Ruling Widens Mental Health Coverage
A California appellate court has issued a ruling that could compel health insurers to spend millions of dollars a year on residential treatments for their enrollees who suffer from eating disorders.
A three-judge panel of the Second District Court of Appeal in Los Angeles unanimously ruled on Wednesday that two Blue Shield of California enrollees, Marissa Rea and Kelly Melachouris, are entitled to residential treatment for their eating disorders even though their coverage specifically excludes it.
Rea and Melachouris had sued Blue Shield over its denial of coverage as part of a potential class-action suit. Los Angeles Superior Court Judge Anthony J. Mohr accepted Blue Shield's argument for throwing out the case last year, prompting Rea and Melachouris to appeal.
The appellate court ruled that the lower's court stance violated the state's Mental Health Parity Act, which required insurers cover mental health services at the same level of healthcare coverage.
Writing for the panel, Judge Jeffrey Johnson concluded that Parity Act must be more broadly interpreted than allowed by the lower court in order to achieve the intent of lawmakers who crafted it in the late 1990s.
According to Johnson, the Parity Act was based on the notion of care that is “medically necessary,” rather than the tighter “basic health services” requirement that is enumerated in the Knox-Keene Act.
The appellate decision could have wide-ranging financial ramifications for health plans in California. Hospitalizations for medical complications related to eating disorders rose 18% between 1999 and 2006, according to the federal Agency for Healthcare Research and Quality. Residential treatment often costs $30,000 a month or more.
“The Rea case, while not directly under the federal law but under California law, illustrates the tension between covering widely expansive health services while maintaining premium levels at somewhere people can afford,” said Bill Helvestine, attorney for the Calfornia Association of Health Plans, the leading insurance lobby in the state.
The case split the two agencies that regulate health insurers in California. The Department of Managed Health Care, which oversees managed care health plans and Rea and Melachouris' policies specifically, had interpreted the Parity Act to function at the level of basic “health services.”
By contrast, the California Department of Insurance had submitted an amicus brief to the Court of Appeals in support of Rea and Melachouris and even presented an oral argument to the panel.
“The decision is a sweeping affirmation of the broad scope of mental health coverage required by law, a resounding victory for consumers, and affirms the position I have consistently taken with regard to mental health parity as I regulate the health insurance market,” said California Insurance Commissioner Dave Jones in a statement.
Along with Jones, Rea and Melachouris also received support from the California Psychiatric Association, Disability Rights California, the Western Center on Law and Poverty, and various autism advocacy organizations.
Blue Shield indicated in a statement thatit was reviewing what steps it would take next.
“We are disappointed by the Court of Appeal’s ruling to the extent it elevates coverage requirements for certain mental health conditions over coverage required for all other health conditions,” the San Francisco-based health plan said. “We believe this is contrary to the purpose of the Parity Act. We are still reviewing the decision and evaluating our options, such as seeking re-hearing before the Court of Appeal or filing a petition for review with the California Supreme Court.”
