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HealthNow settles $1.9M in wrongful mental health denials

The New York Attorney General and HealthNow New York have come to a settlement after an investigation uncovered the wrongful denial of thousands of claims for outpatient psychotherapy and and nutritional counseling for eating disorders. AG Eric Schneiderman said the wrongful denials totaled more than $1.6 million in patient claims. Under the agreement, HealthNow will pay members for the wrongfully denied claims, revise its policies and eliminate a company policy that subjected all psychotherapy claims to review after a member’s 20th visit. The insurer generally does not impose the same type of review process for outpatient medical services.

“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 Schneiderman. “Individuals confronting mental health conditions, eating disorders or substance abuse should not be denied coverage for the treatment they need and deserve.” 

The investigation began in 2015 following consumer complaints. It found that since 2012, HealthNow wrongfully denied coverage for outpatient behavioral health services for approximately 3,100 members and further denied approximately 125 sessions of nutritional counseling - for which members paid $14,000 out of pocket - to members with eating disorders, while it does cover nutritional counseling for medical conditions such as diabetes.

According to the settlement, HealthNow has agreed to eliminate review of outpatient behavioral health treatment based upon set thresholds that trigger review, including but not limited to the 20-visit threshold it has applied since 2010. The insurer also will cover nutritional counseling for eating disorders, including anorexia nervosa and bulimia nervosa. 

In addition, HealthNow will reimburse members who paid out of pocket for treatment, retrain its staff on these changes and pay $60,000 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 in adults and children at least equal to the coverage provided for other health conditions. The New York law is similar to the federal mental health parity law, which was enacted in 2008.

HealthNow New York told WBFO it preferred to respond to the settlement in a prepared statement. The insurer said it "cooperated fully with the Attorney General’s Office during its inquiry into this matter for the last 18 months." It noted being "an early leader and advocate for improving behavioral health and substance abuse awareness and treatment" and being "committed to providing our members access to the most appropriate and effective treatment."

"HealthNow historically has implemented several proactive and innovative initiatives and policies to improve service delivery. We now will be taking additional steps to ensure proper compliance with the complex mental health parity law moving forward," the statement continued. The insurer said it also will be communicating these changes to impacted members.

Members with questions may call the customer service number on the back of their member ID card. Consumers with a complaint regarding health insurance coverage may always contact the Attorney General’s Office Health Care Helpline at 800-428-9071.

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