SIMPLIFYING THE APPEALS PROCESS:

STRATEGIES FOR WINNING DISPUTES WITH YOUR HEALTH PLAN

Parity Resource Guide for Addiction &

Mental Health Consumers, Providers and Advocates

WINTER 2015 • SECOND EDITION

Resource Guide Table of Contents

06 Foreword

08 Acknowledgements

09 PART I: Executive Summary

12 Resource Guide Overview

12 Frequently Asked Questions (FAQs)
12 Model Appeal Letters

13 PART II: Parity Background

14 Parity Law Overview
17 Exemptions
17 Cost Exemptions
17 Common Parity Compliance Issues
18 Parity Rule Summary
18 Final Regulations Overview
18 Scope of Service
19 Parity Testing Criteria
20 Disclosure and Transparency
21 Enforcement
21 Medicaid Managed Care, CHIP and Alternative Benefit Plans
22 Other Issues
23 Final Rule Enhancements

27 PART III: Appeals Overview

28 Understanding Appeals
28 How does the appeals process work?
29 What types of appeals are there?
29 How do the internal appeal options differ?
31 What type of appeal is more common regarding a parity violation?
31 What are the advantages of adding a parity violation to a traditional clinical or
administrative appeal?
32 How is the initial UM determination made?
32 What are the different levels of appeal?
33 How are administrative appeals handled?
34 What are the timeframes to make a decision?
34 Do appeals cost money?

35 PART IV: Parity Appeals

35 Background
35 What is the source of parity regulations?
35 What information should a person know about their insurance policy?
36 What does a parity violation look like?
37 What is the testing methodology to assess whether a parity violation has occurred?
39 Filing a Parity Appeal
39 What is a MH/SUD parity appeal?
39 How should an individual initiate a parity appeal?
39 What should a person do if the pre-authorization request is denied?
40 What information does someone need to file an appeal?
41 What timeframes apply?
41 What are some tips for a successful appeal?

45 PART V: Other Appeal Types

45 Medical Necessity/Utilization Management Appeals
45 What is a utilization management (UM) or “medical necessity” appeal?
45 What are the sources of regulations?
45 What is the difference between prospective, concurrent and retrospective UM decisions?
46 Administrative/Grievance Appeal
46 What is an administrative appeal?
46 What are the sources of the regulations?
46 What are the new federal appeals procedure protections?
47 Internal Review
49 External Review
49 What is an external review appeal?
49 What are the sources of regulations?
50 What are the new federal external review requirements?
52 What is the new expedited federal external review process?
52 When do state external review laws apply?
53 Who can initiate a state-based external review appeal?
54 What types of issues can a state-based external review appeal be initiated for?
55 How is a state-based external review appeal started?
55 Filing a Regulatory Complaint
55 How can government officials help?
57 Accreditation Audits
57 How can an individual initiate a complaint about a health plan with an
accreditation agency?
57 What is an accreditation audit?
57 Arbitration
57 What is an arbitration appeal?
57 What rules govern arbitration?
58 Commercial Insurance
58 Self-Insured
58 When should an individual or provider initiate an arbitration appeal?
58 Judicial Action
58 Is filing a judicial or court action an option?
58 When does someone have legal standing to initiate a court action?
59 What is a class action lawsuit and can it help?

61 PART VI: Final Thoughts

62 Appendix A: Terms to Know

68 Appendix B: Model Appeal Letters

68 Introduction
69 Using the Templates
69 Guidance for individuals/providers/advocates using these templates
 70 Sample Appeal Letters
71 Appeal Letter Sample 1:
Denial Based on Freestanding or Residential Facility-Type Exclusions
74 Appeal Letter Sample 2:
Denial Based on Level of Care Exclusions
77 Appeal Letter Sample 3:
Denial Based on Blanket Exclusions of Office-Based Diagnostic and
Treatment Interventions
80 Appeal Letter Sample 4:
Medical Necessity Denial for Inpatient Services
83 Appeal Letter Sample 5:
Medical Necessity Denial for Outpatient Psychotherapy
86 Appeal Letter Sample 6:
Medical Necessity Denial for Non-Psychotherapy, Outpatient Levels of Care
89 Appeal Letter Sample 7:
Service Coding

92 Appendix C: Helpful Resources

92 State Resources
92 State Insurance Regulators
99 Federal Resources

100 Appendix D: Parity Implementation

Coalition Members

101 Appendix E: Abbreviations

102 Appendix F: About The Kennedy Forum

Foreword Often, the most difficult battles are fought after a law is passed. Never has
that been truer than in the case of the Mental Health Parity and Addiction
Equity Act.

