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THE REA CASE: INSURANCE PARITY SHOULD LEAD US TOWARDS INTEGRATED CARE:

Published Tuesday 17 of June, 2014


On June 10, 2014, the California Court of Appeal ruled in a state party law case that mental illness is a medical condition due “medically necessary treatment” under California’s parity law. (Marissa Rea et al v. Blue Shield of California).


In the Rea case, the Court held that California’s mental health parity law required that residential treatment for the severe mental illness of anorexia and bulimia, must be covered by private insurance plans, even though not listed as a covered benefit.


The plaintiffs in Rea suffer from eating disorders which have the highest mortality rate of all psychiatric conditions. Their doctors had prescribed residential treatment for them, a care option widely accepted in the medical and psychiatric communities as one of the most effective, if not critical, ways to treat potentially fatal eating disorders. This psychiatric condition is uniquely challenging in that sufferers refuse the very element necessary to keep them alive and return them to good health: food.


When their claim was rejected, the patients sued, arguing that under the state parity law, residential treatment for the mental illness of eating disorders was indeed a medically necessary treatment and should be covered. California’s parity law requires health plans to provide coverage for diagnosis and medically necessary treatment of severe mental illnesses under the same terms and conditions applied to other medical conditions. (Italics added).


The Court pointed out that parity laws were necessary because of the historical imbalance in insurance coverage between mental illness and physical illness. Mental illness was covered at far lower levels. Consequently, the coverage imbalance resulted in inadequate treatment for mental health conditions. This was associated with poor clinical outcomes, both medical and mental health; greater disability; higher social support costs; increased total heath spend; and more social costs for state and local governments. Plaintiffs argued that some treatments that are medically necessary for some mental health conditions, have no similar analog in the treatment of physical illness.


The Court agreed with the plaintiffs. In its summation, the Court said: “…given the principle that treatments for the two types of illnesses are in many cases not comparable, parity instead requires that treatment of mental illness is sufficient to reach the same quality of care afforded physical illnesses.“(Italics added).


The Rea case is about insurance parity between mental health and substance use disorders (behavioral health) and physical illness. But let’s not forget that before, during, and after the enactment of parity laws (federal or state), behavioral health (BH) has remained the only part of mainstream medicine where services are separately delivered from medical care services. BH provider networks are totally independent of medical provider networks. BH providers are paid from separate budgets, not a single, unified, medical budget. This payment model becomes a hindrance to the ACA-inspired cost savings accountability approach. BH practitioners are just as important contributors to a patient’s improved health outcomes and cost savings, in accountable care organizations, as are medical contributors.


Segregated BH services delivery exists in a world where, as the Appeals Court stated, mental illness is a medical condition that is due medically necessary treatment. That said, while mental illness is indeed a medical condition, there is a small subset of patients whose primary health condition is behavioral (e.g. schizophrenia, bipolar, etc) who will need specialty BH care, with specialty practitioners and setting. Insurance parity highlights that integration is needed in both specialty BH sector , as well as general medical sector, care. We need integration of services in BOTH places.


The real significance of the Rea case, and others like it, may be to help give medical health insurers the incentive to provide plans with a single medical-behavioral health benefit, so that both illnesses, mental and physical, are treated in a coordinated, inter-connected way. This leads to better health outcomes at lower cost. This is certainly what the federal government, and Medicare in particular, are coming to understand and support. It is time to sunset managed behavioral health carve-outs that segregate BH services delivery.


The full integration approach is all the more compelling since ACOs mandate that doctors and hospitals/clinics are accountable for total patient health outcomes, insurers and care delivery systems can move towards global payments, i.e. lump sum payments for all medical and BH services to a patient population. It is time to move to a system for delivering and paying for medical and BH services that is in the best interests of ACOs and their patients.


Before we can get to integrated services delivery, employers and government purchasers (Medicare, Medicaid) of health plan products must demand that the products include BH services as part of medical benefits. This means one medical insurance plan would fund all medical and BH services using one pool of dollars. BH and medical providers also have an important role to play in demanding that medical and BH benefits be combined in all provider contracts.


Movement to fully integrated medical-behavioral care delivery will lead to more efficient, effective health care for patients and economically better returns for providers and insurers. It will obviate the need to “compare and contrast” if parity exists in plan’s mental illness treatment realm and in the physical illness treatment realm since they will be combined into one covered benefits package.

The parity debate and discussion should be a springboard to moving health policy toward a change in this fundamental structural delivery system deficiency. We still separate behavioral health care and physical health care.


Parity can help lead us towards full integrated care. As Rea held, mental illness… physical illness…both are medical conditions… both are due medically necessary treatment at the same quality of care.


Florence C. Fee, J.D., M.A.

Executive Director

NHMH