Mental health insurer guideline ruling may become national template

This article was initially published in the Chicago Daily Law Bulletin on March 20, 2019.

By Mark D. DeBofsky

Mark D. DeBofsky is a name partner of DeBofsky, Sherman & Casciari P.C. He handles civil and appellate litigation involving employee benefits, disability insurance and other insurance claims and coverage, and Social Security law. He can be reached at [email protected].

Over the past several years, many health insurers have adopted coverage and level of care guidelines in an effort to provide consistency in determining insurance coverage for mental health treatment. A recent ruling in a class action in California addressed whether the guidelines utilized by a major health insurer met generally accepted standards of care.

In Wit v. United Behavioral Health, 2019 WL 1033730, 2019 U.S. Dist. LEXIS 35205 (N.D. Calif., March 5, 2019), the court ruled following a 10-day bench trial that United Behavioral Health's guidelines failed to comport with accepted standards of care and put profits over safe and effective treatment.

The court primarily compared United Behavioral's guidelines to standard of care guidelines issued by the American Society of Addiction Medicine, but also examined guidelines relating to child and adolescent psychiatry and Medicare guidelines.

The court explained that behavioral health-care services are provided based on a continuum of intensity, where the most serious issues of imminent self-harm or harm to others are treated with inpatient hospitalization.

The next level below that is residential treatment, which is provided for individuals who do not pose an imminent risk of serious harm to self or others (meaning those who do not need inpatient hospitalization), but rather, "because of specific functional limitations, need safe and stable living environments and 24-hour care." Within that grouping, there are different levels of residential treatment, sometimes of rather lengthy duration, depending on the need for medical monitoring "for patients to practice basic living skills and to master the application of coping and recovery skills."

Below residential treatment, the next level of care is partial hospitalization, which is more focused on crisis intervention and stabilization.

And the next level lower is intensive outpatient treatment, which involves nine hours per week of outpatient treatment (six for children) "to deal with the underlying co-morbidities, recurrent problems, histories of early and later adversity, trauma, all the complexity that is actually in reality part of what mental disorders are about."

Finally, the lowest level of service intensity is outpatient treatment generally consisting of one to two psychotherapy sessions per week.

Based on the evidence presented, the court enumerated a number of standards of care that were generally accepted by clinicians:

  • "It is a generally accepted standard of care that effective treatment requires treatment of the individual's underlying condition and is not limited to alleviation of the individual's current symptoms."
  • "It is a generally accepted standard of care that effective treatment requires treatment of co-occurring behavioral health disorders and/or 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."
  • "It is a generally accepted standard of care that patients should receive treatment for mental health and substance use disorders at the least intensive and restrictive level of care that is safe and effective."

The court cautioned, however, that "the fact that a lower level of care is less restrictive or intensive does not justify selecting that level if it is also expected to be less effective." The court thus added, "It is a generally accepted standard of care that when there is ambiguity as to the appropriate level of care, the practitioner should err on the side of caution by placing the patient in a higher level of care."

The court found United Behavioral violated that standard by encouraging clinicians to "err on the side of moving members to lower levels of care even where there is uncertainty about whether such a move is safe."

  • "It is a generally accepted standard of care that effective treatment of mental health and substance use disorders includes services needed to maintain functioning or prevent deterioration."
  • "It is a generally accepted standard of care that the appropriate duration of treatment for behavioral health disorders is based on the individual needs of the patient; there is no specific limit on the duration of such treatment."

Correspondingly, the court stressed: "It is a generally accepted standard of care that the unique needs of children and adolescents must be taken into account when making level of care decisions involving their treatment for mental health or substance use disorders."

To meet that standard, "practitioners take into account the developmental level of a child or adolescent in making treatment decisions is by relaxing the threshold requirements for admission and continued service at a given level of care."

  • "It is a generally accepted standard of care that the determination of the appropriate level of care for patients with mental health and/or substance use disorders should be made on the basis of a multidimensional assessment that takes into account a wide variety of information about the patient."

In assessing the United Behavioral guidelines against those standards, the court found the defendant's guidelines placed too much weight on acuity and crisis stabilization, resulting in "a significantly narrower scope of coverage than is consistent with generally accepted standards of care."

The court found United Behavioral violated generally accepted standards of care by not addressing particular needs of children and adolescents and by restricting treatment by characterizing it as custodial care even though Medicare guidelines exclude situations where skilled care is provided from a classification as custodial care.

In addition to deviating from generally accepted standards of care, the court determined the United Behavioral guidelines violated the laws of several states. For example, since 2011, Illinois law has mandated that all "[m]edical necessity determinations for substance use disorders shall be made in accordance with appropriate patient placement criteria established by the American Society of Addiction Medicine" (215 ILCS 5/370c(b)(3)).

That provision was subsequently amended in 2015 to add the following sentence: "No additional criteria may be used to make medical necessity determinations for substance use disorders."

The court expressed deep concern with evidence showing the involvement of financial considerations in the development of United Behavioral guidelines and determined: "The court finds that the financial incentives discussed above have, in fact, infected the [g]uideline development process. In particular, instead of insulating its [g]uideline developers from these financial pressures, United Behavioral has placed representatives of its [f]inance and [a]ffordability [d]epartments in key roles in the [g]uidelines development process throughout the class period."

As a result of its factual findings, the court concluded that United Behavioral breached the fiduciary duties it owed policyholders under the Employee Retirement Income Security Act and denied benefits that were properly due since "the evidence at trial established that the emphasis on cost-cutting that was embedded in United Behavioral's [g]uideline development process actually tainted the process, causing United Behavioral to make decisions about [g]uidelines based as much or more on its own bottom line as on the interests of the plan members, to whom it owes a fiduciary duty."

The Wit ruling addresses the fault in every prior ruling that has upheld a behavioral health claim denial based on the use of "guidelines" without questioning whether the insurer's guidelines were consistent with generally accepted standards of care. This decision also recognized another major fault in insurers' decision-making regarding behavioral health treatment, which is addressed in American Society of Addiction Medicine criteria and in several of the other criteria cited - that individualized circumstances preclude the mechanical application of "one size fits all" criteria.

The court's recognition that "safe" does not equate to "effective" demolishes the myth that pushing for lower levels of care is acceptable care. The ruling also precludes insurers from denying claims where treatment is necessary to prevent further medical deterioration even if the patient has plateaued and no further improvement is expected.

The Wit ruling will dictate the future of all litigation over behavioral health care, which is already evolving away from challenges brought under the Mental Health Parity and Addiction Equity Act into arguments relating to the legitimacy of clinical guidelines utilized to determine both coverage and level of care.

In view of the current opioid epidemic in the United States and the growing need for effective treatment, the Wit decision will undoubtedly broaden coverage and will be influential in transitioning to better quality of and greater universality of care for mental health conditions.

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