Today, too many Americans are still being denied the care they need and the
care they are guaranteed under this law. As a result, these individuals and
families often need help filing appeals when their access to behavioral health
services is denied, or when their health plans refuse to pay after they have
received treatment.

If you find yourself, a family member, or friend in a similar situation, the

guide you are holding is an essential tool to keep by your side as you navigate
the insurance and regulatory systems. Perhaps you’re a provider trying to
help a patient get needed coverage; this guide will help you, too. The goal in
developing this guide is to help ensure the best outcomes for you, your loved
ones, friends, neighbors, or patients.

While this guide is primarily a consumer resource, advocates like The

Kennedy Forum and the Parity Implementation Coalition will also use it
to educate regulators, legal advocates, legislators, and others to ensure that
the Mental Health Parity and Addiction Equity Act, and related federal
and state laws, are fully implemented and enforced until mental health and
addiction are treated equally.

It’s true that we’ve been engaged in this cause for many years, but this is
really just the beginning. Stay tuned as The Kennedy Forum and the Parity
Implementation Coalition offer additional resources to ensure that you have
the right information and tools at the right time to get the behavioral health
coverage you deserve.

Patrick J. Kennedy

06 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
This resource guide is dedicated to the millions
of individuals, families and providers who work
tirelessly at fighting addiction and mental illness
and ensuring equal rights under the law.

T
he Parity Implementation Coalition, in
conjunction with The Kennedy Forum,
developed this resource guide to help you
understand the law, file complaints and appeal denied
claims. This resource guide was originally published
as a toolkit in 2010, the second edition of which was
updated in mid-2015. We will continue to update this
publication as regulations are issued and clarified and
as additional FAQs are made available.

The information included in this resource guide is

meant to be helpful, but does not constitute legal
advice or substitute for legal counsel. If you need help
with the resource guide or have questions about parity,
please send an email to [email protected] or
[email protected].
 We gratefully acknowledge the support from the following

Acknowledgements
organizations (along with their reference materials):

The American Cancer Society

Community Catalyst
The Consumers Union
Kaiser Family Foundation
The Kennedy Forum
Mental Health America
Parity Implementation Coalition
The Patient Advocate Foundation
Watershed Addiction Treatment Programs

The managing editors:

Garry Carneal, JD
Carol McDaid, MA
Beth Ann Middlebrook, JD
Holly Strain, MPH

And the following contributors:

Patrick Kennedy
Meiram Bendat, JD, Ph.D., MFT
Bill Emmet
Henry Harbin, MD
Irvin “Sam” Muszynksi, JD
Marilyn Vadon, JD

© 2015 All rights reserved by The Parity Implementation Coalition and The Kennedy Forum.
Single copies of this resource guide can be downloaded at www.parityispersonal.org or
www.thekennedyforum.org for individual use.
For permission to use or print multiple copies, please contact Holly Strain at
[email protected].
Any feedback or edits to the reference guide should be sent to Garry Carneal at
[email protected].

08 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
PART I: Executive Summary

A
ll too often, public policymakers, health plans, employers, medical establishments and
others have failed to fully recognize the value of mental health and substance use disorder
(MH/SUD) treatments. The primary purpose of this resource guide is to educate and
inform patients, providers and other advocates of the action steps available to them to ensure
that they receive the same type of insurance coverage for MH/SUD treatments as they receive for
physical treatment services. For too long, reimbursement for MH/SUD treatments has not been a
priority. With the enactment of the Paul Wellstone and Pete Domenici Mental Health Parity and
Addiction Equity Act of 2008 (the “parity law” or “MHPAEA”), and the regulations that instruct
insurance plans on how to comply with the parity law, the groundwork for a level playing field to
exist between insurance coverage for behavioral health and physical conditions is now in place.

