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Health Policy & Politics

To Help Addicts Fight Addiction, New York Fights Health Insurers

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A few days into heroin detox—when you’re still in the throwing-up phase of withdrawal—is not a good time to learn your insurance is refusing to pay for your stay. That’s what happened to 22-year-old Joe (a pseudonym) in 2012 when he was in an inpatient detox in Oregon.

Joe’s mother Elaine had checked with the insurer in advance to see if they would cover the care, but then she got the call from the detox center warning Joe was about to be kicked out. The insurance company was refusing to pay because it wasn’t a life or death situation. 

Joe’s father Doug was enraged. (We’re calling Elaine and Doug by middle names to protect their privacy). “They said he wasn’t gonna die. So, they didn’t have to pay.  What a scam?!” says Doug.

Joe’s case is hardly unique. Insurance coverage of substance abuse treatment and other mental and behavioral health is often limited, despite the 2008 passage of a landmark federal law—the Mental Health Parity Act—requiring insurers to cover mental health and addiction treatment as they would any other medical condition.

They said he wasn't gonna die. So, they didn't have to pay.

  In New York, Attorney General, Eric Schneiderman has started to crack down on insurers. With little federal enforcement, New York is one a handful of states putting pressure on the industry to provide true parity in mental and behavioral health.

Over the past year, Schneiderman, has sued five of the state's largest insurers for illegally denying similar claims contrary to state and federal mental health parity laws.

“The settlements have required [insurers] to cover, drug abuse treatment and other behavioral health conditions, the same way they cover any other type of illness,” Schneiderman says.

National observers see New York as an enforcement leader. “I would say, on enforcement, New York is not just a pace car state but they are leading the pack,” says Carol McDaid, co-chair for the watchdog group Parity Implementation Coalition.

These settlements are re-enforced in New York by several state laws that went into effect in April this year. Lawmakers outlawed insurance practices like “fail first” provisions-- that would only cover the cost of inpatient treatment after patients had failed in outpatient first.

“You have to fall off the wagon and get back to taking drugs or we’re not going to give you a more advanced form of care. So, we’ve eliminated that and other requirements like that in our settlements,” says Schneiderman.

State law now requires insurers to make the medically appropriate care decision for each patient. New York State must approve the process insurers use to make those decisions.

Despite state or federal parity laws, people will still get denied coverage. This requires them to go through what can be a long appeals process. Under the newest New York laws, a patient can stay in treatment while they appeal a denial.

This law could have helped Doug and Elaine back in 2012. When they first heard Joe would have to leave rehab, the couple agonized. Joe was far from their Western New York home, and he was suffering complications from a severe lung condition. And they knew how miserable he felt.

“You don’t die from heroin detox. You feel like you’re going to, but you don’t die,” says Elaine.

Joe’s parents ended up paying nearly $10,000 out of pocket for his short stay in detox.

“We’re already struggling with what’s going on with our son and worried about him surviving, and then having to fight with the insurance company and go through their process where they review it. And then they turn it down and they say, “Well, you can appeal through us,” says Doug.

Parity Implementation Coalition’s Carol McDaid says when a family is in a crisis situation laws that allow patients to stay in treatment are critical, and she hopes to see other states follow New York’s example.