‘The rule has sticks as well’: Biden’s getting tough with health insurers

The Biden administration is going after health insurers for flouting a federal law requiring them to provide mental health care on the same terms as other care.

The administration has proposed new rules it says will make the insurers comply and it’s threatening big fines if they don’t. Insurers are pleading innocent and, backed by some of America’s biggest companies, claiming the Biden administration plan could make an intractable problem worse.

The battle comes as Americans’ mental health care needs are at modern highs, following a pandemic-driven spike that refuses to abate.

"We always hope for collaboration, but the rule has sticks as well,” Neera Tanden, head of President Joe Biden’s domestic policy council, told POLITICO. “We hope insurers will change their behavior going forward without the sticks, but we will continue to fully enforce the parity law."

Those sticks include fines of $100 per policyholder per day if insurers don’t close loopholes the administration says they’re using to limit what they pay for mental health care. The administration says those ploys include requirements that doctors seek insurers’ approval before delivering care, lower reimbursement rates for providers who treat mental illness and deliberate efforts to limit the number of in-network physicians available to patients.

Insurance companies say Biden is scapegoating them and that they are already doing their best to lean on technology like telehealth to boost access to care, expand their provider networks and increase what they pay those providers. They’re also trying to better integrate mental health in primary care.

“Nobody has a magic wand to create the number of mental health providers to match the number of physical health providers,” said Craig Smith, partner at law firm Hogan Lovells and former general counsel for Florida's Agency for Health Care Administration. “You can promulgate regulations. You can pass statutes. No amount of government oversight or enforcement can magically solve the challenge.”

The real issue, the insurance companies argue, is the lack of qualified mental health care providers. Nearly half of the U.S. population lives in an area with a mental health worker shortage, according to health policy research group KFF.

Still, the White House points to a 2022 report to Congress from the Health and Human Services, Labor and Treasury departments, which found that not one of the 156 insurance plans and issuers studied were following rules requiring them to measure their compliance with the 2008 law.

The problem is actually quite simple, advocates of the Biden rules say.

“The insurers are cracking down on mental health reimbursement in order to save money,” said Sen. Chris Murphy (D-Conn.).

A decadeslong campaign

On Capitol Hill, Democrats and Republicans are alarmed at the state of their constituents’ mental health. Some lawmakers are even opening up about their own struggles.

The Covid-19 pandemic brought the issue to the fore as anxieties about the disease and the social isolation of government lockdowns exacerbated mental health conditions and substance use disorders.

More than a third of adults said they had symptoms of anxiety or depression during the pandemic, and 90 percent of U.S. adults think the nation is in a mental health crisis, according to KFF.

Suicide rates jumped the most they have in decades, up to 14.1 per 100,000 people in 2021, according to the most recent Centers for Disease Control and Prevention data.

Yet access to care has lagged.

Estimates vary, but the latest data from HHS indicates that more than half of adults with mental illness don’t get treatment. Treatment levels may be even lower for substance use conditions like opioid use disorder — just 1 in 5 U.S. adults got medication treatment for it in 2021, according to the latest National Institute on Drug Abuse data.

And while barriers to mental health and substance use disorder treatment vary by condition, stigma is a common throughline, experts say.

The U.S. health care system historically treated mental and physical health care differently. Insurers didn’t typically cover mental health care until after World War II. Insurance coverage was originally fragmented and separated from the broader system, said Colleen Barry, dean of Cornell University’s Brooks School of Public Policy.

“For so long, mental health was a dirty stepchild of health care,” said Maureen Maguire, the American Psychiatric Association associate director of parity implementation and enforcement policy. “There was a lot of shame involved in it. People didn't want to get help. If you couldn't find help, you didn't want to say you couldn't find help.”

Administrations going back decades have made improving access to care a priority.

John F. Kennedy was the first president to take significant steps to achieve parity for mental health in 1961. He called for the health insurer for federal employees — which offered limited mental health care — to cover it at the same levels of other care.

From then until the 1990s, efforts to expand parity were largely at the state level, according to Barry’s research.

The Mental Health Parity Act of 1996, signed by former President Bill Clinton, required plans to cover mental health equally, but only in terms of annual or lifetime benefit maximums.

In 2008, then-President George W. Bush signed the Mental Health Parity and Addiction Equity Act, whose chief House sponsor, then-Rep. Patrick Kennedy (D-R.I.) used his own struggles with mental illness to convince colleagues to support it.

The law mandated that deductibles and co-pays, as well as treatment limitations, be equivalent to those for physical health care, and enactment was seen as a landmark win.

Since opting not to seek reelection in 2010, Kennedy, the youngest child of former Sen. Ted Kennedy (D-Mass.), has worked to ensure his law is working.

“The more insidious fight over the years, which is why these rules are so important, is around discriminatory medical management practices by payers,” he said. “It's a lot more challenging to wrap your arms around the myriad ways that insurance companies can limit access.”

Biden’s plan

The new proposed regulations, from HHS and the Treasury and Labor departments, are open for public comment until Oct. 2.

If finalized, they would mandate that insurers analyze their coverage to ensure equivalent access to mental health care based on outcomes.

The companies would have to look at how they respond to requests from doctors to authorize treatments for mental illness, compared with physical ones, as well as audit their provider networks and examine how much they reimburse providers out of network.

“This is something that you would have expected the issuers and plans to be doing as part of their own internal analysis to ensure compliance,” said JoAnn Volk, co-director of the Center on Health Insurance Reforms at Georgetown University.

One major problem Biden’s proposal targets is that of “ghost networks” — inadequate numbers of mental health providers who take insurance — forcing subscribers to go out of network and pay more.

The rule would also establish when health plans can’t require doctors to obtain prior authorization to prescribe a medicine or procedure, or otherwise put up roadblocks for patients seeking mental health, as well as substance use treatment.

Insurers could face fines of up to $100 per day per patient for failing to offer comparable coverage for mental health.

But enforcement could be a challenge, and it’s unclear how aggressive the administration would be. Previous enforcement has largely been collaborative, not punitive.

The Department of Labor has had limited resources to enforce the existing regulations, prompting Murphy to seek more in new legislation.

Insurers’ ally

Insurers say they agree that access to mental health care should be equivalent to that of physical health care.

But AHIP, the lobbying group for insurers, says the situation is more complicated than Biden makes out, and that workforce shortages are what’s behind barriers to care.

“Access to mental health has been, and continues to be, challenging primarily because of a shortage and lack of clinicians, which is why for years, health insurance providers have implemented programs and strategies to expand networks and increase access,” AHIP spokesperson Kristine Grow said in a statement.

The group said those include boosting telehealth coverage and integrating physical and mental health care. And it points to rising mental health care usage since the 2008 law as evidence that the law is working.

The insurers also have a key ally in making their case: the companies that buy insurance plans.

Last month, the ERISA Industry Committee, which represents large employers' benefit interests and counts among its members some of America’s largest corporations, joined AHIP in writing to administration officials to ask that the comment period on the proposed rules be extended.

The companies and their insurers warned that the rules could create "unnecessary burdens" for providers, insurers and patients, and "unintentionally" impede access to care.