The Parity Implementation Coalition (PIC), in conjunction with The Kennedy Forum, published
this resource guide to serve as an aid for individuals seeking MH/SUD services. The guide should
also be used by family members, providers, advocates and others to help them better understand
the insured’s rights and benefits under the parity law and how to file appeals from insurance
coverage denials. The resource guide is designed to promote better communication with plans,
assist consumers and providers in preparing and documenting information when disputes arise with
a health plan over coverage and/or reimbursement and better understand basic appeals rights and
procedures. Every plan has its own appeals policies and procedures that are typically provided to
insureds and providers along with a coverage denial. It is important that insureds, providers and
advocates examine the appeal instructions enclosed with denial of coverage letters and become
familiar with the specific steps that they must take to file a successful appeal.

This Second Edition of the resource guide provides a more in-depth look at the types of appeals
that may be taken and how and when to file them. It also includes tips on how to file parity appeals
based on apparent violations of the federal parity law, medical necessity appeals, administrative or
grievance appeals based on coverage limitations and/or exclusions included in the four corners of
benefit plan documents. The guide also explains the external review appeals process available once
all internal appeals have been exhausted.

The primary focus of the resource guide is the current federal parity law, also referred to as
MHPAEA. The legislation was passed in 2008 to end discriminatory health care practices against
those with a mental illness and/or addiction. The final regulations were published in 2013 and are
now in full effect. Most notably, the law aims to remedy both the financial (“quantitative”) and
non-financial (or “non-quantitative”) ways that plans have historically limited access to addiction

Parity Implementation Coalition + The Kennedy Forum 09

PART I: Executive Summary

and mental health care in a more restrictive way than care for physical conditions. Individuals with
mental illness and/or addiction, their families, professionals in the field, employers and health plans
all worked together to pass the federal parity law.

To help individuals and providers better understand how to challenge benefit denials based on
parity non-compliance and report parity violations, this resource guide includes sample appeal
letters, tips on how to file regulatory complaints, guidance on how to report possible parity
violations to accrediting bodies and options for judiciary action in the court system. To make
this information user friendly, the resource guide provides frequently asked questions and answers
(FAQs) for the specific steps to file an appeal.

As health care expenses have increased, both public and private health plans have experimented
with various methods to control costs, including how medical claims are paid for. As a result,
many plans have subjected MH/SUD benefits (also known as “behavioral health benefits”) to more
rigorous forms of cost containment than typically seen under medical benefits. These restrictions
on coverage for care can take many forms, including higher co-pays and deductibles, shorter day
and visit limits, pre-approval or “prior-authorization” for services and other forms of “medically
managing” benefits.

When cost containment measures are used appropriately by plans to achieve quality and
accountability, their impact can be beneficial to patients, providers and payers in the health care
system. However, when they are used as a means to delay or deny medically appropriate care, they
can have devastating consequences on individuals, families and the health system at large.

It is important to note that MHPAEA was not intended to eliminate cost containment or medical
management. The legislative intent was to create equality in access to and coverage of MH/SUD
benefits as compared with medical and surgical benefits.

We have seen a number of insurance methods that impact how behavioral health benefits are
covered by health plans and accessed by plan participants. In many cases, health plans apply
coverage criteria in a more stringent manner than under the medical/surgical benefits. Here are
some examples of how plans restrict coverage of MH/SUD services:

• Excluding benefits based on whether a treatment is experimental or investigative

• Prior authorization required (e.g., pre-approval of a course of treatment)
• Denials or exclusions of coverage for particular treatments or levels of care

10 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 PART I: Executive Summary

• Medical necessity criteria (i.e. denials or limitations of care because a service or

treatment is not deemed “medically necessary” by the plan to treat an individual’s
behavioral health condition)
• Exclusions that prohibit coverage for any service provided by a certain facility or provider type

Many of these types of decisions are made through a plan’s utilization review or utilization
management (UM) program. Unfortunately, some plans implement overly restrictive UM
guidelines as a way to ration or limit care. In addition, a denial of behavioral health benefits may
be due to a scope of coverage issue. In these cases, the plan takes the position that the MH/SUD
service or level of care is not covered under the insurance policy. This reference guide gives a fairly
comprehensive overview of how these systems work and how an individual or provider can file an
appeal when a denial of coverage, also known as an adverse benefit determination, is made by a
health plan.

