Federal Court Gives Green Light to Deny Coverage

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COMMENTARY

Nearly every psychiatric clinician I know has experienced it: Their patient’s health plan determines—with little justification—that the needed treatment is “not medically necessary.” The clinician is then forced to spend valuable time fighting for coverage of the treatment that is validated by accepted clinical standards of care. Meanwhile, families confront their options: spending life savings, taking on burdensome debt, or going without treatment.

With more than 7.1 million American adults not receiving the mental health treatment they need because of cost,¹ ensuring health plans cover the services patients need is essential to maintaining and increasing access to care.

At the root of this issue is who makes the determinations about whether treatment is needed— and what standards should be and must be followed.

The Mental Health Parity and Addiction Equity Act of 2008 established the principle of parity for mental and physical health coverage. Although we have made progress, a significant barrier to achieving parity is insurers’ frequent arbitrary determinations that needed care is not medically necessary.

Yet there has been hope in tackling this issue successfully. In 2019, a federal district court in San Francisco detailed in a more than 100-page ruling how United Behavioral Health (UBH), the nation’s largest insurer of mental health care, used internally developed medical necessity criteria that were inconsistent with generally accepted standards of care to deny mental health and addiction coverage.² In so doing, the court ruled that UBH had violated its fiduciary duty to plan members under the federal Employee Retirement Income Security Act (ERISA).

After hearing expert clinical testimony, the court described the 8 generally accepted standards of mental health and substance use disorder care. These standards are listed in the Table.

Table. The 8 Generally Accepted Standards of Mental Health and Substance Use Disorder Care

The court then found that UBH’s medical necessity criteria were inconsistent with each of these standards, resulting in inappropriate coverage denials for more than 50,000 patients.² Half of those patients were children or adolescents, and the son of 1 of the named plaintiffs died after receiving a denial of coverage.

According to the court, there was clear evidence that UBH used medical necessity determinations to limit the duration of coverage in an arbitrary manner and push patients into inappropriate lower (cheaper) levels of care.² UBH’s process for developing medical necessity criteria were, the court determined, “infected” by its financial interests.

Importantly, all the experts at trial—including UBH’s own witnesses—agreed that criteria to determine the appropriate level of care that are consistent with generally accepted standards of care already exist.² These criteria come from nonprofit clinical specialty associations, including the American Society of Addiction Medicine (ASAM), the American Academy of Clinical Psychiatrists, and the American Academy of Child and Adolescent Psychiatry. These associations’ criteria provide holistic assessments of patients’ needs and put patients’ interests first.

In fact, UBH’s own internal clinicians believed that the ASAM criteria were most appropriate for substance use disorder determinations and recommended that UBH switch. This recommendation was vetoed, however, by UBH’s finance department because of uncertainty of the financial impact of the switch.²

To fix the violations it found, the court ordered UBH to reprocess denials that were based on its own flawed criteria by using the nonprofit clinical professional associations’ criteria and to use these criteria for mental health and substance use medical necessity determinations going forward in its ERISA plans.³ (UBH’s ERISA plans cover more than 20 million Americans.³)

The district court’s ruling in the Wit case has been a huge win for millions of Americans across the country seeking treatment for mental health and addiction disorders. The decision also sent a message to insurers that, under ERISA, they must decide whether care is medically necessary based on standards set by clinicians, not based on insurers’ financial self-interest. The case has also spurred state-level action, including new laws in several states, such as California,⁴ with the aim of preventing insurers from using medical necessity criteria that are inconsistent with generally accepted standards of care as well as to put in place a standardized definition of medical necessity.

