Under a landmark settlement with the New York attorney general, Schenectady-based MVP Health Care will overhaul its behavioral health claims process, cover residential treatment, pay a $300,000 fine, and refund as much as $6 million to plan members whose substance use disorder (SUD) or mental health claims were denied. The mental health part of the settlement is based on Timothy’s Law, a 2006 state statute that does not apply to SUDs. The SUD part of the settlement is based on the federal 2008 Mental Health Parity and Addiction Equity Act (MHPAEA).

The health care bureau of Attorney General Eric T. Schneiderman found that since at least 2001, MVP, through its subcontractor ValueOptions, denied 40 percent more behavioral health claims than medical claims. The settlement requires MVP to resubmit previously denied claims for independent review, which could result in as much as $6 million in restitution to MVP enrollees.

The agreement is part of a broader, ongoing investigation into compliance with behavioral health parity laws; earlier this year, the attorney general reached a similar settlement with Cigna over claims for eating disorders.

“Ensuring that New Yorkers have adequate access to mental health and substance abuse treatment should be a priority for our state,” Attorney General Schneiderman said in a March 20 statement announcing the settlement. “Insurers must comply with the law to ensure that individuals with mental health conditions are treated no differently than those with physical ailments — and that they are getting what they pay for from insurers.”

The investigation also found that since 2009, when MVP subcontracted out behavioral health benefits to ValueOptions, the scrutiny of claims was greater for behavioral health than for medical/ surgical. The disparity was particularly pronounced in intensive levels of care, with MVP, through ValueOptions, denying 39 percent of the claims for inpatient psychiatric treatment and 47 percent of its claims for inpatient substance abuse treatment. These rates are more than double the plans’ denial rate for inpatient medical claims.

Under the agreement, MVP will remove visit limits, remove the requirement that patients fail at outpatient treatment before being admitted to inpatient, and more.

MVP will be monitored and will pay $300,000 to the attorney general’s office as a civil penalty.

John Coppola, executive director of the New York Association of Alcoholism and Substance Abuse Providers (ASAP), commended the attorney general for his leadership on parity and ensuring that people with behavioral health disorders have access to treatment.

But it’s unfortunate, he said, that insurance companies don’t recognize on their own that treating SUDs saves money in the long run. “It ultimately results in healthier people and savings across the board in health care costs,” he said.

“Hopefully MVP will move forward and join their peers that are becoming much more flexible with behavioral health benefits,” he said, citing in particular the Blue Cross Blue Shield plan in the Albany area that recently eliminated front-end management of the behavioral health benefit. “They now realize that this has not been a cost-effective way for them to enhance people’s health and welfare,” he said.

MVP and ValueOptions comment

Both MVP and ValueOptions responded to questions from ADAW by email. “MVP will continue to work with ValueOptions to ensure that our members are receiving all medically necessary services in keeping with plan benefits,” said Jacqueline Marciniak, spokeswoman for MVP, in response to emailed questions from ADAW. She didn’t answer a question about whether MVP will pass on the liability of the denied claims to ValueOptions. “As per the terms of the settlement, we’re not at liberty to discuss the status of past or future claims,” said Marciniak. However, she added that MVP “is committed to a continuous improvement process inclusive of all aspects of our business that directly impact the health and well-being of our members.”

In a prepared statement, MVP President and CEO Denise Gonick said that MVP “will now include residential treatment in its commercial benefit coverage.” She added that MVP cooperated with the investigation. “MVP agrees that access to quality care is essential, and that such access is critical to our goal of building healthier communities,” Gonick said.

MVP members with denied claims filed from January 1, 2011, through March 10, 2014, with medical necessity as the reason will have an opportunity to resubmit those claims, said Gonick. The claims will be reviewed “by an independent third party,” she said. And all claims that included residential treatment for that time period will automatically be reviewed.

“I’ve asked everyone at MVP to lend a hand to help impacted members get through the process with ease,” said Gornick. “We at MVP care deeply about the communities we serve, and will continue to strive to offer high-quality services that promote the health and well-being of all our members.”

