A.G. Schneiderman Announces Settlement With ValueOptions To End Wrongful Denial Of Mental Health And Substance Abuse Treatment Services

Investigation Revealed ValueOptions Denied Mental Health Claims Twice The Rate Of Other Claims, And Addiction Recovery Services Denied Four Times As Often

Company Administers Mental Health and Substance Use Disorder Benefits For Major Health Insurance Plans Including The Empire Plan, MVP, and Emblem Health, Among Others

NEW YORK – Attorney General Eric T. Schneiderman today announced a settlement with Beacon Health Options (formerly known as ValueOptions) requiring the managed care company – which administers behavioral health benefits for approximately 2.7 million New Yorkers in fully funded or state and local government health plans – to dramatically reform its claims review process and pay a $900,000 penalty. The settlement resolves allegations of widespread violations of mental health parity laws by the company, which serves a total of 45 million consumers across all 50 states. An investigation by the Attorney General’s Health Care Bureau found that ValueOptions issued denials twice as often for behavioral health claims as insurers did for other medical or surgical claims and four times as often for addiction recovery services.

“Insurance claims for mental health care should be treated just the same as insurance claims for physical health care, and my office will continue to ensure full compliance with our state’s mental health parity laws,” said Attorney General Schneiderman. “The millions of New Yorkers who need mental health and addiction services should never feel shame or stigmatized and my office will remain committed to eliminating barriers to patients getting the care they need.”

Last year, the Attorney General entered into settlements with two major New York health insurers, MVP Health Care and EmblemHealth, which uses ValueOptions as a vendor for administering behavioral health benefits. These three settlements together require extensive reforms in ValueOptions’ claims management procedures, and require the company to cover residential treatment and charge the lower, primary care co-payment for most outpatient visits to mental health and substance use disorder treatment providers. Today’s settlement reinforces ValueOptions’ obligations to submit previously denied MVP and Emblem mental health and substance use disorder treatment claims to an independent appeal process, which could result in millions of dollars being returned to members wrongfully denied benefits.

New York’s mental health parity law, known as Timothy’s Law, was enacted in New York in 2006, and requires that insurers provide mental health coverage at least equal to coverage provided for other health conditions. The federal Mental Health Parity and Addiction Equity Act, enacted in 2008, prohibits health plans from imposing greater financial requirements or treatment limitations on mental health or substance use disorder benefits than on medical or surgical benefits.

Mental and emotional well-being is essential to overall health. Every year, almost one in four New Yorkers has symptoms of a mental disorder, but less than half of those people receive treatment. And, despite the fact that in any given year, one in ten New Yorkers has a substance use disorder, only 11% of these individuals receive any treatment. Lack of access to treatment for vulnerable individuals, which may be caused by health plans’ coverage denials, can disrupt work, family, and school life, and lead to more serious illness. The Attorney General’s investigation revealed that ValueOptions consistently applied more rigorous – and frequent – utilization review for behavioral benefits than is typically applied to other medical or surgical benefits. Denials were nearly twice as common for mental health claims than for other medical claims submitted to insurers, and claims for addiction recovery services were nearly four times as common.

Under today’s agreement, ValueOptions will continue to overhaul its claims review process and cooperate with an ongoing independent appeal process for MVP and EmblemHealth members whose claims had been previously denied due to lack of medical necessity or lack of coverage for residential treatment. More than 11,000 potentially eligible EmblemHealth members have received notice of their appeal rights and have until the end of March to file appeal applications. Altogether, the settlements could result in millions of dollars in restitution to MVP and EmblemHealth members. Already, through the ongoing appeals process for MVP, $250,000 in previously denied claims have been overturned and will be going back to members who paid out of pocket.

ValueOptions has agreed to overhaul its behavioral health benefits process by:

  • Removing visit limits for almost all behavioral health services, and removing preauthorization requirements for outpatient behavioral health services.
  • Covering services provided by mental health practitioners, such as Mental Health Counselors, licensed under Article 163 of the New York Education Law.
  • Ensuring that its provider networks and online provider directory are accurate, and assisting members in transitioning providers where necessary.
  • Conducting full and fair reviews for services that require preauthorization, such as inpatient substance use disorder treatment.
  • Providing detailed oral and written explanations for denied claims, so that members can exercise their appeal rights, and providing up-to-date information about alternative treatment providers.
  • Classifying claims correctly so that reviews are done expeditiously and members are afforded full appeal rights.
  • Removing the requirement that members “fail” outpatient substance use disorder treatment before qualifying for inpatient rehabilitation treatment.
  • Basing the number of treatment days or visits approved on members’ needs, rather than arbitrary limits.
  • Integrating medical and behavioral health claims review staff, which will facilitate the coordination of members’ care.
  • Continuing coverage of treatment pending the completion of appeals, so that treatment is not interrupted.
  • Reimbursing coverage of treatment for most diagnoses listed in the Diagnostic and Statistical Manual of the American Psychiatric Association (the “DSM”), including gender identity disorders.
  • Reimbursing members for out-of-network services at the usual, customary and reasonable rate (“UCR”) for the relevant behavioral health service, without applying arbitrarily applying lowered rates for non-M.D. providers.
  • ValueOptions will also post parity disclosures on its website, file regular compliance reports with the Attorney General, and pay a $900,000 penalty.

Consumers with questions or concerns about this settlement or other health care matters may call the Attorney General’s Health Care Bureau Helpline at 1-800-428-9071.

The agreement with ValueOptions is the fourth reached by the Attorney General’s office since last year enforcing the mental health parity laws and stems from a broader and ongoing investigation into health insurance companies’ compliance with the laws.

The investigation of this matter was conducted by Assistant Attorney General Michael D. Reisman, of the Attorney General’s Health Care Bureau, which is led by Bureau Chief Lisa Landau. The Health Care Bureau is a part of the Social Justice Division, led by Executive Deputy Attorney General for Social Justice Alvin Bragg.

A copy of the settlement can be read here.

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