curiousKC | Why do Companies Treat Insurance for Mental Health Differently Than Physical Health? Regulators Say They Shouldn’t

Mental and physical health are not mutually exclusive. When one suffers, the other can suffer as well.

So why, one curiousKC reader inquired, do some insurance companies treat them differently?

The short answer is that they shouldn’t. By federal law, insurance companies are required to maintain parity between mental health and physical health.

“If, for example, a health insurance plan allows unlimited doctor visits for treatment for a (physical) type of issue, then they must also allow treatment for a mental health condition,” said Carrie Couch, director of consumer affairs division at the Missouri Department of Commerce and Insurance.

But there can be some disparities in practice, said Lee Modesitt, director of government affairs at the Kansas Insurance Department.

“A broken bone is relatively easy to diagnose, where a patient’s mental health needs vary from person to person,” Modesitt said.

Additionally, there is a shortage of in-network mental health providers, according to Guin Becker Bogusz, an attorney at Gordon Tilden Thomas Cordell in Seattle. She wrote an article for the National Alliance on Mental Illness in 2020 about this topic.

Insurance companies have contracts with physicians who take their insurance and can negotiate reimbursement for their care, Bogusz said. This then makes the physicians part of the insurance carrier’s network.

But there is a shortage of in-network mental health providers because there is a shortage of such specialists in general. Bogusz added that there are a lot of hoops physicians have to jump through in order to become a preferred provider, and sometimes they don’t get reimbursed enough for their services.

Having a shortage of in-network mental health providers creates challenges because not all therapists or counselors are the best fit for all clients, Bogusz said. Sometimes people have to go out of network in order to find a mental health specialist that works for them.

“It’s a very important relationship,” Bogusz said. “You have to have a degree of trust there and you don’t want to see just anybody. You need to see someone you’re comfortable with.”

Another challenge for people dealing with mental health issues is meeting the criteria for what’s considered medically necessary, Bogusz said. Sometimes those standards are difficult to meet.

“Maybe you have somebody who has anxiety, but it’s not super severe yet … But the strictest criteria for those visits to be covered requires them to be experiencing more severe symptoms of anxiety. That can create a problem,” Bogusz said. “So it kind of forces people to forgo maybe maintenance care that they need until things get worse.”

Stephanie Marquis, media and outreach manager at Washington State Office of the Insurance Commissioner, said that sometimes mental health coverage depends on the type of health plan people have. 

Some large companies self-insure and provide benefits through their own funds, Marquis said. But those types of plans are outside state and federal regulations, meaning they do not have to follow mental health parity laws.

“Typically if we hear (someone) is not getting a benefit that is pretty basic, then we can almost assume that it’s a self-funded plan,” Marquis said.

Couch also said that sometimes people purchase health insurance that has been misrepresented and isn’t actually insurance at all. Rather, they may be short-term, limited-duration benefit policies, discount plans or health care sharing ministries. These may not have the protections of real health insurance, she said.

If someone is having problems with getting mental health treatment covered, Couch and Modesitt recommend contacting their departments, where they can speak to someone about their issue and file a complaint.

“If folks are having issues with companies not covering mental health treatment, then that’s definitely something we want to hear about,” Couch said.

Marissa Plescia is a Dow Jones summer intern at Kansas City PBS.