Why You Need to Start Talking Like a Nurse:
What You Need to Know About Parity and Medical Necessity

By Barbara Griswold, LMFT
(December 1, 2011)

First, a little background: When I first opened my practice 21 years ago, if a client was lucky enough to have medical insurance, it often didn’t cover psychotherapy. With each passing year, more plans covered therapy, but usually imposed higher copayments and yearly visit limits.

In 1996, California passed a limited parity law, a milestone in the effort to eliminate this kind of double standard. The law required most insurance plans to provide coverage for mental health and substance abuse treatment that was at least equal to (“at parity with”) the plan’s medical coverage. However, the parity law was limited to clients who had one of the following “parity” diagnoses: Major Depression, Bipolar Disorder, Schizophrenia, Schizoaffective Disorder, Obsessive Compulsive Disorder, Panic Disorder, Bulimia, Anorexia, Autism/Pervasive Developmental Disorder, or Serious Emotional Disturbances of Children.

What changed: In 2010, the Mental Health Parity and Addiction Equity Act (MHPAEA) went into effect. Superseding California’s parity law, this Federal Act mandates – for ALL mental health and substance abuse diagnoses covered by the plan – that coverage be at least equal to that of the plan’s medical benefit. Plans can no longer impose limits on mental health visits if no such limit exists for medical visits. There can be no higher deductible or copayment for mental illness or substance abuse treatment. And if a plan covers out-of-network medical care, it must cover out-of-network mental health care. Of course, there are exceptions. The Act doesn’t apply to individual plans, or employers with less than 50 employees. In these cases, the state parity law may still come into play.

Why this matters to us: Now that most plans can no longer impose annual session limits, many plans are taking advantage of a loophole still available to them to restrict treatment, known as “medical necessity.” Even if a member has coverage for unlimited sessions, the plan may refuse to cover ANY service it believes is not medically necessary. This is true for both in-network and out-of-network providers, and regardless of the plan type.

To determine medical necessity for treatment, many plans now require periodic written or telephonic treatment updates so that care can be reviewed by case managers. For example, most Anthem Blue Cross of California accounts now require that providers complete an Outpatient Treatment Report (OTR) after 12 sessions.

What we need to do: To advocate on our client’s behalf, we need to learn to speak the language of medical necessity when talking to case managers or filling out treatment reports. You may ask the plan for their Medical Necessity Criteria (often on their websites), but typically they are looking to see that:

• There is a known or suspected DSM diagnosis (not just a V-code).
   
• Treatment must alleviate some measurable medical symptom (such as insomnia, anxiety or depression). Therapy can’t be solely for personal growth, career issues, self-esteem, communication, or improving relationships. Avoid treatment plans that focus on feelings awareness, healing the inner child, or finding meaning in life.
   
• The symptoms must have decreased the client’s level of functioning. A DSM Axis V GAF (Global Assessment of Functioning) score above 40 and below 69 is often required for outpatient therapy.
   
• The problem seems resolvable in therapy.
   
• Treatment is believed to be the most appropriate type, level, and length needed. Clients reaching therapeutic plateaus may be considered more appropriate for referral to community support, while others may need more intensive treatment.
   
• The client is making some progress, or at least being stabilized to prevent relapse or deterioration.
   
• The client must be motivated, participating, and following recommendations.
   
• When substance abuse is diagnosed, an evaluation has been done.
   
• Medications are being used, where indicated, or documentation is made of why they are not.
   
• You are coordinating care with other treating providers and physicians.
   
• When working with a child, your treatment plan typically must include family therapy, unless contra-indicated.

So, some tips for talking to a plan: If your care is ever reviewed, here are some things to keep in mind:

1. Imagine you work in a hospital. Learn to describe and record your client’s observable symptoms, progress, and your care in a very “medical model” way.
    
2. Be specific, noting symptom severity and frequency, and scores on even simple diagnostic tests. Look up the diagnosis in the DSM, and use applicable terminology (e.g. “hypersomia”). Identify symptoms and how they have negatively impacted the client’s “Activities of Daily Living” (ADLs), such as work, family, friendships, finances, and self-care.
    
3. Describe how treatment will reduce impairment, or prevent relapse or hospitalization. What are you doing in session or what homework are you giving to reduce symptoms? Tie these interventions to your goals. Remember: The goal need only be to return the client to a baseline level of functioning, not complete symptom elimination.
    
4. Make sure goals are measurable, realistic, and consistent with the diagnosis. Avoid vague goals such as “help identify feelings, and support through divorce,” which does not clearly spell out the symptoms being treated. Try to quantify goals. For example, instead of “client will sleep better” you might say “reduce reliance on sleep medication to no more than two times per month.”
    
5. Identify any progress, however small, toward symptoms reduction or goals.
    
6. Be prepared to discuss why your chosen modality (individual/couples/family/group) is the most cost-effective way to treat the client’s symptoms.
    
7. Be ready to discuss referrals you have made, and coordination of care with treating professionals (or be ready to explain why these did not occur).
    
8. The plan may want you to discuss your treatment plan with your client, and for you to do periodic check-ins.
    
9. Above all, don’t take his/her questions personally, and don’t be defensive. They are just doing their job. Imagine you just know more about the case, and need to educate the case manager about the details.

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Barbara Griswold, LMFT, is the author of Navigating the Insurance Maze: The Therapist’s Complete Guide to Working with Insurance – And Whether You Should. To purchase the book or other resources for therapists, click here. Contact Barbara at barbgris@aol.com to get answers to your insurance questions.

Copyright 2008-, Barbara Griswold, LMFT. No part may be reproduced without written permission of the author.