This year, the New York State Attorney General reached settlements with three health insurance companies for claimed violations of Timothy’s Law. EmblemHealth (“Emblem”) recently agreed to pay $1.2 million in civil penalties, take remedial action, and participate in restitution which may exceed $31 million. MVP and Cigna each faced penalties earlier this year.
Timothy’s Law, enacted in 2006, requires insurance providers to include mental health and chemical dependency coverage. This mental health parity law precludes insurance companies from having separate limitations on coverage or increased costs for mental, nervous, or emotional disorders, unless the same conditions are placed upon physical illness covered under the policy.
The law was named after Timothy O’Clair, a 12-year-old child diagnosed with several behavior disorders, who committed suicide after his family had exhausted the mental health benefits under their health insurance plan. To prevent other families from facing similar situations, the O’Clair family, with the help of Senators Thomas Morahan and Thomas Libous and Assembly Members Paul Tonko and Peter Rivera, helped to reforming New York State’s insurance laws.
The Attorney General’s investigation into Emblem claimed numerous wrongful denials of mental health coverage. Since 2011, Emblem, through its behavioral health subcontractor, Value Options, allegedly denied behavioral health coverage 64% more often than it denied medical health coverage. Emblem agreed to overhaul its behavioral health claims review process, cover residential treatment, and charge a lower primary care co-payment for outpatient visits to mental health and substance abuse treatment providers. Additionally, the company will be monitored by an outside agency that will file an annual parity compliance report. The Attorney General’s press release, which can be found here, lists additional requirements as part of the remedial action plan.
The Emblem settlement is not the first time Value Options has been implicated for alleged noncompliance. In March of this year, MVP Health Care, which also subcontracts with Value Options for behavioral health services, settled with the Attorney General’s office for claimed violations of Timothy’s Law. Based upon its denial of 40% more behavioral health claims than medical claims, MVP agreed to pay a civil penalty of $300,000; submit previously denied mental health and substance abuse treatment claims to an independent reviewer, which could result in patient recoupment of $6 million; and reform its current practices. MVP’s remedial action plan is similar in nature to the one fashioned for Emblem. For more information on the MVP settlement, the Attorney General’s press release can be found here.
The third company investigated by the AG’s office, Cigna, allegedly violated Timothy’s Law by wrongfully denying hundreds of claims for nutritional counseling for mental health conditions. In January 2014, Cigna agreed to pay a $23,000 civil penalty, reprocess and pay the denied claims, and comply with Timothy’s Law in the future. Settlement information regarding Cigna violations can be found here.
Lindsay Zanello wrote this post. For more information about mental health parity, please contact Caitlin Monjeau.