Families fall deep in debt for mental health care. Why is insurance so spotty?

The Mental Health Project is a Seattle Times initiative focused on covering mental and behavioral health issues. It is funded by Ballmer Group, a national organization focused on economic mobility for children and families. The Seattle Times maintains editorial control over work produced by this team.

A letter from the insurance company arrived in a crisp white envelope. Regence BlueShield would only cover $3.24 of an $8,000 psychological evaluation for Jennifer Cohen’s son.

It’s one charge among more than 120 claims Cohen said her family has filed to their insurance companies on behalf of their 17-year-old, who has experienced severe anxiety, depression, ADHD, OCD and acts of self harm since early childhood.  

Following denial after denial, the Shoreline family racked up $250,000 in expenses for their son’s care, including costs from a three-month wilderness therapy program and a 12-month residential treatment program, incurred between 2021 and 2022.

Their story is familiar for Washingtonians — and people nationwide — with mental health conditions. Getting insurance companies to cover visits and procedures can require knowledge of federal and state laws, awareness of the fine details of insurance plans, and extensive time to debate denials.

Federal and state laws require insurers to cover mental health and substance use disorder treatment and services at comparable levels to physical health concerns. However — because of historical disregard for mental health and weak enforcement measures — documents, data and anecdotal complaints show insurers often fail to live up to that promise. 

The resulting burden falls heavily on patients, who report they often struggle to afford care: Nationally, almost 60% of people with mental illnesses who faced barriers to getting treatment said high costs and lack of health insurance coverage were factors, according to a 2023 Mental Health America report.

“The reason for disparities historically is just a perception that mental health care was more costly (for insurers),” said Kaye Pestaina, vice president at the health policy research organization KFF and co-director of its Program on Patient and Consumer Protections, and that mindset is still present. For example, some physical ailments, like a broken leg, can be resolved with straightforward treatment, whereas someone with depression might need to try multiple medications.

Gaps in care: Insurance and Mental Health

But studies have found that treating mental health isn’t necessarily more expensive. And just as someone experiencing addiction might relapse and need treatment multiple times, a cancer patient in remission could also find that cancerous cells return. 

Disparities in insurance coverage for mental health often leave people with an impossible choice: Go without desperately needed care or pay out of pocket and be on the hook for thousands of dollars. 

That prospect became real for Cohen’s family last year, she said. Faced with mounting medical bills in December, she said she and her husband couldn’t pay their mortgage and relied on family money to get by. 

“We’re in debt, probably forever,” Cohen said. “I’m not going to be able to retire.”

“A very powerful law”

A federal law passed in 2008 states that if an employer’s insurance plan covers mental health services, it must apply coverage that’s equal to medical and surgical services. Washington’s mental health parity law, which first passed in 2005, says that plans regulated by the state must cover mental health services, said Jane Beyer, senior policy adviser at the state’s Office of the Insurance Commissioner.

Patients should have access to the same copays, deductibles and numbers of sessions for illnesses of the brain, like anxiety and addiction, as for illnesses of the rest of the body, the laws say.

Here’s an example: A patient who went into a diabetic coma would not be refused emergency hospital care and told to go on a diet first. Therefore, someone in a severe mental health crisis should not be sent away from the Emergency Department and told to try talk therapy first.

But while laws are on the books, mental health advocates say parity still has not been achieved. 

Determining whether parity exists between mental and physical health is complex: Each case and diagnosis is different. But the consulting research firm Milliman examined the question, in part by looking at how often people went to out-of-network providers, and in 2019 reported it had found “worsening disparities in access to behavioral health care.”

In Washington, nearly 40% of people reported going out of network for outpatient behavioral health care, while fewer than 4% went out of network for physical care, the analysis found. 

This trend has been in place for decades, with historic challenges to getting and maintaining equal coverage. President John F. Kennedy’s administration initiated parity efforts, but those mandates were largely reversed in the 1980s under President Ronald Reagan.