The Parity Implementation Coalition includes the American Academy of Child and Adolescent
Psychiatry, American Psychiatric Association, American Society of Addiction Medicine, Bradford Health
Services, Cumberland Heights, Hazelden Betty Ford Foundation, MedPro Billing, Mental Health America,
National Alliance on Mental Illness, National Association of Psychiatric Health Systems, The Watershed
Addiction Treatment Programs and Young Persons in Recovery. Many of these organizations advanced
parity legislation for over twelve years in an effort to end discrimination against individuals and families
who seek services for mental health conditions and substance use disorders and remain committed to its
effective implementation.

The Kennedy Forum is supporting the Parity Implementation Coalition in the updating and distribution
of this edition of the resource guide. Founded in 2013, The Kennedy Forum seeks to unite the health care
system and rally the mental health community around a common set of principles: fully implement the 2008
parity law, bring business leaders and government agencies together to eliminate issues of stigma, work
with providers to guarantee equal access to care, ensure that policymakers have the tools they need to craft
better policy and give consumers a way to understand their rights.

Parity Implementation Coalition + The Kennedy Forum 11

 Resource Guide Overview

This resource guide is drafted from the perspective of the patient or provider filing the appeal, but
can be used by other stakeholders including caregivers, family members, policymakers and attorneys.

Frequently Asked Questions (FAQs)

The key sections on how to file various types of appeals are done through FAQs to provide a more
direct way of outlining the steps that an individual or provider should take when filing an appeal.

Model Appeal Letters

The sample appeal letters highlighted in Appendix B MUST be customized. Individuals, families,
their advocates and providers must carefully review each template and its introduction to make the
best use of them given the insured’s unique interactions with the plan.

Every place in the “templates” or sample appeal letters containing a [ ] must be filled in by an
individual, advocate or provider filing the appeal. Attached to each template is a legal rationale
that represents the consensus of the Parity Implementation Coalition and The Kennedy Forum.
We encourage patients and providers to use this rationale to increase their chances for a successful
appeal, along with any additional information, such as clinical details for the patient or clinical
guidelines, tailored to the specific case

Common Abbreviations Helpful Tip

M H / S U D: We want to hear from you and help you if

Mental Health/Substance Use Disorders. we can!

M H PA EA : If you do file an appeal, we would appreciate

The Paul Wellstone and Pete Domenici Mental receiving a copy of it at
Health Parity and Addiction Act, “The Parity [email protected].
Law”, The “Federal Parity Law” or “The Statute”.

See Exhibit E for more common abbreviations

used in this reference guide.

12 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
PART II: Parity Background

M
ost Americans with health insurance face greater barriers in accessing services for mental
illness and addiction than they do in accessing care for other medical conditions. This is
because the majority of health plans have traditionally imposed, and in many instances,
still impose higher out-of-pocket spending requirements and more restrictive treatment limitations
on addiction and mental health benefits.

Today, with new technologies like MRIs and PET scans that allow scientists to look inside the
brain, the evidence that mental illness and addiction are brain diseases is more compelling than
ever. Unfortunately, reimbursement policy has not kept up with science.

