was hospitalized for two weeks after attempting to take her own life, marking her second suicide attempt, with the first one occurring when she was just ten years old. This hospitalization resulted in a staggering $30,000 bill, of which insurance covered only a fraction.


Underpinning the urgency of the matter, the Biden administration has proposed a rule aimed at enhancing parity in mental health care coverage. This rule would require insurers to disclose the impact of their coverage policies on patients, including sharing denial rates for mental health care claims compared to other claims. Furthermore, insurers would need to provide data on additional restrictions such as prior authorization requirements.


Additionally, this new rule would address a loophole that has allowed over 200 state and local government health insurance plans to opt out of mental health parity regulations. The public comment period on this proposed rule has been extended.

Despite the federal Mental Health Parity and Addiction Equity Act of 2008, which mandates that if insurance plans offer mental health coverage, the benefits must be on par with those for other medical conditions, many insurers continue to charge higher copayments for mental health care, limit the frequency of mental health treatment, and impose more restrictive prior authorization policies. A joint report presented to Congress this year by the Department of Labor, the Department of Health and Human Services, and the Department of the Treasury validated these concerns.

To address these ongoing issues, some states have implemented their own parity policies, fining insurance companies for violating these rules. Over the past decade, ten states have fined insurance companies nearly $31 million for parity rule violations, while 17 states have passed legislation requiring insurers to demonstrate compliance on an annual basis.

In most states, individuals with private insurance are required to seek out-of-network care for mental health treatment more frequently than for other health services. The issue is further compounded by clinician shortages, with nearly 98% of Texas counties designated as mental health professional shortage areas.

Challenges persist due to low reimbursement rates for mental health care providers compared to other medical professionals. This discrepancy often discourages psychiatrists from participating in insurance plans, forcing patients to pay out of pocket or seek partial reimbursement through insurance claims. As a result, the issue of low reimbursement rates becomes a significant deterrent for psychiatrists to accept insurance plans.

While some states are working to increase Medicaid reimbursement rates for behavioral health services, it is clear that there is much work to be done to ensure that mental health parity is achieved nationwide. The American Psychiatric Association has created model parity legislation tailored to individual states to address the challenges of mental health care access and affordability.

As the nation grapples with these ongoing disparities in mental health care coverage, many individuals and their families find themselves navigating a complex and costly system in search of the care they desperately need.


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