History of mental health parity efforts

1961: President John F. Kennedy requires the health insurance program for federal employees to provide parity.

1970s-1980s: States pass legislation for private insurers mandating minimum benefit levels for alcoholism, drug abuse and mental health treatment. 

1996: The Mental Health Parity Act of 1996 creates standards between physical and mental health care for annual and lifetime dollar limits.

2005: Washington state’s Mental Health Parity Act of 2005 requires mental health services to be covered under fully insured small and large group insurance plans.

2008: The federal Mental Health Parity and Addiction Equity Act of 2008 states that if an employer offers behavioral health coverage, payment requirements and treatment limits must be equal to those for medical and surgical benefits.

2010: The Patient Protection and Affordable Care Act requires coverage of mental health and substance use disorder services for individual and small group health plans.

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The current federal parity legislation became law during the 2008 financial crisis when it was attached to the $700 billion stimulus package. It was named in honor of two bipartisan Senators who had pushed for parity laws in the 1990s: Pete Domenici, whose daughter had schizophrenia, and Paul Wellstone, whose brother had mental illnesses. 

“It’s been a very powerful law that has not been aggressively enforced,” said David Lloyd, chief policy adviser at The Kennedy Forum, a mental health advocacy organization.

A look at complaints filed to Washington’s Office of the Insurance Commissioner shows how persistent and serious problems with enforcement are raised in this state: More than 215 complaints filed between 2019 and early 2023 were about insurance barriers regarding mental health, and in many cases, those people ultimately were entitled to coverage. These complaints also likely represent a fraction of people who experienced problems, know about the office and have time to write in, Beyer and other experts said.

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In the complaints, people reported that they experienced sudden changes to their plan, with an insurer deciding to no longer cover a service or medication, or that they could not find an in-network provider that met their needs, or that they had to excessively prove a treatment was needed. Sometimes, simple computer errors led to hours of phone calls.

In some cases, lives were at stake. One person reported in July 2020 that he was “experiencing difficulty getting treatment for his wife who is in extreme pain and suicidal as a result.” Another person stated in March 2022 that her insurer “refused to approve more [than] a two-day stay for me in a psychiatric hospital even though I was suicidal.”

“We tried everything”

Cohen said her son has struggled with his mental health since he was 4. “He was just very angry. Every interaction was a fight.”

The Seattle Times is not naming her son, who is a minor, to protect his privacy.

Starting in fifth grade, his parents put him in a series of treatments, including an intensive outpatient program, group therapy, and evidence-based treatment centers that work with children on anxiety. “We tried everything,” Cohen said.

In 2019, at age 13, he attempted to kill himself. He received immediate care, but the pandemic and the corresponding transition to online school set him back again, and he fell into a deep depression. Most days, he didn’t log on for classes. Discussions with his public high school proved mostly fruitless, his parents said. 

In Washington, teens 13 and up have the right to withdraw from mental health treatment — as well as initiate it — without their parents’ consent. His parents thought he wouldn’t get treatment voluntarily and would likely check himself out. They decided in 2021 to send him to a wilderness therapy program in Colorado called Open Sky, which guides students through mindfulness meditation and uses outdoor activities like hiking to stimulate physical and mental health, according to its website.

Upon completion of the program, Cohen’s son attended Gateway Academy in Utah, a residential treatment center.

When he began treatment, Cohen’s family was insured by Premera Blue Cross, the carrier provided by her husband’s employer. Under that plan, only the therapy portion of the wilderness program was covered. Insurance paid about $4,100, she said, and Cohen and her husband were charged about $66,000, according to bills and insurance documents reviewed by The Seattle Times. Premera covered some of Gateway’s costs under a category called partial hospitalization, typical for most residential treatment programs. For each month of care, Cohen was charged about $13,000, and documents show Premera covered about $8,400 of that.

