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ACA Requires Parity Between Mental, Physical Disorders -- Will Insurers Comply?

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From the time he was 18 years old, Salvatore Marchese was trying to get treatment for his drug addiction. He bounced around from rehab facility to rehab facility but was always let go after 11 days because his insurance company wouldn’t cover treatment for longer than that.

In June of 2010, at the age of 26, Marchese was finally approved for state funding for treatment, but once again, his treatment was cut short after less than two weeks because his funding ran out. He was released, despite paperwork stating that he was a high risk for relapse. Three months later, he was found slumped in his car in Camden, dead, the apparent victim of a heroin overdose.

“We always struggled with insurance trying to get approvals, but there was never enough funding and/or beds to take him,” his mother, Patty DiRenzo of Blackwood, wrote on an online web site called Shatterproof. “He wanted help desperately but sadly never received the help he needed and deserved.”

While the Affordable Care Act mandates that insurance companies cover treatment for drug and alcohol addiction just as they would cover treatment for any other health condition, like diabetes or cancer, addiction specialists are still skeptical that kind of parity is going to happen, particularly for acute cases, like that of Marchese, which may require inpatient care.

“The good news is, the ACA does cover many addiction services. What is not necessarily being covered is long-term residential care, and in order to recover, people need long-term care, support services, a continuum, to stay well,” said Debra Wentz, chief executive officer of the New Jersey Association of Mental Health and Addiction Agencies.

The federal government does not pay Medicaid for treatment in “Institutions for Mental Disease,” or IMDs, which are defined as inpatient facilities with more than 16 beds and more than 51 percent of the facility population with a mental illness. The policy, put in place in 1965 when Medicaid was enacted, was meant to stop the federal government from paying what was largely considered a state and local expense. But that policy may now stop addicts from getting inpatient care.

“A lot of the residential substance abuse facilities are classified as IMDs, so that type of care is not paid for by Medicaid,” Wentz said.

Moreover, it’s not clear how many substance abuse providers are going to be included in the networks of most plans. While the ACA requires that there be so-called network adequacy, the state Department of Banking and Insurance is going to have to closely monitor the situation to ensure that insurance companies are including addiction treatment facilities in their networks, Wentz said.

“Mental health parity in commercial plans doesn’t have to start being implemented until July 1, 2014, so those networks may not be in place yet, but this is something we’re going to have to watch, to make sure they comply,” Wentz said, adding, “There’s a lot of potential under the new laws to get a lot more people covered for addiction treatment. There are a lot of positives. But there are still challenges we must work through.”

Skeptical About Success

Frank L. Greenagel Jr., a recovery counselor and adjunct professor at Rutgers School of Social Work, said he’s cynical about insurance companies complying with the parity rules because the act was passed in 2008, and to date, it still hasn’t led to any real changes.

“Until we actually see the law in effect, regardless of how it’s written, I just don’t have any confidence that anything will change,” he said.

Mental health services are now one of the 10 essential benefits all insurance companies must cover under the ACA. But some, like Greenagel, fear insurers will do their best to avoid covering addiction treatment, long considered the ugly stepchild of mental health coverage -- largely because many see addiction as willful misconduct rather than an illness.

“My experience has been insurance companies work very hard at paying for the lowest level of care that they can legally get away with and for the shortest amount of time. I don't know if the ACA will change that,” Greenagel said. “They employ smart lawyers and find therapists who will side with them in order to collect a paycheck.”

While the ACA was ratified in 2010, Congress had actually passed the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act two years earlier. The act, commonly referred to as the mental health parity act, required that insurance companies cover mental health the same way they cover physical ailments. The provisions of the parity act were folded into the ACA, but it’s taken a couple of years to hammer out the enabling regulations insurers must actually follow to achieve this parity. Interim regulations were passed in 2010, and the final regulations were passed last November, but the insurance industry’s non-compliance with the interim rules has addiction specialists skeptical that they will comply with the final rules.

“The interim regulations were good, but the language was not tight enough and opened the door to non-compliance by health insurers,” said Dan Meara, spokesman for the New Jersey affiliate of the National Council on Alcoholism and Drug Dependence, or NCADD-NJ. The final rules addressed some of the problem areas, but there may still be more, he said.

The interim rules, for instance, did not address some common practices insurers use to restrict coverage, such as “medical management,” where they restrict treatment geographically or put limits on the scope or duration of treatment, Meara said. Insurers historically applied these restrictions more harshly on treatment for mental health than on treatment for physical ailments, or what’s often referred to as medical/surgical, Meara said. Insurers also applied the prior authorization rule more frequently on the mental health side. Under the parity law, insurers can no longer do that, Meara said.