Since 1992, advocates have fought for health care equality

for those suffering from addiction and/or mental illness. A Helpful Tip
partial mental health parity law was passed in 1996 that was
a significant step forward. Webster’s Dictionary defines “parity”
as “the quality or state of being equal.”
The Paul Wellstone and Pete Domenici Mental Health Compare your health plan’s medical/
Parity and Addiction Equity Act (MHPAEA) was passed surgical benefits to your health plan’s
in 2008 to end discriminatory health care practices against “behavioral health” or addiction/mental
those with mental illness and/or addiction. The statute health benefits. Do they appear equal? If
provides that plans cannot apply financial requirements not, your plan may not be in compliance
or treatment limitations to mental health or substance use with the federal parity law.
disorder (MH/SUD) benefits that are more restrictive than
as applied to medical/surgical benefits. Plans also cannot
not apply separate treatment limitations only to MH/SUD benefits. Most notably, the law aims
to remedy both the financial (“quantitative”) and non-financial (“non-quantitative”) ways that
plans limit access to addiction and mental health care, more so than plans do for other physical
conditions. Individuals with mental illness and/or addiction, their families, professionals in the field
and employers all worked together to pass the law.

Final implementing regulations went into full effect starting January 1, 2015 for all plans
covered by MHPAEA (see next page for which plans parity applies to). These regulations provide
greater clarity on how plans must apply the non-quantitative treatment limit requirements and
what specific information and which documents must be given to patients, providers and their
advocates. In the end, turning a law into real, lifesaving addiction and mental illness benefits
means that we have to assert our new rights and use all available means, most especially the appeals
process, to ensure that we receive the benefit coverage and reimbursements we are entitled to.
This is our responsibility.

Parity Implementation Coalition + The Kennedy Forum 13

PART II: Parity Background

Parity Law Overview

The MHPAEA was signed into law on October 3, 2008. The first phase of the law went into effect
for plan years beginning on or after October 3, 2009. The Final Regulations (final rules) went into
effect for plan years beginning on or after July 1, 2014. For the majority of plans, the regulations’
protections became effective on January 1, 2015.

Which plans does the federal parity law apply to?

PLAN DOES MHPAEA APPLY?

Employer-funded plans with more than 50 Yes

insured employees
Medicaid managed-care plans Yes
Children’s Health Insurance Program plans Yes
Medicaid Alternative Benefit plans Yes
(Medicaid expansion)
Non-grandfathered small employer plans Yes*
(less than 51 employees)
Non-grandfathered individual market plans Yes**
Plans offered through the health insurance exchanges Yes
Federal Employees Health Benefits Plans (FEHBP) Yes***
TRICARE/DOD plans No
Medicare plans No
Veterans Administration No

* Technically MHPAEA does not apply directly to small group health plans, although its requirements are applied
indirectly to non-grandfathered small group plans in connection with the Affordable Care Act’s essential health
benefit (EHB) requirements.

** Non-grandfathered plans are plans that came into existence after the March 23, 2010 passage of the ACA.

*** While the MHPAEA statute does not apply to Federal Employees Health Benefits Program (FEHPB), the Office of
Personnel Management has issued carrier letters directing such plans to comply with MHPAEA.

14 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 PART II: Parity Background

The parity statute originally applied to:

• Employer-funded plans with more than 50 insured employees
• Medicaid managed-care plans 1
• CHIP (Children’s Health Insurance Program)

The Affordable Care Act (ACA) expanded MHPAEA’s protections to:

• Non-grandfathered employer plans with fewer than 51 employees (small group plans) 2
• Non-grandfathered individual market plans
• Medicaid Alternative Benefit Plans (Medicaid expansion benefit)
• Plans offered through the health insurance exchanges

As enacted in 2008, MHPAEA did not require a plan to offer mental health and/or substance use
disorder (MH/SUD) benefits; but if the plan chose to do so, it must offer the MH/SUD benefits on
par with (equal to) the other medical/surgical benefits it covers. For example, if a plan allowed an
individual to have as many appointments with an immunologist as he or she needs but only covers
five appointments with a psychiatrist, this would violate the parity law.

The ACA expanded MHPAEA’s protections. As a result, qualified health plans (individual and
small group health plans offered in and outside the health insurance exchanges) and the benefits
offered to the Medicaid expansion population must include MH/SUD benefits as an essential
health benefit, and thereby, must comply with the parity law.