Then, the pandemic forced both Cohen and her husband to find new jobs. When she found a new position in September 2021 working for the state, the family switched to a Regence Blue Shield Uniform Medical Plan while her son was in the middle of his therapeutic schooling.

From the beginning, Regence denied coverage for her son’s treatment at Gateway.

The teen’s psychiatrist wrote to Regence, in a letter reviewed by The Times, stating he was “functioning too poorly to be able to access treatments on an outpatient basis,” and “additional medication changes alone” would not be “sufficient to bring about change.”

But according to a denial letter Regence sent, which Cohen shared with The Times, the insurer said Cohen’s son didn’t meet criteria like demonstrating “significant impairments in functioning” due to a psychiatric disorder, such as showcasing behaviors that interfere with family, work, schooling or age-appropriate activities.

Cohen was prepared to pay for wilderness therapy out of pocket, but she was not expecting to also finance the full cost of Gateway, the residential treatment center. Of the nearly $82,000 worth of charges accrued while covered by Regence, the family ultimately got back just under $5,000 from insurance after appealing their case, documents show.

Through spokesperson Monica Graham, Regence declined to comment on the teen’s case, citing “respect for members’ privacy.”

A shifting landscape

Insurance plans typically make coverage determinations by deciding whether a treatment is medically necessary. In Washington, rules require insurers to make decisions “consistent with generally recognized standards.” 

A major court case pending in the 9th U.S. Circuit Court of Appeals is testing the boundaries of that premise and its implications for Washington insurers. In Wit v. United Behavioral Health, judges are examining whether the insurer United Healthcare violated a promise to patients that it would use generally accepted medical standards to make coverage decisions for behavioral health services. Instead, it used its own cost-based guidelines, the lawsuit alleges.

A judge in California issued a landmark decision in 2019, ruling that United had inappropriately denied behavioral health claims.

However, in 2022, a three-judge panel within the Ninth Circuit, which includes Washington state, reversed the order, ruling that United’s method for making coverage decisions was “not unreasonable.” Appeals are ongoing. 

Another court case probing the limits of parity is expected to play out in the Washington Supreme Court starting in September. In a case against Premera Blue Cross, plaintiffs will argue that Premera violated mental health parity laws by excluding wilderness therapy programs. Premera is arguing that consumers cannot sue in these situations, said Janet Varon, the executive director of Northwest Health Law Advocates, who is working on an amicus brief on the case.

In an email statement, Amanda Lansford, a representative for Premera, said the company has concerns about “the well-being of children sent away to unlicensed programs in states that have minimal oversight protections,” referring to the “troubled teen industry” as a network of loosely regulated therapeutic boarding schools, residential treatment centers, wilderness programs and boot camps. She said Premera covers programs that provide “safe and effective” medical care for adolescents.

Other efforts to monitor parity requirements are happening at the federal level. Last month, President Joe Biden’s administration introduced new rules that would force insurers to study the health of patients after treatment. The purpose is to determine whether benefits are being administered equally.

Appealing a case

Upon receiving a denial, the immediate recourse available to a patient is to file an appeal to the insurance company. But when someone’s already struggling with their mental health, it’s that much harder to find the will to argue their case.

“They don’t have emotional resources to devote to fighting with their insurance company,” said Sarah Applegate, a nurse practitioner at a psychiatric office in Bellevue. 

Plus, said Eleanor Hamburger, a Washington attorney specializing in disability rights, the appeal process is not designed to benefit the complainant.

If an insurance company doesn’t respond in time for an appeal, or if it uses the wrong standard in its denial, or if it interprets medical necessity the wrong way, “there is very little that a consumer can do to make an insurance company follow the law,” aside from suing, Hamburger said. The attorney has worked on more than 25 class-action lawsuits regarding state and federal mental health parity laws during her career.

But Hamburger said judges “like things to be clear cut,” and the standards for medical necessity are not always clear. “These are hard cases.”

