This post considers a MHPAEA-related case decided by the US Court of Appeals for the Tenth Circuit, E.W. v. Health Net Life Insurance Company (available here). The case is notable because it represents the first US court of appeals to establish the elements required to state a claim under the current 2013 MHPAEA final regulations; it also provides us with an opportunity to consider how things might differ if the proposed regulation is adopted as a final rule.
Health Net involved a claim against Health Net Insurance Company and Health Net of Arizona, Inc. (collectively, Health Net) by the parents of a minor (I.W.). I.W. was admitted to a subacute care facility (an adolescent mental health residential treatment center), but her stay was cut short because it was determined that her treatment was no longer medically necessary. The determination of medical necessity was based on the application of the McKesson InterQual Behavioral Health 2016.3 Child and Adolescent Psychiatry Criteria (the InterQual Criteria).
At trial, the plaintiffs claimed that Health Net violated the MHPAEA by imposing medical necessity criteria for mental health benefits that were more stringent than those for medical/surgical benefits. The district court did not agree. On appeal, the Tenth Circuit reversed the MHPAEA claim based on the 2013 MHPAEA final regulations. (There was also an Employee Retirement Income Security Act-related claim, the dismissal of which by the district court was affirmed by the Tenth Circuit.) The Tenth Circuit held the medical necessity criteria applied by the plan to medical/surgical benefits in a subacute setting was less stringent than analogous, intermediate-level metal health benefits. In its holding, the court fashioned the following test under which, to state a claim under the MHPAEA, a plaintiff must:
- Plausibly allege that the relevant group health plan is subject to the MHPAEA;
- Identify a specific treatment limitation on mental health or substance use disorder benefits covered by the plan;
- Identify medical or surgical care covered by the plan that is analogous to the mental health or substance use disorder care for which the plaintiffs seek benefits; and
- Plausibly allege a disparity between the treatment limitation on mental health or substance use disorder benefits as compared to the limitations that defendants would apply to the medical or surgical analog.
Item (1) was not in dispute; the relevant group health plan was clearly subject to the MHPAEA. The court instead focused on, and dealt exhaustively with, each of the other three items:
- Identify a specific treatment limitation on mental health or substance use disorder benefits covered by the plan.
The plaintiffs alleged that the plan required them to satisfy “acute care medical necessity criteria” to receive benefits for treatment in a subacute care setting. Citing to the relevant provision of the 2013 final MHPAEA regulations, the court determined this qualifies as a nonquantitative treatment limitation (NQTL) since it addresses a limitation on the scope of benefits for treatment under a plan or coverage, which include medical management standards limiting or excluding benefits based on medical necessity. The court held that that plaintiffs plausibly alleged that the InterQual Criteria capture acute conditions. It also noted that that residential treatment centers, as defined in the plan, provide subacute care.
- Identify medical or surgical care covered by the plan that is analogous to the mental health or substance use disorder care for which the plaintiffs seek benefits.
Here, the plaintiffs identified medical/surgical care covered by the plan that is analogous to the mental health and substance abuse care for which they seek benefits. They claimed that coverage for mental health services in an adolescent mental health residential treatment center are analogous to coverage for medical/surgical conditions in settings such as skilled nursing facilities, inpatient hospice care and rehabilitation facilities. The court agreed that inpatient skilled nursing facilities qualify as a relevant analog. The court also identified the relevant test, explaining that the 2013 final MHPAEA regulations require that a plan:
[M]ay not impose an NQTL with respect to mental health or substance use disorder benefits in any classification unless . . . any processes, strategies, evidentiary standards, or other factors used in applying the [NQTL] to mental health or substance use disorder benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation with respect to medical/surgical benefits in the classification.
This test is radically modified and expanded on in the proposed regulations (discussed below).
- Plausibly allege a disparity between the treatment limitation on mental health or substance use disorder benefits as compared to the limitations that defendants would apply to the medical or surgical analog.
The court agreed with the plaintiffs that there is a disparity between the treatment limitations applied to benefits for mental health or substance abuse care compared to those applied to benefits for medical or surgical care. Specifically, acute care medical necessity criteria were applied to the former but not the latter.
Because of the Health Net’s procedural posture, the court at this stage is dealing with mere allegations. Whether the plaintiffs can prevail on the merits remains to be seen. The case nevertheless invites the question: How would the plaintiffs fare if the NQTL in this case was instead judged under the proposed regulations?
The 2013 final MHPAEA regulations do not require plans and issuers to use the same NQTLs for both mental health and substance use disorder benefits and medical/surgical benefits. All that is required is that the processes, strategies, evidentiary standards and other factors used to determine comparability are applied no more stringently for mental health or substance use disorder benefits than for medical/surgical benefits. Notably, the pre-2013 interim final regulations contained an exception to the NQTL requirements allowing for variation ‘‘to the extent that recognized clinically appropriate standards of care may permit a difference,’’ which was not included in the final 2013 MHPAEA rule. Rather, the regulators were of the view that plans and issuers could continue to be able to consider clinically appropriate standards of care provided that such standards were supported by and consistent with the applicable processes, strategies, evidentiary standards and other factors. Thus, Health Net could still prevail if it can demonstrate that the InterQual Criteria were consistent with these requirements.
The proposed regulation is, of course, far more demanding in its testing of NQTLs. The NQTL in issue here—acute care medical necessity criteria—would need to satisfy the “predominant” limitation that is applied to “substantially all” medical or surgical benefits. Since that NQTL does not appear to apply to any medical/surgical benefits, it would appear it would be “game over” in the plaintiff’s favor. But maybe not. The proposed regulations include an exception for generally recognized independent professional medical or clinical standards and standards related to fraud, waste and abuse. As we have previously reported, these exceptions are the subject of a good deal of controversy among the comments to the proposed regulations. Health Net illustrates the stakes. Whether these exceptions are retained in a final regulation, and if so in what form, could make all the difference.