1 While the statute applies to Medicaid Managed Care Plans, the Final Rule does not. More CMS guidance will
be forthcoming.

2 “Non-grandfathered plans” are plans that were established after March 23, 2010 in accordance with the Affordable
Care Act.

Parity Implementation Coalition + The Kennedy Forum 15

 PART II: Parity Background

Exemptions
• Local and state self-funded government plans may apply for an exemption from the Centers
for Medicare and Medicaid Services (CMS).
• MHPAEA does not apply to Medicare plans
• MHPAEA does not apply to TriCare/Department of Defense (DOD) plans

Cost Exemptions
• Plans that experience cost increases of more than 2% in the first year and 1% in the following
year may file for an exemption
• Plans that drop coverage because the plan meets cost
exemption criteria must inform plan participants of a
reduction in benefits
Combined
Deductible Example
At the time of the publication of this resource guide, no
plans have qualified for a cost exemption under MHPAEA.
If your annual deductible is $500, you
can meet that deductible by paying $250
Common Parity Compliance Issues
for medical/surgical services and $250
Here are examples of parity compliance issues: for mental health/substance use disorder
• Plans that provide out-of-network coverage under the services.
medical/surgical benefit must provide on par out-of-
network coverage under the MH/SUD benefit A plan cannot make you pay $500
towards a medical/surgical deductible
• Financial requirements (e.g., deductibles, co-
and $500 for a mental health/substance
payments, coinsurance or out-of-pocket expenses)
use disorder deductible.
imposed on MH/SUD benefits may NOT be more
restrictive than those imposed on medical/surgical
benefits
• Treatment limitations (e.g., frequency of treatment, number of visits, number of days or
similar limits on scope or duration of treatment) imposed on MH/SUD benefits may NOT be
more restrictive than those imposed on medical/surgical benefits
• Plans cannot require a patient to go to a MH/SUD facility in their own local or state area if
the plan allows plan members to go outside of local or state areas for other medical services
• Plans are prohibited from using “separate but equal deductibles.” In other words, MH/SUD
and medical/surgical benefits must add up together towards the same, combined deductible
• Plans cannot exclude certain types of MH/SUD facilities or provider types while covering a
full range of medical/surgical facilities and provider types

Parity Implementation Coalition + The Kennedy Forum 17

PART II: Parity Background

• Criteria for medical necessity determinations must be made available to any current or
potential plan participant, beneficiary or contracted provider (in-network) upon request
• The reason for any denial of reimbursement or payment must be made available to the
participant or beneficiary
• Where there is a similar state parity law or regulation, the federal parity law serves as the
floor. State regulators must enforce at a minimum the federal requirements, along with any
additional state requirements
• State laws that offer more consumer protections than the federal law are NOT preempted

Parity Rule Summary

A brief summary of the final rules is below. Click here for a technical, detailed summary of the
final rules.

The final regulations explaining how the law must be complied with were published by the U.S.
Department of Labor (DOL), U.S. Department of Health and Human Services (HHS) and the
U.S. Department of Treasury (Treasury) on November 13, 2013.

Final Regulations Overview

The parity law regulations were published in two stages: as interim final rules and final rules. The
final rules were published in November 2013, and all health plans that are subject to the law now
must comply with the final rules.

Scope of Service
The final rules clarified the scope of service issue by stating:
1. The six classification of benefits scheme (i.e. inpatient in- and out-of-network, outpatient in-
and out-of-network, emergency care and prescription drugs) was never intended to exclude
intermediate levels of care (intensive outpatient, partial hospitalization or residential)
2. The language in the final rules on scope makes it clear that each classification and sub-
classification has to meet all parity tests within that classification and further states that
“the classifications and sub-classifications are intended to be comprehensive and cover the
complete range of medical/surgical benefits and mental health or substance use disorder
benefits offered by health plans and issuers.” This language, coupled with the new, specific
examples around intermediate levels of care, demonstrates that the range and types of
treatment services offered by the plan for MH/SUDs must be comparable to the range and
types of treatment services offered for medical/surgical conditions within each class

