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Post date: August 22 2016

A.G. Schneiderman Announces Settlement With Healthnow New York Over Wrongful Denial Of $1.6 Million In Outpatient Mental Health Treatment And Ensures Coverage For Nutritional Counseling For Patients With Eating Disorders

News from Attorney General Eric T. Schneiderman

August 22, 2016

New York City Press Office / 212-416-8060
Albany Press Office / 518-776-2427
Twitter: @AGSchneiderman


Company Will Reimburse Members Wrongfully Denied, Will Revise Policies, And Will Eliminate Practice of Automatically Reviewing All Outpatient Psychotherapy Claims Beyond Pre-Set Thresholds 

Settlement Based On Alleged Violation Of Laws Requiring Insurers To Treat Behavioral Health the Same As Medical Care

NEW YORK – Attorney General Eric T. Schneiderman today announced a settlement with HealthNow, New York, Inc., after an investigation uncovered the wrongful denial of thousands of claims for outpatient psychotherapy and more than one hundred claims for nutritional counseling for eating disorders. The wrongful denials totaled more than $1.6 million in patient claims. Under the agreement, the Buffalo-based company, a not-for profit health service corporation providing health care coverage for approximately 573,700 New Yorkers (including 291,000 who are enrolled in commercial health plans), will pay members for the wrongfully denied claims, revise its policies, and will eliminate a company policy that subjected all psychotherapy claims to review after a member’s 20th visit.

“Insurers have a legal obligation to provide the same level of care to patients being treated for behavioral health conditions as they do for patients with other ailments,” said Attorney General Schneiderman. “Individuals confronting mental health conditions, eating disorders, or substance abuse should not be denied coverage for the treatment they need and deserve.” 

Attorney General Schneiderman’s Health Care Bureau launched an investigation in 2015 into HealthNow’s administration of behavioral health benefits following the receipt of consumer complaints. The complaints alleged that HealthNow had improperly denied coverage for treatments by requiring that all outpatient behavioral health visits be preauthorized after the first 20 visits per year, and by excluding coverage for nutritional counseling for eating disorders.

The Attorney General’s investigation revealed that since 2012, HealthNow conducted thousands of wrongful reviews in outpatient behavioral health cases under its  20-visit threshold, denying coverage for outpatient behavioral health services for approximately 3,100 members. HealthNow generally does not impose the same type of utilization review process for outpatient medical services.

HealthNow further denied approximately 125 sessions of nutritional counseling to members with eating disorders, on the grounds that the service was not a covered benefit. As a result, members were charged a total of approximately $14,000 for these medically necessary treatments. The company does, however, cover nutritional counseling visits for medical conditions – for example, for patients with diabetes.

Pursuant to the Attorney General's settlement, HealthNow has agreed to eliminate utilization review for outpatient behavioral health treatment based on set thresholds that trigger review, including but not limited to the 20-visit threshold it has applied since 2010.  HealthNow will also cover nutritional counseling for eating disorders, including anorexia nervosa and bulimia nervosa. HealthNow will reimburse members who paid out of pocket for treatment after their claims were denied under the 20-visit threshold or nutritional counseling exclusion. Health Now will also retrain its staff regarding these significant reforms. Under the settlement, HealthNow will also pay $60,000 to the OAG as a civil penalty.

The investigation was launched under Timothy’s Law, which mandates that New York group health plans provide “broad-based coverage for the diagnosis and treatment of mental, nervous or emotional disorders or ailments … at least equal to the coverage provided for other health conditions.” N.Y. Ins. Law §§ 3221(l)(5)(A); 4303(g)(1). Timothy’s Law also requires that plans provide coverage comparable to that provided for other health conditions for adults and children with biologically based mental illness – including bulimia and anorexia – under the terms and conditions otherwise applicable under the policy. N.Y. Ins. Law §§ 3221(l)(5)(B)(i); 4303(g)(2)(A).

The New York law is similar to the federal mental health parity law, which was enacted in 2008.

Many individuals with behavioral health disorders seek outpatient treatment.  According to the Substance Abuse and Mental Health Services Administration, outpatient therapy and counseling is an evidence-based treatment for mental and substance use disorders. Evidence from rigorous clinical research studies has shown that a variety of psychotherapies are effective with children, adults, and older adults, across diverse conditions. Additionally, evidence from numerous large scale trials and quantitative reviews supports the efficacy of cognitive-behavioral therapy for alcohol and drug use disorders.

Data from the National Institute of Mental Health show that anorexia nervosa is the most fatal mental disorder, with an estimated mortality rate of approximately 10 percent. Evidence-based medical guidelines confirm the important role of nutritional counseling in the treatment of eating disorders. According to the American Psychiatric Association’s Practice Guideline for the Treatment of Patients with Eating Disorders, nutritional counseling is “a useful part of treatment and helps reduce food restriction, increase the variety of foods eaten, and promote healthy but not compulsive exercise patterns,” and is an empirically supported strategy for the treatment of binge eating. The National Eating Disorder Association considers nutritional counseling “a necessary component of treatment” for eating disorders. 

Consumers with a complaint regarding health insurance coverage for behavioral health treatment, or any other health care-related complaint, may always contact the Attorney General’s Office Health Care Helpline at 800-428-9071.

The investigation of this matter was conducted by Assistant Attorney General Michael D. Reisman of the Health Care Bureau. The Health Care Bureau is led by Bureau Chief Lisa Landau. The Health Care Bureau is part of the Division of Social Justice led by Executive Deputy Attorney General for Social Justice Alvin Bragg.

HealthNow New York Inc. # 16-105
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