California's Mentally Ill Improperly Denied Treatment Coverage At Staggering Rates

By McCarton Ackerman 05/19/16

After analyzing 15 years of data from the DMHC, independent medical reviewers found that health plans denied coverage in 48% of all mental health cases.

California's Mentally Ill Improperly Denied Treatment Coverage At Staggering Rates

Although California has some of the strongest mental health parity laws in the country, new findings show that mentally ill residents in the state are improperly denied coverage nearly half the time by health plans and insurers.

Both the California Mental Health Parity Act of 1999 and the Mental Health Parity and Addiction Equity Act of 2008 attempt to make insurers and health plans provide the same level of benefits to those seeking mental health treatment, as people who need surgical or medical treatment. 

Despite this, the NBC Bay Area Investigative Unit discovered, after analyzing 15 years of data from the California Department of Managed Health Care (DMHC), that health plans improperly denied coverage in 48% of all mental health cases. Independent medical reviewers overturned 1,007 coverage denials related to mental health during that time period—more than any other medical condition. Since 2011, reviewers overturned 53% of all mental health denials.

A survey conducted last year by the National Alliance on Mental Illness also noted that among Affordable Care Act plans, there were twice as many denials for mental health and substance abuse care, than for other medical care. A main reason insurers have been able to get away with this is through lengthy internal evaluations to determine whether costly or long-term mental health treatment is needed.

“I think the bottom line for them is they are looking for ways to keep costs down and have managed to be effective in doing that,” said Randall Hagar, the current government affairs director for the California Psychiatric Association.

Leslie Kornblum and Roberta Friedman experienced this firsthand after their daughter was diagnosed with anorexia, major depressive disorder and social anxiety disorder. Blue Shield denied coverage for inpatient treatment for her eating disorder, after a Blue Shield psychiatrist deemed it not medically necessary. The couple initially footed the $114,000 bill, but were reimbursed by Blue Shield after independent medical reviewers overturned the denial. “This person has never seen my daughter. How the heck would he know if this is medically necessary or not?” Kornblum told NBC.

The state’s DMHC is continuing to crack down on this issue, issuing a $4 million penalty in 2013 against the Kaiser Foundation Health Plan and $500,000 in penalties against three other health plans. The department is also currently reviewing all 25 major health plans it oversees, in order to ensure compliance with federal mental health parity rules. In addition to these efforts, state politicians are also pushing to ensure greater transparency from health plans and insurers about their protocol for denying mental health coverage.

“A lot of people with depression and illnesses like that related to mental health, they don’t bother to complain. And that’s wrong,” state Senator Jim Beall told NBC. “We have to have a system that takes care of them adequately without having to complain."

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McCarton Ackerman is a freelance writer and editor living in Portland, Oregon. He has been a contributor for The Fix since October 2011, writing on a wide range of topics ranging from medical marijuana in Colorado to the world's sexiest drug smugglers. Follow him on Linkedin and Twitter.