ERISA and the History of Conflict with Psychotherapy Practice
The history of conflict between psychotherapy providers and Employee Retirement Income Security Act (ERISA) primarily revolves around issues related to reimbursement rates, coverage decisions, and the administrative burden imposed by managed care organizations and insurance companies under ERISA-governed plans.
Psychotherapy providers have engaged in legal challenges and advocacy efforts to address perceived inequities in ERISA-governed plans. These efforts have included lobbying for legislative changes and pursuing legal action to ensure fair treatment and reimbursement. Thus far, advocacy and legal action have been financially challenging with little or no productive result.
Despite advocacy and legal action, psychotherapy providers and ERISA conflicts continue to center on issues of inadequate reimbursement, restrictive coverage policies, significant administrative burdens, and legal constraints due to the ERISA preemption powers given to Healthplans. However, given current Federal and State requirements to move from fee-for-service contracts to alternative and value-based contracts, there is excellent opportunity for the State of Oregon and psychotherapy practices to require that Healthplans be transparent and accountable and that they negotiate alternative and value-based contracts in good faith with fair dealing.
Following is an outline of the issues and the unprecedented opportunity for the State of Oregon to use ERISA objects to make Healthplans transparent and accountable and to end the power difference Healthplans have over the State of Oregon and independent Provider Practices.
Reimbursement Rates and Coverage Decisions
1. Lower Reimbursement Rates
Cost-Cutting Measures: Managed care organizations (MCOs) and insurance companies often implement cost-containment strategies under ERISA plans, lowering reimbursement rates for psychotherapy services compared to other medical services.
Impact on Providers: Psychotherapy providers argue that their reduced rates do not adequately compensate for the time and expertise required to provide effective mental health care, affecting their financial viability. Providers argue that there is no evidence of significant waste and that Healthplans restricting care that is medically necessary to increase the quality of psychotherapy outcomes and improve public health.
2. Coverage Limitations
Restrictive Policies: ERISA plans frequently impose limitations on the types and duration of psychotherapy services covered, such as limiting the number of sessions or requiring prior authorization.
Access to Care: These limitations restrict patient access to necessary mental health services; providers argue that restricting utilization undermines quality of care and patient outcomes.
Administrative Burden
1. Complex Claims Processes
Administrative Complexity: ERISA plans often involve complex and time-consuming claims processes, including extensive documentation, pre-authorization requirements, and frequent denials or delays in payment.
Provider Burden: The administrative burden associated with these processes can be overwhelming for psychotherapy providers, detracting from the time and resources needed for patient care.
2. Appeals and Grievances
Challenging Denials: Providers often must engage in lengthy and cumbersome appeals processes to challenge coverage denials, adding to their administrative workload.
Limited Recourse: Under ERISA, the ability to challenge plan decisions is often constrained, creating frustration among providers who believe their clinical judgments are overridden by non-clinical administrative decisions.
Legal and Regulatory Challenges
1. ERISA Preemption
State Law Preemption: ERISA preempts state laws that relate to employee benefit plans, which can limit the applicability of state-level mental health parity laws intended to ensure fair coverage for mental health services.
Uniform Standards: While ERISA aims to create uniform standards, it can also prevent states from enforcing regulations that might otherwise benefit psychotherapy providers and their patients.
2. Litigation and Advocacy
Legal Challenges: Psychotherapy providers have historically engaged in legal challenges and advocacy efforts to address perceived inequities in ERISA-governed plans. These efforts include lobbying for legislative changes and pursuing legal action to ensure fair treatment and reimbursement. Legal actions require a great deal of time and significant expense which increases the risk that alternative and value-based contracts will fail.
Efforts for Reform
1. Mental Health Parity Laws
Advocacy for Parity: Psychotherapy providers have advocated for federal and state mental health parity laws, which aim to ensure that mental health services are covered on par with physical health services.
MHPAEA: The Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 is a significant legislative achievement, but ongoing efforts are required to ensure its effective implementation and enforcement under ERISA plans.
2. Legislative Proposals
Confronting ERISA: The conflict between psychotherapy providers and ERISA centers on issues of inadequate reimbursement, restrictive coverage policies, significant administrative burdens, and legal constraints due to ERISA preemption. Efforts to reform these challenges continue through advocacy, legislation, and legal action. Thus far, advocacy and legal action has been financially exhausting with little or no progress.
Aligning with ERISA: Efforts to introduce legislation, such as the Healthy Contracts Bill, seek to address some of the systemic issues by promoting transparency, accountability, and fair reimbursement practices in Healthplans’ contracts.
The Healthy Contracts legislation is framed to complement ERISA objectives rather than conflict with them by emphasizing alignment with ERISA’s core goals of protecting beneficiaries, ensuring transparency, and promoting fiduciary responsibility.
Emphasis on the ways the Healthy Contracts legislation enhances fiduciary responsibility, promotes transparency, strengthens compliance, protects participants, aligns with federal standards, and supports public health is important. Strong argument can be made that the Healthy Contracts legislation complements ERISA objectives. This framing helps mitigate potential conflicts and underscores the legislation’s role in enhancing the regulatory framework that governs Healthplans.
DISCLAIMER and PURPOSE: This discussion document is intended for training, educational, and or research purposes only. The information contained herein is based on the data and perspectives available at the time of writing. It is subject to revision as new information and viewpoints emerge.
For more information see: https://www.mentorresearch.org/disclaimer-and-purpose