18 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 PART II: Parity Background

3. The final rules clarify that plans must assign intermediate MH/SUD benefits to the
same classification of benefits as plans or issuers assign comparable intermediate medical/
surgical benefits
The preamble to the final rules explains:
For example, if a plan or issuer classifies care in skilled nursing facilities or rehabilitation
hospitals as inpatient benefits, then the plan or issuer must likewise treat any covered care in
residential treatment facilities for mental health or substance user disorders as an inpatient
benefit. In addition, if a plan or issuer treats home health care as an outpatient benefit, then
any covered intensive outpatient mental health or substance use disorder services and partial
hospitalization must be considered outpatient benefits as well. [78 F.R. 68247]

The net effect of this provision is that parity requirements (as clarified by the Frequently Asked
Questions (FAQs) issued by the Department of Labor) extend to intermediate levels of MH/SUD
care and that such services must be treated comparably with medical/surgical care under the plan.

Parity Testing Criteria

Under the final rules, there are two methods to test for parity compliance when comparing MH/
SUD benefits with medical/surgical benefits:

Quantitative Treatment Limitations (QTLs)

As described in the final rules, these include day and visit limits, deductibles, co-pays and
coinsurance.

Non-Quantitative Treatment Limitations (NQTLs)

The final rules provide examples of NQTLs that include, but are not limited to:
• Medical management standards limiting or excluding benefits based on medical necessity or
medical appropriateness or based on whether the treatment is experimental or investigative
• Formulary design for prescription drugs
• For plans with multiple network tiers (such as preferred provider networks and participating
provisions), network tier design

Standards for provider admission to participate in a network, including reimbursement rates:

• Plan methods for determining usual, customary and reasonable charges
• Refusal to pay for higher-cost therapies until it can be shown that a lower cost therapy is not
effective (also known as fail-first policies or step therapy protocols)
• Exclusions based on failure to complete a course of treatment

Parity Implementation Coalition + The Kennedy Forum 19

PART II: Parity Background

• Restrictions based on geographic location, facility type, provider specialty and other criteria
that limit the scope or duration of benefits for services provided under the plan or coverage

The preamble to the final rules also provides additional NQTL examples, such as:
• Limitations on inpatient services for situations where the participant is a threat to self
or others
• Exclusions for court-ordered and involuntary holds
• Service coding
• Exclusions for services provided by clinical social workers
• Network adequacy

Disclosure and Transparency

The final rules offer additional regulatory guidance and examples that clarify the application of pre-
existing federal law disclosure requirements under the Employee Retirement Income Security Act
(ERISA) and claims procedure, internal appeals and external review regulations to MHPAEA and
its implementation and enforcement.

MHPAEA requires that the criteria for medical necessity determinations be made available to any
potential or current enrollee or contracting provider upon request. MHPAEA also requires that the
reason for the denial of coverage or reimbursement must be made available to the plan participant
or beneficiary.

Additionally, ERISA requires employer group plans to disclose the medical necessity criteria for
both MH/SUD and medical/surgical benefits within 30 days of the request, as well as the processes,
strategies, evidentiary standards and other factors used to apply an NQTL to both behavioral
and medical benefits. Moreover, ERISA plans are required to comply with the Department of
Labor’s (DOL) claims procedure regulations; non-grandfathered group plans and health insurance
providers in both group and individuals markets are required to comply with the DOL’s rules under
the ACA regarding claims and appeals.

The preamble to the final rules also offers a reminder that regulations under the ACA and guidance
under FAQs issued by the DOL require certain plans and issuers to provide the claimant, free of
charge, during the appeals process with any new additional evidence considered relied upon or
generated by the plan or issuers in connection with a claim.

20 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 PART II: Parity Background

Enforcement
The final rules clarify, as codified in federal and state law, that states have primary enforcement
authority over health plans that offer insurance coverage in the state-licensed group and
individual markets. As such, states are intended to be the primary means of enforcing
implementation of MHPAEA.

The HHS, through CMS, has enforcement authority over issuers in states that do not comply. The
DOL has primary enforcement authority over self-insured ERISA plans.

