Why it’s so hard to get health insurance to pay for therapy

At a time when it seems Americans don’t agree on much, we agree on this: The US is in the throes of a mental health crisis, one that predates the pandemic but which the pandemic made impossible to ignore.

Yet finding a mental health provider and, crucially, getting health insurance to cover their services continues to be a struggle.

Longstanding federal laws are supposed to ensure that health insurers cover mental health care just as they do physical treatments. But 15 years after Congress passed a policy that was supposed to achieve “parity” for mental health care, we still don’t have it. It seems to be much easier to get insurers to pay for a broken bone or high blood pressure medication than it is to get addiction treatment or find a therapist.

A recent survey of nearly 2,800 US patients found that 40 percent of patients who had sought in-network mental health care had to make four or more calls to find a provider who would see them — compared to just 14 percent for physical health care. More than half of patients said they had had a claim for mental health care denied three or more times, compared to about one-third who had the same experience with physical services

Now the Biden administration is taking new steps to hold health insurers accountable and, they hope, make it easier for Americans to get mental and behavioral health care.

But those are promises that have been made before. Experts sound cautiously optimistic about Biden’s proposal, but it’s too early to say if this time it’s different.

Congress has been trying for decades to force insurers to cover mental health care. The first mental health parity law was passed in the late ’90s as a bipartisan consolation prize of sorts after Bill Clinton’s health care reform plans fizzled out. It was viewed as largely symbolic. Health insurers have an annual limit for how much patients can pay out of pocket for care, and the law required that the limit for mental health care costs be no higher than for other medical services. But given how unregulated the health insurance market was at the time, it did not have much of a practical effect. Sometimes health insurers didn’t cover mental health care at all. On the individual market, health insurers would disqualify people from coverage if they had mental health needs.

But in 2008, Congress took another pass at improving coverage for mental health services, attaching a bill to the must-pass financial bailout and establishing the rules that exist today. (The Affordable Care Act then extended these requirements to insurance sold on the law’s insurance marketplaces.)

The 2008 law went substantially further than the previous version of parity had. It did not require insurers to cover mental health care, though a combination of state and federal regulations have led to most insurance products in the US covering some mental health services. And if a health plan does cover that care, the law created certain standards that it must meet:

Insurers cannot place quantitative limits for inpatient or outpatient mental health services that were more stringent than the limits for other services. For example, a plan couldn’t limit a person to one day in a mental health treatment facility while covering five days for another type of hospital stay. Insurers cannot charge higher copays or require higher out-of-pocket payments for mental health services than for physical care. They also are required to count any out-of-pocket payments by the patients toward their overall annual deductible. Insurers are also supposed to eliminate or reduce other barriers to care, such as requirements for referrals. If they don’t pay mental health providers enough, leading few providers to work with their health plan, that’s also something they’re supposed to fix.

It was a paradigm shift for health insurers. According to JoAnn Volk, co-director of the Georgetown Center on Health Insurance Reforms, insurance underwriters have told her that, prior to the parity law and the ACA’s ban on preexisting conditions, insurers would try to identify people with mental health issues in order to deny them coverage. Now, federal law was requiring them to provide benefits that were as generous for mental health as they were for other medical care.

“It is a massive shift,” Volk said. “You can’t avoid those people. You have to pay for what they need.”

What’s gone wrong with mental health parity — and Biden’s plan to fix it

Although the 2008 law was a big shift for insurers, it’s still a struggle for too many people to get mental health care.

The law itself doesn’t judge insurers based on patients’ actual ability to see a provider. Instead, it’s about paperwork/procedure: On paper, insurers cannot limit visits or inpatient stays and, according to experts, they usually do meet those mandates. A provider network, on paper, needs to be up to standard. But a doctor can be in-network and not taking new patients — a phenomenon that policy wonks call a phantom or ghost network.

Nevertheless, outcomes can still suggest that plans are failing to achieve true parity in mental health coverage. And the data does strongly suggest insurers have failed to meet the standards set by the 2008 legislation.

An insufficient number of mental health professionals (a 31,000-clinician shortage is projected for 2025) and the difficulty of finding one who is in your insurer’s provider network have conspired to make it too difficult for too many Americans to get mental health care.

According to a Milliman research report, US patients were five times more likely to use an out-of-network provider in 2017 for both inpatient and outpatient mental health care than they were for all other medical services. One in five office mental health visits was with an out-of-network provider. Reimbursement rates for primary care were 20 percent higher than they were for mental health care, on average. And those disparities actually got worse over the course of the 2010s.

All in all, the US has made it hard to find a mental health provider and hard to pay for their services. (Even if your provider does cover some of an out-of-network bill, the patient’s share will be higher than it would have been in-network). And this is with the parity law in effect.

What’s gone wrong? Some of the problem lies in the design of the law and its emphasis on procedure over outcomes. “It doesn’t guarantee great access — that patients can see the doctor they need and get the treatments they need,” Volk said.

Some of it is administrative. Enforcement of the parity rules is spread across the US Labor Department, Medicare and Medicaid, and state regulators. It has picked up more in the past few years, with lawsuits filed by state regulators against major insurers and administrative actions by the feds, but had been lax up to that point. The rules were slow to take effect in the first place, with the last of the initial regulations issued in 2016.

Some of it is cultural. Unfortunately, given the scale of mental health need in the US, insurers have a strong financial incentive to be stingy with covering mental health care. They are aided by the unavoidable reality that a lot of providers and patients have gotten used to working outside of insurance for mental health services. Patients pay their therapist directly, and that’s it. Now the health system is asking those providers to start dealing with the same paperwork that plagues other clinicians.

“They’re not used to doing the bookkeeping, the credentialing,” Volk said. But she stressed that was a small part of the problem compared to insurer compliance. “I don’t think insurers and plans have held up their part of the bargain.”

To address that problem, the Biden administration is taking new steps to strengthen enforcement of the parity rules. It is going to require insurers to perform an audit of their mental health benefits and specifically network adequacy, reimbursement rates, and how insurers use tools like prior authorization to limit access to mental health services. The goal is to perform a more outcomes-oriented evaluation of parity compliance, Volk said.

“It’s definitely a step forward,” she told me.

Administration officials have also been threatening the possibility of fines and additional legal actions to force health plans to follow the law.

The ultimate impact will depend on the follow-through. Congress has continued to tinker with the parity rules, including the 2020 amendment requiring insurers to perform a parity analysis that Biden is building upon, an implicit recognition of the failure thus far to actually achieve that elusive goal.

And with seemingly each new data point on the state of America’s mental health, the stakes for getting this right could only grow greater.