The Pennsylvania Insurance Department has announced that UnitedHealthcare Insurance Co. will pay a $1 million civil penalty for state and federal violations related to mental health care coverage. The Minnesota-based health insurance provider will have to pay the penalty and spend another $800,000 on community outreach. The company will also pay restitution to people whose claims were wrongfully denied and those whose out-of-pocket costs were miscalculated.
The Pennsylvania Insurance Department assesses all group policies for compliance with state and federal law, including mental health parity. The state’s insurance regulators found the violations during a routine audit of the company’s operations and compliance with state and federal laws in the period between January 2015 and March 2016. Auditors reported significant noncompliance issues, particularly around the topic of mental health parity.
According to a federal law that Congress passed in 2008, health insurance plans must offer the same level of care and coverage to people seeking treatment for mental health needs as those who have medical or surgical needs. Parity has to apply to financial requirements, cost-sharing requirements, and treatment limitations. There also can’t be any disparities in the administrative oversight and operational costs and efforts. For instance, if surgical coverage departments are more extensive and better staffed than substance use coverage departments, that would constitute a disparity.
The most significant issues the insurance regulators found were problems with coverage of autism spectrum disorders and substance use disorders. Coverage and costs for specific mental health services have to be comparable to the other services covered by the insurance plan.
Auditors also found inaccurate assessments of out-of-pocket expenses for autism spectrum disorder-related treatments. They found that payments were delayed; insurance providers are required to pay for covered services within 45 days. Auditors found that the company’s response to consumer complaints was also delayed.
The Philadelphia Inquirer reported that a UnitedHealthcare spokesperson said in a written statement, “While we have already made changes, we will continue to make improvements to help individuals get care under their plans.”
The statement also says the company will continue to work with the state’s insurance department to provide additional resources to help Pennsylvanians meet their mental health needs.
However, even if policies follow parity regulations on paper, illegal disparities can be found in coverage, administrative oversight, and operational factors that may result in poorly handled claims and policy mismanagement.
This isn’t the only case of mental health coverage disparities in recent years. In 2018, Blue Cross of Northeast Pennsylvania had to pay a $90,000 civil fine for disparities in substance use disorder treatment, along with failing to pay claims properly and failure to keep accurate records. In 2019, Aetna paid $190,000 for similar issues involving autism spectrum disorder coverage and the mishandling of claims.
However, this case represents one of the largest penalties levied against an insurance company. Typically, audits that look into market conduct result in penalties in the $90,000 to $150,000 range.