The final parity rule also addressed what is known as “fail first” practices, where insurers require individuals to first exhaust low-level services and fail before being covered for more intensive, costly services, like inpatient care. Again, it was a policy applied far more frequently on the mental health side than on the medical/surgical side.

“Insurance companies are going to try to find ways around everything there,” Meara said. “Some won’t, but some will absolutely try to minimize coverage.”

It’s also unclear who will enforce the law if insurance companies fail to comply, Meara notes. What if an assessment finds someone needs in-house treatment, but their insurance company will only cover outpatient treatment? There needs to be a remedy for patients to turn to, if their insurance company isn’t playing fairly, Meara said.

Addiction Issues

The problem with addicts, in particular, experts say, is that they only reach out for treatment when they’ve reached a crisis point and have a moment of clarity, but those don’t last too long If they’re forced to fight for coverage, they may be back in the throes of their addiction by the time they win their claim.

“Clearly, some progress has been made. But it will take years to see how it’s working, what’s not working, and what health insurers are going to do to frustrate patients,” Meara said.

Dr. Louis E. Baxter, executive medical director of the West Windsor-based Professional Assistance Program of New Jersey and immediate past president of the American Society of Addiction Medicine, said that so far he’s not been impressed with the way the insurance industry is dealing with mental health and addiction parity.

Baxter, an addiction expert who sat on a presidential advisory panel for the Office of National Drug Control Policy, whose recommendations were used to create the ACA, said when insurers were forced to provide the same level of coverage for both physical and mental health, instead of bringing their mental health benefits up to par, they cut back on coverage on the medical/surgical side. Some insurers simply dropped their mental health and addiction coverage altogether, while others dropped clients who had pre-existing condition of mental illness or substance abuse, he said.

“Rather than be found disobeying the law, they elected not to provide addiction coverage,” Baxter said.

Horizon Blue Cross Blue Shield of New Jersey, AmeriHealth and Magellan Health Services were asked to comment for this story and either declined or did not respond.

Addiction specialists say insurance companies aren’t the only impediment to addicts getting treatment. The treatment industry, itself, has to answer for the major expense that some treatment programs cost, said Greenagel, who sat on the Governor’s Council for Alcoholism and Drug Abuse. Only the wealthy can afford treatment if insurance doesn’t cover it, he said.

“There are rehabs around the country that now charge about $30,000, $40,000, $50,000 a month, and some make you write a check before they take you. That may work for the upper middle class but not for the lower classes. So what happens is the only people who are really getting treatment are the rich,” Greenagel said, noting that Medicaid only reimburses treatment providers at a rate of $16 an hour. “At that rate, you’ll have a hard time getting treatment.”

Cost isn’t the only problem. Some addicts may wind up without care because there simply aren’t enough treatment facilities in New Jersey. There was already a dearth of facilities to which addicts could go for treatment even before the ACA was passed. Now, with thousands and thousands of additional New Jersey residents having health insurance, addiction specialists say the need for additional resources may become dire.

“There’s a lot of unmet need already, in terms of alcohol and drug use treatment. And suddenly, four million people across the country who have drug and alcohol problems, from homeless people to working mothers, will suddenly have insurance coverage, and the number of people seeking treatment could double over time, depending on how many people come forth,” Wentz said.

According to the state Department of Human Services’ Division of Mental Health and Addiction Services, there are some 87,140 people in New Jersey currently seeking treatment. Of that figure, some 31,145 did not receive the treatment they sought, Wentz said. And some estimate as many as 104,000 more people will be newly eligible for services under the Medicaid expansion.

Changes made last year to the Diagnostic and Statistical Manual (DSM) of mental disorders, used by mental health professionals to diagnose the type and severity of an illness and the appropriate treatment, will not help matters, addiction specialists say. Under the DSM-IV, to be diagnosed with a “substance use disorder” -- a categorization that makes one more likely to be covered by insurance -- the diagnostic criteria required an individual to have only one symptom.

But in the revised version, called DSM-5, people must have at least two symptoms to be categorized with even a mild substance use disorder. Critics of the revisions say it will now be harder to meet these requirements.

“That is an avenue where I think some insurers may take to forestall some of this work that has gone into the parity and the Affordable Care Act,” Baxter said.

In the end, addiction specialists say it may take court intervention to get the insurance industry to comply with the parity law.

“What’s going to have to happen is that when the ACA is in full effect, and insurance companies balk at having to provide an equal level of benefits, litigation is unfortunately going to have to occur,” Baxter said. “Because when you have rules and regulations and some entities say, ‘Okay, I know what the rule is, and I know what the regulation is, but I’m not going to do it, you have to make them do it. And that normally occurs through some kind of litigation.”

Caren Chesler is a freelance writer, based in Ocean Grove, whose work has appeared in various general-interest and business publications, including The New York Times. She also served as Statehouse reporter for the Asbury Park Press.

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