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Addiction Treatment Advocacy Coalition

July 14, 2017

Via: Email

Dear Ms. Fuller:

The Addiction Treatment Advocacy Coalition advocates on behalf of the over 1700 addiction treatment facilities in California. Over the last fourteen months, ATAC has brought major parity violations to the Department of Insurance, Department of Managed Health Care and the Department of Labor in California, yet there has been no regulatory action to correct the violations by insurance companies.

Given that HHS is having a listening session concerning the Mental Health Parity and Addiction Equity Act (MHPAEA), ATAC would like to bring to your attention major concerns with the implementation of the law in California. Access to treatment, as well as addiction equity, are essential for California to deal with its ever growing opioid, heroin, alcohol and drug use epidemic. As you know, parity provides equal treatment of behavioral health issues and medical/surgical concerns. This is not occurring within California in behavioral health, particularly the substance use disorder environment.

The 2008 MHPAEA outlines many issues that indicate there may be parity concerns between behavioral health and medical/surgery health in California. The items listed below are issues of parity that have been documented by substance use treatment facilities in California:

1. UCR Information

Payors have refused to provide information about how they determine usual, customary and reasonable (UCR) reimbursement, indicating that UCR information is proprietary.

The use of third party, and sometimes captive, organizations to determine UCR has resulted in an assault on behavioral health reimbursement. Insurance companies have changed the geography for determining UCR from zip code specific to general zip codes. For example, from zip code 90265 for Malibu to 902xx, which now extends from Malibu to Compton. The result is lower overall UCRs for areas known for substance use disorder and does not account for the differing costs of operating a substance use treatment facility in Malibu versus one in Compton. In addition, insurers are determining UCRs by melding both non- profit and for-profit addiction treatment centers. Clearly the UCR for a non-profit which receives donations and governmental grants is different from that of a for-profit operator.

Please note that the payors were sued in New York State, forced to shut down the inappropriate third party organizations that determined UCR and paid fines in excess of $700 million. Yet, the same structure continues to be used in California.


2. Inappropriate Denial Documentation

Some payors send boilerplate denial documentation for most of substance use disorder (SUD) claims filed. MHPAEA requires that any denial documentation be specific to the client and not vague. The SUD treatment facilities have received denial documentation with the following characteristics:

  • Vague description of clinical rationale for denial
  • No information about criteria, evidence used in making decision
  • No information about the credentials of the reviewer issuing the denial

All of the above are required in MHPAEA.

3. Fail First Requirements

When a higher level of care is requested, payors only approve a lower level of care because they require a lower level of care to “fail first” before the recommended level of care is approved.

4. Utilization Review

Higher Denial Rates for Behavioral Health

Based upon investigations done in New York State, the substance use disorder treatment industry believes that behavioral health claims, particularly substance use disorder claims, are being denied at a much higher rate than medical/surgical claims. This practice is in direct violation of MHPAEA.

An investigation into payor denial rates is required to validate this claim. However, based upon the New York statistics and ongoing investigations, ATAC is confident that our claim will be validated.

De-facto Visit and Day Limits

The empirical data from multiple treatment facilities indicates that de-facto visit and day limits are being implemented by payors. As opposed to episode of care being driven by the underlying client acuity characteristics, a standard number of days are being used for detoxification, residential, partial hospitalization and intensive outpatient treatment. A violation of parity.

Inappropriate Denial of Coverage

Payors are denying coverage for lack of treatment completion, as well as a lack of client improvement. In addition, coverage other than outpatient is being denied by insurance companies for so-called “repeat offenders.”

Retroactive Claim Denial

Post pre-authorization and after the level of care has been provided to the client, payors are retroactively denying claims and requesting inappropriate claw backs. In essence, having the substance abuse treatment facility provide services and then later saying that the services are not approved or medically necessary. The net result is the client gets treatment and the provider does not get paid.

Lack of Adherence to Expedited Review Standards

When a provider makes a request for expedited review, the MHPAEA requires that the payor must provide a decision within 3 days. which is consistently being violated. Coverage under ACA/Obamacare must be continued and paid until a final decision is made by the payor, which is also consistently being violated.

Formal complaints are met with “cease and desist” orders indicating that the facility complaining can no longer contact the payor employees. This has had a chilling effect on substance abuse treatment facilities interested in filing formal complaints.

Thank you in advance for reviewing our concerns. Please do not hesitate to contact us if you would like documentation of any of these concerns.


Stampp Corbin
(614) 579-4136 cell

Joan Borsten
Vice President,
(310) 774-7783 cell

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Content created by Assistant Secretary for Public Affairs (ASPA)
Content last reviewed on October 17, 2017