The company that runs Blue Cross and Blue Shield plans in five states is unlawfully denying behavioral health benefits to members in violation of generally accepted medical standards, according to a federal lawsuit seeking class action status.
The complaint filed Thursday accuses Chicago-based Health Care Service Corporation of denying coverage last year to a young Chicago-area woman suffering from depression, substance use disorder, and borderline personality based on faulty guidelines issued by MCG Health in Seattle.
It claims HCSC breached its fiduciary duty under the Employee Retirement Income Security Act in administering self-insured employer health plans and violated plan terms. It asks the court to issue a permanent injunction against HCSC using the MCG guidelines and instead order it to use guidelines that are consistent with generally accepted medical standards. The plaintiff also requests an order stopping MCG from licensing its guidelines.
HCSC said it doesn't comment on pending litigation.
The suit is the latest in a series of cases challenging how insurers cover mental health and substance abuse treatment. Experts say different insurers use widely different criteria for covering behavioral care, even though medical experts have sought to standardize those guidelines.
At least partly as a result, providers and patients say that despite federal and state lawsuit requiring insurers to cover behavioral care on parity with care for physical conditions, they often face major problems getting carriers to pay for needed treatment.
HCSC processes mental health claims on behalf of more than 1.7 million employee plan members. MCG guidelines are used by eight of the largest U.S. health insurers, affecting more than 208 million covered lives, according to the suit.
Zuckerman Spaeder, the law firm representing the young woman and her mother, won a federal ruling in March in a similar class action lawsuit against United Behavioral Health, which experts say could have wide ramifications for what insurers must cover if it is upheld on appeal.
"This case will have wider repercussions than the United case because it goes beyond a single insurer," said D. Brian Hufford, one of the plaintiff attorneys. "If we can demonstrate in court that the use of the MCG guidelines is improper, that hopefully will continue momentum in compelling changes in how insurers cover behavioral health services."
According to the new suit, the young woman received residential mental health treatment in April and May of 2018, and HCSC denied coverage for the care as not medically necessary, citing MCG guidelines. Her mother filed administrative and external appeals of the denial, which the reviewers upheld based on the same guidelines.
The suit said the MCG guidelines used by HCSC provide that residential behavioral health treatment is only medically necessary for crisis stabilization or other circumstances in which the patient is suffering from acute symptoms.
But that is much more restrictive than generally accepted medical standards issued by the American Psychiatric Association and other professional groups, the lawsuit alleged. Those standards "recognize that persistent and/or pervasive behavioral health disorders cannot necessarily be as effectively treated on a short-term or outpatient basis as they could be in residential care," the suit said.
Hufford said the MCG guidelines focus on providing coverage for acute conditions rather than more properly being designed to also cover treatment for underlying chronic behavioral health conditions.
The suit said HCSC and MCG have "tremendous financial incentives to artificially suppress behavioral health costs by restricting coverage for treatment of chronic behavioral health conditions."
The incentive for HCSC is to reduce such medical expenses in order to sells its services as a cost-effective claims administrator, according to the complaint.
Last March, U.S. Chief Magistrate Judge Joseph Spero in San Francisco held that United Behavioral Health, a unit of UnitedHealthcare, breached its fiduciary duty to patients by using unreasonable and overly restrictive guidelines to make coverage decisions for more than 50,000 mental health and substance abuse patients.
He found that United had a structural conflict of interest in applying its restrictive coverage rules because it felt pressure to keep benefit costs down so it could offer competitive rates to employers.
A few other lawsuits have resulted in settlements in which large carriers including HCSC agreed to revise their coverage policies on residential treatment and other behavioral healthcare services. In addition, there are other pending suits alleging unlawful coverage and reimbursement policies for behavioral healthcare against other large insurers.