Asked whether the MVP settlement would change the way ValueOptions operates in New York, ValueOptions spokeswoman Amy Sheyer responded that the “company is confident that it has complied with all applicable state and federal mental health parity laws and remains committed to ensuring its continued compliance.” In terms of the MVP contract, there will be changes because now MVP will include residential coverage as a benefit and will apply the lower co-payment to behavioral health services, she said. “Regarding specifics of our contract with MVP or any client contract and our proprietary discussions with our clients, we do not comment on them,” Sheyer said.

Sheyer said that in “behavioral health care, hospitalization and ongoing readmission is not a positive outcome for an individual in need,” and that the “goal is family-centered, more coordinated care in a community setting.” By having a network of providers, ValueOptions has “an opportunity to help ensure quality of care through our credentialing process” and can “put in effective controls to identify fraud, waste and abuse.”

Asked whether ValueOptions would be responsible for paying any of the restitution for claims denied under its work with MVP, Sheyer said, “It is our policy not to comment on client contract provisions or proprietary discussions with them.”

Finally, we asked ValueOptions whether the fact that more than double the rate of denials occurred for inpatient behavioral health compared to inpatient medical/surgical claims indicated a lack of parity. Sheyer responded that ValueOptions reviewed claims “in accordance with industry standards and our contract with MVP.” As for medical necessity criteria, these are “in accordance with industry best practices,” she said. There was no reference to compliance with parity or any other law in her response to this question.

More enforcement expected in New York

Two attorneys from the Legal Action Center, Sally Friedman and Karla Lopez, explained that both ValueOptions and MVP are ultimately responsible for the lack of compliance with parity. “But MVP has the ultimate responsibility,” said Friedman. This case shows that health plans that contract out behavioral health claims need to ensure that the contractor is being compliant, she said. In addition, the marketplace may affect the way managed behavioral health organizations (MBHOs) operate. “Presumably, companies are not going to want to contract with managed care organizations that are going to be violating the law flagrantly, and the insurance companies are going to want to get contracts showing that they are complying with the law,” she said. Just because an MBHO is a contractor doesn’t mean that the MBHOs have “carte blanche to do whatever they want.”

The settlement makes it clear that going forward, MVP will have to use clinical standards to approve appropriate levels of care, said Lopez. The same utilization review standards used by the state Office of Alcoholism and Substance Abuse Services will have to be used by MVP and its contractors to determine the appropriate level of care, she said.

The investigation will go beyond MVP, according to the Legal Action Center. “I think in general the attorney general is gearing up across the board to do more robust enforcement of parity laws for mental health and SUDs,” said Friedman. The effective date of the final rule for MHPAEA, which has very strong parity protections for SUDs, is July — which in reality means plan years beginning next January. That will give added impetus to the scrutiny of insurance plans, said Friedman, noting that in no other state does the attorney general have its own health care bureau.

“This settlement shows that New York state is committed to enforcing the parity laws and will not tolerate the discriminatory practices that have been prevalent for years,” said Friedman. “New York’s leadership in parity enforcement should be fantastic news not only for New York treatment programs and their patients, but also for programs and patients around the country.

The ‘exception’ clause

The final rule implementing the MHPAEA was a victory for treatment providers and patients, and a defeat for MBHOs in its strong inclusion of nonquantitative treatment limitations (NQTLs) and promotion of residential treatment (see ADAW, November 18, 2013). But MBHOs aren’t giving up. They are questioning whether they are allowed “exceptions” to the parity final rule, as they were in the interim final rule, to NQTL comparisons between behavioral and medical/surgical benefits. “It is on our list to clarify with the regulators next month what their intent is,” said Pamela Greenberg, president and CEO of the Association of Behavioral Health and Wellness. “In the final rule they stated that they took the language out because they did not think it was necessary because there already was flexibility in the rule to use clinical guidelines,” said Greenberg. “We plan to ask them to explain what they meant by there being existing flexibility in the rule.” The regulators are the Department of Health and Human Services, the Department of Labor and the Department of the Treasury — the federal agencies that produced the MHPAEA rulemaking.

So for now, at least, the battle for parity is in the states. And in New York, the patients who need treatment appear to have a powerful supporter in their corner.

Bottom Line…

Under a settlement agreement with the New York attorney general, MVP Health Plans will comply with federal and state parity laws; it will also work with contractor ValueOptions to change the way it handles behavioral health claims.