Federal District Court Rules United Unlawfully Denied Coverage for Mental Health and Substance Use Disorder Services Based on Overly-Restrictive Internal Coverage Guidelines – On March 5, 2019, Chief Magistrate Judge Joseph C. Spero of the U.S. District Court for the Northern District of California ruled that United Behavioral Health (UBH), a subsidiary of UnitedHealth Group, violated its fiduciary duties and unlawfully denied benefits for mental health and substance abuse treatment under ERISA by developing and implementing clinical policies and coverage guidelines which were inconsistent with generally accepted standards of care. The court’s findings further detailed that UBH developed these unreasonable guidelines with the goal of reducing benefits expenses rather than proper care management and access for its plan members. The court also rejected UBH’s arguments that the guidelines were incorporated into the ERISA plan terms by reference. Finally, the health plan’s arguments about the need for each of the class members to exhaust administrative remedies were rejected on the grounds of excuse and futility given that the case involved a “facial challenge” to UBH’s application of faulty coverage guidelines.
The decision was rendered after an October 2017 bench trial resolving issues of liability in two consolidated class action lawsuits, Wit, et al. v. United Behavioral Health and Alexander, et al. v. United Behavioral Health, brought on behalf of members and beneficiaries of UBH-administered ERISA plans who were denied behavioral health benefits based on UBH’s policies and guidelines.
All of the UBH plans at issue included as a condition of coverage that the requested treatment be consistent with “generally accepted standards of care.” The court found that UBH’s discretion as the plan administrator is limited to interpreting and applying plan terms and making coverage determinations based on those terms. The court held that this discretion did not permit UBH to implement coverage guidelines to amend or restrict plan terms which provided for medical necessity determinations under “generally accepted standards.”
This was held true even where the members’ plans expressly referenced UBH guidelines in the administration of claims for coverage, and expressly excluded services inconsistent with UBH guidelines. The court reasoned that UBH internally developed these guidelines without input from plan sponsors, failing to comply with requirements for amending plan terms as set forth under the respective plan documents and notice requirements under ERISA. Thus, the court held that the references in the plan documents to UBH’s internally-developed policies and guidelines did not convert those guidelines into plan terms or give UBH unfettered discretion to treat its guidelines as if they were changes or additions to plan terms.
Chief Magistrate Spero highlighted ways in which its clinical policies and coverage guidelines ran afoul of standards established by peer-review studies and guidelines from professional organizations such as the American Society of Addiction Medicine (ASAM) and government agencies. For example, the court’s ruling highlighted that UBH’s guidelines placed “an excessive emphasis” on treating immediate acuities and stabilizing crises or “presenting problems,” while improperly discounting and cutting off authorization for the effective treatment of members’ underlying long-term or co-occurring conditions and comorbidities once the acute condition has improved. The court also took issue with the fact that UBH guidelines failed to consider or adopt level-of-care criteria tailored to children or adolescent patients.
In addition to being inconsistent with plan terms, the court held that UBH coverage guidelines failed to comply with state laws in Illinois, Connecticut and Rhode Island which require that insurer guidelines be consistent with ASAM criteria for level of care medical necessity determinations.
Furthermore, the court pointed to trial evidence that UBH developed its guidelines in an effort to keep benefit expenses down and mitigate the financial impact of the Mental Health and Addiction Parity Act of 2008. The court noted that members of UBH’s Finance and Affordability Departments played key roles in the development process of these coverage guidelines, even blocking a clinician-recommended change to bring its guidelines in line with ASAM criteria.
The court’s determination that development of UBH’s guidelines was tainted by this financial interest was crucial to how the court would review UBH’s actions. The court held that “significant skepticism is warranted” in reviewing whether UBH abused its discretion as plan administrator, because this financial incentive created a “structural conflict of interest.” The court applied this skepticism equally whether fully-insured or self-funded plans were involved, reasoning that even with self-funded plans UBH “felt pressure to keep benefit expenses down so that it could offer competitive rates to employers,” and “the conflict of interest affected all members equally, regardless of which type of plan they were insured under, because UBH used a single set of Guidelines to make coverage determinations.”
The court’s determination on damages is expected to be resolved later this year. Only ERISA participants and beneficiaries could be class members in the lawsuit. Non-ERISA insureds who have been denied coverage under these same guidelines deemed unlawful under ERISA may need to rely on separate state laws, agencies and regulators to seek relief.
The cases are Wit, et al. v. United Behavioral Health, Case No. 14-cv-02346-JCS (N.D. Cal.) and Alexander, et al. v. United Behavioral Health, Case No. 14-cv-05337 JCS (N.D. Cal.). Please click here for a copy of the court’s March 5, 2019 opinion. These cases address issues that parallel ones in which King & Spalding routinely represents providers in payment disputes against health plans. For more information, contact the reporters listed below.
CMS Requests Comments on Proposal to Require Providers to Disclose Price Information – On March 4, 2019, HHS published a proposed rule, which includes a request for public comment on the implications of requiring providers to make public disclosures of price information for the services they perform. The 21st Century Cures Act prohibits providers from engaging in practices that block access to electronic health information, if the provider “knows that such practice is unreasonable and is likely to interfere with, prevent, or materially discourage access, exchange, or use of” that information. The agency’s request for comments asks the public for its views as to whether, or how, price information should be included in the definition of “electronic health information” (EHI) for the purposes of this provision. Public comments are due by the close of business on May 3, 2019.
The agency explained that it was considering this disclosure requirement because “[t]he fragmented and complex nature of pricing within the health care system . . . has had negative impacts on patients, health care providers, health systems, plans, plan sponsors and other key health care stakeholders.” By promoting “[t]ransparency in the price and cost of health care,” the agency reasoned, it “could help increase competition that is based on the quality and value of the services patients receive.” To achieve that goal, HHS “is considering subsequent rulemaking to expand access to price information for the public, prospective patients, plan sponsors, and health care providers.”