After being initially denied, Cohen appealed Regence’s decision. A panel, including two physicians, examined the family’s case — a fairly standard process for most commercial insurers in Washington.

Mental health resources from The Seattle Times

When someone appeals, a clinician or a group not involved in the original decision reviews additional medical records and other information to determine if a decision should be reversed. For example, at Premera, the company makes those decisions using its own internal policies and a screening tool called InterQual, which balances medical needs with profit-loss formulas, said Rita Riojas, director of regulatory services. 

Customers should not be afraid to appeal, said Tiffany Ruegsegger, manager of clinical reviews at Premera. “Employees are empathetic to our customers’ needs” and want to help members get care, she said. “Don’t hesitate to reach out.”

Appeals can be successful for patients: KFF found in 2021 that insurers for HealthCare.gov members reversed about 40% of denials upon appeal.  

Enforcement gaps

Outside of the appeals process, the system for getting help is a maze fragmented across federal and state agencies. 

Customers can file complaints to Washington’s OIC, which can investigate and force compliance, but the state only has jurisdiction over about 20% of health care plans in Washington: fully insured small and large group plans (which businesses purchase from insurance companies for their employees), and individual plans bought on the health care exchange. 

Most large employers, like Amazon, Boeing and Microsoft, provide self-insured plans that don’t fall under the OIC’s authority, and oversight is limited. 

Cohen tried taking her family’s case to the state OIC, but it didn’t fall under its jurisdiction. Instead, because she works for the state, her plan is regulated by Washington’s Health Care Authority. By that point, Cohen said she was “too exhausted” to keep fighting her case. 

How to get help

First, identify your type of insurance coverage.

If you have a private, self-funded plan: U.S. Department of Labor

(You likely have this plan if you work at a large company like Amazon, Microsoft or Boeing)

300 Fifth Ave. Suite 1210, Seattle, WA 98104-2397

206-373-6750

If you have a public, self-funded plan: Centers for Medicare & Medicaid Services within the U.S. Department of Health & Human Services

(You likely have this plan if you are a state or local government worker)

701 Fifth Ave. Suite 1600, Seattle, WA 98104

206-615-2306

If you have a fully insured small or large group plan: state Office of the Insurance Commissioner

(You likely work at a mid-size business)

302 Sid Snyder Ave. SW, Suite 200, Olympia, WA 98501

360-725-7171

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The other problem for patients is that the system is mostly reactionary, said Beyer from the OIC. It’s often consumer complaints “that lead us to do investigations and ultimately take enforcement actions because we can’t be everywhere.”

A 2019 GAO report questioned the effectiveness of parity enforcement efforts and said state authorities were too reliant on complaints. In a survey of all 50 states, the GAO found wide variation in the frequency and type of reviews that states conduct. 

State Rep. Lauren Davis, D-Shoreline, said the way OIC operates, as mostly a complaint-driven system, is a “fundamental problem.”

“We need a better enforcement mechanism for mental health parity that is not incumbent on the person who is being treated inappropriately,” Davis said. 

Mounting expenses

The tail to fight denials is long. “We’ve been dealing with this for over a year,” Cohen said.

To pay their bills, Cohen and her husband took out a $150,000 home equity line of credit; they say they pay about $960 in interest, at a variable rate, each month. They also say they tapped into their son’s 529 college savings plan and depleted their own savings. 

“We have been very good with our money, careful and prudent, and then we thought we were going to have to file for bankruptcy,” she said.

Like any teenager, Cohen said, her son still has challenging moments. Some days he feels strong; some days he wants to return to Open Sky and Gateway. Nowadays, though, Cohen said her entire family has stronger communication and coping skills.

Ultimately, she said, the treatment saved her son’s life. 

“If I had to do it again, I would,” she said.

This article was supported by the Journalism and Women Symposium Health Journalism Fellowship, with the support of The Commonwealth Fund.

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