Tragically, however, this huge win in Wit became a huge loss in March 2022, when a 3-judge panel of the federal Ninth Circuit Court of Appeals reversed the Wit v UBH decision.⁵ It took a single paragraph of a cursory 7-page ruling—in contrast to the comprehensive, 100-page-plus district court decision—for the panel to reverse the district court and allow UBH to use medical necessity criteria that may be inconsistent with generally accepted standards of care.⁵

The appellate panel did not address any of the exhaustive evidence presented at trial or the district court’s findings that UBH’s criteria were consistent with generally accepted standards of care. The panel also ignored UBH’s violations of several states’ laws that are an important part of the case. These state laws required UBH to use the ASAM criteria (or criteria consistent with it) for substance use disorder determinations. The attorneys general of 3 of these states—Illinois, Rhode Island, and Connecticut—filed an amicus brief with the Ninth Circuit asking it to correct the panel’s significant errors.⁶

If the panel’s flawed reversal stands, it will have a ripple effect that undermines the health coverage of the more than 130 million Americans in employer-sponsored ERISA plans. The ruling effectively gives every insurer the green light to use whatever self-serving criteria it wishes when deciding whether to pay for treatment.

Furthermore, the reversal creates more obstacles to individuals who are struggling at a time of unprecedented need. Hardest hit will be those patients in ERISA plans with the least financial resources, who lack the ability to pay out of pocket for care. Already underserved low-income communities, LGBTQ+ communities, and communities of color will once again be disproportionately harmed, reinforcing our deeply inequitable system that rations care based on ability to pay.

The Wit reversal also directly harms clinicians’ ability to properly care for their patients. Clinicians will be forced to spend more time trying to convince insurers that the treatments they select as most appropriate for their patients meet insurers’ self-serving criteria, rather than independent, objective standards. The reversal also is an obstacle to clinicians providing care that is consistent with generally accepted standards. If insurers refuse to cover such care and patients cannot afford appropriate care without coverage, clinicians are often put in an untenable position of negotiating with insurers for coverage for treatment that is not the most appropriate. Our laws should not permit insurers to insert themselves between clinicians and their patients.

With our country’s ongoing mental health and addiction crisis, the consequences of the Wit v UBH reversal are too great to ignore. Indeed, this is why several dozen patient and provider groups, including the American Psychiatric Association and the American Medical Association, filed amicus briefs asking the Ninth Circuit to revisit this flawed ruling and grant the rehearing petition.⁷

If insurers are allowed to use whatever criteria they wish, millions of Americans will continue to be subject to arbitrary coverage denials that deny them a path to recovery. The Ninth Circuit must not neglect its duty by allowing insurers not to fulfill theirs.

Should the Ninth Circuit deny a rehearing, the only option will be to push legislation in states and in Congress to require insurers to follow generally accepted standards of care. Because clinicians are on the front lines of helping their patients get the mental health and addiction care they need, I encourage clinicians to join the effort to require insurance companies to make decisions in patients’ best interests. Insurers should be competing on how best to improve their members’ well-being, not on the efficiency of denying coverage.

Dr lnsel is a psychiatrist and neuroscientist who has been a national leader in mental health research, policy, and technology. He is the author of Healing: Our Path from Mental Illness to Mental Health.

Editor’s note: All information within this article was up to date at the time of print.

References

1. Adults reporting unmet need for mental health treatment in the past year because of cost. KFF. Accessed August 19, 2022. https://www.kff.org/other/state-indicator/adults-reporting-unmet-need-for-mental-health-treatment-in-the-past-year-because-of-cost/

2. Wit v United Behavioral Health, Case No. 14-cv-02346-JCS (N.D. Cal. Feb. 28, 2019).

3. Wit v United Behavioral Health, 14-cv-02346-JCS (N.D. Cal. Jan. 5, 2022). https://casetext.com/case/david-wit-v-united-behavioral-health

4. California Senate Bill 855, Chapter 151 (2020). https://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201920200SB855

5. David Wit v United Behavioral Health, No. 20-17363 (9th Cir. Mar. 22, 2022). https://casetext.com/case/wit-v-united-behavioral-health-12.

6. Wit v United Behavioral Health. Brief amici curiae of Rhode Island, Connecticut, and Illinois. May 16, 2022. https://www.thekennedyforum.org/app/uploads/2022/05/2022-5-16-Brief-of-Rhode-Island-Connecticut-and-Illinois-as-Amici-Curiae-in-Support-of-Plaintiffs-Appellees-and-Rehearing-En-Banc.pdf

7. Wit v United Behavioral Health. The Kennedy Forum. Accessed August 19, 2022. https://www.thekennedyforum.org/wit/