The agency seeks feedback from the public on a number of questions, including, for example: (i) whether prices should be included in the definition of EHI; (ii) whether those prices should be measured by the amount charged to the patient’s health plan, by the provider’s chargemaster, or some other metric; (iii) whether health IT developers should be required to include mechanisms for patients to see price information; and (iv) whether price information should be made available on public websites.
A full summary of the topics for public comment and the instructions for providing feedback are in the proposed rule, available here (the request for comment on pricing information appears at pages 7513-14 of the link).
CMS Revises Immediate Jeopardy Citation Guidance – On March 5, 2019, CMS issued new guidance for surveyors to identify immediate jeopardy cases. CMS revised the previous version of Appendix Q to clarify and increase consistency for identifying immediate jeopardy and communicating such findings to providers, suppliers, and laboratories.
Immediate jeopardy (IJ) is a situation in which a recipient of care has suffered or is likely to suffer serious injury, harm, impairment or death as a result of a provider’s, supplier’s or laboratory’s noncompliance with one or more Medicare requirements, conditions of participation, conditions for coverage or certification. See 42 CFR § 488.1. IJ represents the most severe and egregious threat to the health and safety of recipients and carries the most serious sanctions for providers, suppliers and/or laboratories.
Appendix Q of the State Operations Manual (SOM) provides guidance to surveyors citing IJ. The recent revision replaces the previous version of Appendix Q and creates a Core Appendix Q to be used by surveyors of all provider and supplier types and laboratories. To cite IJ under the Core Appendix Q guidelines, surveyors must determine that (1) there has been noncompliance with one or more federal health, safety and/or quality regulations; (2) such noncompliance has caused or created a likelihood that serious injury, harm, impairment or death to a recipient would occur or recur; and (3) immediate action is necessary to prevent the occurrence or recurrence of serious injury, harm, impairment or death to one or more recipients. The guidance clarifies that for noncompliance to rise to a level of IJ there must be a “serious adverse outcome” of the noncompliance, which is described as outcomes resulting in a significant decline in physical, mental or psychosocial functioning, which is not solely due to normal progression of a disease or the aging process. See SOM, Appendix Q, Section V, Part B.
CMS made the following key changes in the Core Appendix Q:
- Likelihood Instead of Potential. The previous version of Appendix Q allowed surveyors to cite IJ when there was merely a potential for serious harm. Core Appendix Q clarifies that to cite IJ in situations where recipients have not already suffered serious injury, harm, impairment or death, the nature and/or extent of the identified noncompliance must create a likelihood (defined as a “reasonable expectation”) that such harm will occur if not corrected. To determine that serious harm will likely occur if no corrective action is taken, the Core Appendix Q instructs surveyors to use their professional judgment and to consider the nature and scope of the identified noncompliance, the particular vulnerabilities of the recipients at risk and any other relevant factors.
- Culpability Removed. The previous version of Appendix Q required surveyors to make a finding of culpability to cite IJ. The Core Appendix Q guidance removes this requirement and instead requires just a finding of noncompliance. CMS reasoned that this change is consistent with the regulatory definition of IJ that does not include culpability as an element.
- Psychosocial Harm. The Core Appendix Q instructs surveyors to consider whether noncompliance has caused or made likely serious mental or psychosocial harm to recipients. “Psychosocial” refers to the combined influence of psychological factors and the surrounding social environment on physical, emotional and/or mental wellness. If the psychosocial outcome to the recipient is difficult to determine or incongruent with what would be expected, surveyors may analyze how a reasonable person in the recipient’s position would be impacted by the noncompliance (i.e. would a reasonable person in a similar situation be expected to experience a serious psychosocial adverse outcome as a result of the same noncompliance).
- No Automatic IJ Citations. Under the Core Appendix Q, noncompliance with one regulation that rises to the IJ level, does not automatically raise noncompliance of a related regulation to the IJ level. Surveyors must decide each IJ citation independently. If the surveyor finds that the same incident or facility practice results in multiple violations, the team must be able to articulate how the incident or practice represents a distinct violation of each regulation. Although a comprehensive statement may contain facts illustrating deficiencies of multiple regulations, surveyors may not simply copy and paste from one to another. Even if multiple deficiencies share common facts, surveyors may need to conduct additional investigation to evaluate additional deficiencies thoroughly.
The new guidance also includes subparts to Core Appendix Q that provide guidance specific to long term care facilities and clinical laboratories. See SOM, Appendix Q, Subpart X (Long-Term Care) and Subpart XI (Clinical Laboratories). CMS reasoned that this change was made because there are specific policies related to IJ citations for these specific provider types.
Additionally, CMS added an IJ Template that surveyors must use to document each component of IJ. See SOM, Appendix Q, Subpart XII (IJ Template). If the surveyor makes a finding of IJ, CMS instructs the surveyor to use the IJ Template to convey information to the provider, supplier or laboratory. CMS notes that Form CMS-2567 is still the only form that contains official survey findings and any information on the IJ Template does not reflect an official finding against an entity. CMS indicated that the IJ Template was created to ensure that providers, suppliers or laboratories are notified of an IJ finding as soon as possible, to increase transparency and to improve timeliness and clarity of communications.
Finally, CMS has created an online training program for Core Appendix Q. CMS requires all Regional Office (RO) and State Survey Agency (SA) staff involved in making IJ determinations to complete this training as soon as possible, but no later than March 22, 2019. CMS states that the training is designed to provide RO and SA surveyors, management staff and training coordinators, as well as providers, suppliers and laboratories with the ability to uniformly identify IJ.
The guidance and revised Appendix Q can be found here.