WA fines Regence Blue Shield over mental health coverage

Washington state is fining health insurance giant Regence Blue Shield over half a million dollars for disparities between its mental health and medical coverage.

For years, Regence failed to provide the state with detailed documentation showing its behavioral health offerings are comparable to medical or surgical coverage, in violation of state and federal law. The data the company did provide showed major differences between the two types of care, including for in-network reimbursement rates, among other areas.

"Throughout this process, Regence's staff appeared to willfully misinterpret our questions, dismiss our concerns and generally disregard their own responsibilities to their members' well-being," state Insurance Commissioner Patty Kuderer said in a statement.

Regence argued parity wasn't an issue, but didn't provide documentation to prove that, according to the Office of the Insurance Commissioner.

"The data Regence provided, or in some cases failed to provide, demonstrates a lack of accountability for following this nation's insurance laws," Kuderer said.

A Regence spokesperson said the company has "implemented state and federal requirements for behavioral health access in good faith, made necessary updates and will continue prioritizing compliance while supporting future rulemaking for clear, consistent standards."

"Everyone should have access to high-quality behavioral health care," spokesperson Ashley Bach said in an email. "We value our collaborative relationship with the Office of the Insurance Commissioner and worked diligently to provide comprehensive responses to the OIC's inquiries."

Under an order signed Friday and announced Monday, the insurer will pay the state $550,000. It's the second major fine Kuderer's office has issued over mental health coverage parity issues since she took office this year.

The money will go to Washington's general fund, the main source of funding for state operations. Since 2001, the insurance commissioner's office has sent over $44 million from fines like this back to state coffers.

Persistent parity problems

State and federal law require insurers to cover behavioral health treatment similar to physical health care. For example, an insurer can't charge different co-pays for mental health treatment and physical health. And if there's no limit on outpatient physical health care visits, there also can't be a limit for mental health care.

Despite mental health parity laws, mental health coverage still often doesn't stack up.

A nationwide study last year found patients went out of network to see a behavioral health specialist 3.5 times more often than they did for physical health clinicians. For some types of care, the disparity was even greater. Going to out-of-network providers generally results in higher out-of-pocket costs.

And for those who stay in their insurers' network, reimbursement rates were higher for physical health office visits than mental health appointments, the study found.

This year, Washington state legislators passed a bipartisan law aimed at bridging this divide.

The new law, which takes effect in 2027, seeks to make clear that mental health and drug treatment are "medically necessary" care that insurance companies are required to cover. Insurers argued it would drive up premiums.

Over the summer, Kuderer's office similarly levied a $550,000 fine against Premera Blue Cross for not following mental health parity laws. The company's online provider directory also didn't comply with state law.

The insurance commissioner's office has been scrutinizing mental health care parity among Washington insurers with the help of federal grants.

In 2023, the agency found similar violations at UnitedHealthcare, resulting in a $500,000 penalty.

Meanwhile, the Trump administration this year has paused new rules issued by former President Joe Biden that looked to strengthen mental health protections and hold insurance companies accountable for denying such coverage.

This is notable because many Washingtonians are subject to federal mental health parity laws, instead of the state's. That includes those on Medicaid and workers on so-called "self-funded" plans whose employers directly pay for medical benefits, instead of through premiums to an insurance company.

This isn't the first time the state has dinged Regence this year.

Last month, Kuderer's office fined the company $100,000 for denying over 950 claims for treatment due to a lack of prior authorization between June 2020 and May 2022. The care included physical, occupational, speech and hearing therapies.

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