July 13, 2011 - The California Department of Insurance (CDI) announced today that it has issued an Order to Show Cause against Blue Shield of California Life and Health Insurance Company for failing to comply with the California Mental Health Parity Act. Enacted in 1999, the law requires private insurance plans to provide equal coverage for selected mental health conditions and physical conditions.
At a hearing of the Senate Select Committee on Autism, representatives from CDI explained that Applied Behavior Analysis (ABA) therapy, a common and proven approach toward improving the lives of children with autism, is required to be covered by insurers under California's mental health parity law. Furthermore, the representatives highlighted independent medical reviews (IMR's), which showed ABA to be necessary therapy.
"Our purpose and goal is to ensure that insurance companies are in full compliance with California's mental health parity law," Adam Cole, General Counsel at CDI, said. "CDI is taking this action to address the barriers faced by families attempting to obtain behavior therapy and increase their access to proven transformative therapies."
CDI has filed an enforcement action to make Blue Shield comply with California's mental health parity law. The Department asserts that Blue Shield violated the law by:
- Denying coverage on the ground that ABA isn't "medically necessary"
- Denying coverage on the ground that ABA is "experimental"
- Denying coverage on the ground it is available only for services performed by a licensed provider and ABA providers are not licensed
- Denying coverage on the ground that ABA is not a "health care service," but instead is a service for "learning disabilities or behavioral problems or social skills training/therapy"
- Not including ABA providers in its network
- Refusing to provide insureds with definitive denials of coverage within 30 days of receiving a claim, thereby preventing insureds from invoking IMR
The action comes after the parents of two autistic children sought the Department's assistance when Blue Shield refused to approve coverage for Applied Behavior Analysis (ABA) therapy recommended by their children's physicians. ABA therapy is based on behavioral conditioning techniques and reinforcement of positive behaviors to shape behaviors and teach new skills. Blue Shield claims it is experimental. "Decades of research show it to be a successful and well-established treatment for autism and not an experimental or investigational treatment," said Mr. Cole.
After the children were denied coverage for the treatment, the parents sought IMR by CDI, which found that ABA therapy was medically necessary in both cases, but Blue Shield refused to comply with the binding determinations in the IMR decisions. In addition, when CDI sent out a request to all insurers to identify their provider networks, as required by law, Blue Shield refused to submit a provider report and roster.
In response to the company's unwillingness to submit its provider networks and its refusal to initially cover ABA for the individuals who complained, the Department is issuing a cease and desist order.