Medicaid Managed Care, CHIP and Alternative Benefit Plans

As set forth in CMS’s April 6, 2015 “Medicaid Fact Sheet: Mental Health Parity Proposed Rule for
Medicaid and CHIP”:
• The proposed Medicaid/CHIP/Alternative Benefit Plans rule for MHPAEA ensures that all
beneficiaries who receive services through managed care organizations, alternative benefit
plans or CHIP will have access to mental health and substance use disorder benefits regardless
of whether services are provided through the managed care organization or another service
delivery system
• The proposed rule also prevents inequity between beneficiaries who have mental health
or substance use disorder conditions in the commercial market (including the state and
federal marketplace), Medicaid and CHIP and helps promote greater consistency for these
beneficiaries
• The proposed rule requires states to include contract provisions calling for compliance with
parity standards in all applicable contracts for these Medicaid managed care arrangements,
including prepaid inpatient health plans or prepaid ambulatory health plans
• Under the proposed rule, states that have contracts with managed care organizations and
states with Medicaid alternative benefit plans will be required to meet the parity requirements
regarding financial and treatment limitations consistent with the regulation applicable to
private insurers. Under the proposed rule, all types of CHIP programs, regardless of delivery
system (including fee-for-service and managed care), will be subject to parity standards

In addition, the proposed rule requires plans (or in some instances the state) to make available
upon request to beneficiaries and contracting providers the criteria for medical necessity
determinations with respect to mental health and substance use disorder benefits. The proposed
rule directs the state to make available to the enrollee the reason for any denial of reimbursement
or payment for services with respect to mental health and substance use disorder benefits.

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PART II: Parity Background

NOTE: The proposed Medicaid parity rule is not final. This resource guide is intended to be
updated periodically to include new developments regarding parity law implementation.

Other Issues

Cost Exemption for Plans and Issuers

The final rules provide a formula for how plans and issuers can file a cost exemption if the changes
necessary to comply with the parity law raise costs by at least 2% in the first year. No plan has
received such a cost exemption to date.

Tiered Networks
The final rules allow plans and issuers to sub-classify benefits
Helpful Consumer Tip
to reflect multiple provider network tiers, but only if tiering
is based on reasonable factors in accordance with the NQTL Make sure you have these important
rule and without regard to whether the provider is a medical/ items when speaking with an insurance
surgical or MH/SUD provider. After sub-classifications are representative:
established, the plan or issuer may not impose financial
requirements or treatment limitations more stringently on • Original Bill
MH/SUD benefits in any sub-classification than the • Explanation of Benefits (EOB)
plan imposes on medical/surgical benefits in accordance with • Insurance Card (Group Number)
the NQTL rule.
• Customer Service Phone Number
• Reason for Denial Letter, if available
Application to the Individual and Group Markets
The final rules apply to large group plans and all individual
plans for the plan year beginning on or after July 1, 2014.
As referenced above, MHPAEA indirectly applies to non-grandfathered, small group health plans
through the Affordable Care Act’s essential health benefit
(EHB) requirements.

Non-Federal Governmental Plans

Local and state self-funded governmental plans may
continue to apply to CMS for an exemption from
MHPAEA’s requirements. Such plans must, however,
comply with specific disclosure requirements to maintain exemption eligibility.

Multi-Tiered Prescription Drugs

A plan may have multi-tiered prescription drug programs that apply different levels of financial
requirements to different tiers of prescription drugs if such tiers are based on reasonable factors in

22 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 PART II: Parity Background

accordance with the NQTL rule and without regard to whether the drug is prescribed under the
medical/surgical or MH/SUD benefits.

Final Rule Enhancements

The final rules contain important additional guidance and clarifications to the 2010 interim
final rules:

Scope of Service. Parity requirements are extended to intermediate levels of care (e.g., intensive
outpatient, partial hospitalization and residential). (See examples 9 and 10 in the final rules for
additional details on how this rule impacts residential SUD facilities.)

Removal of NQTL Exception. The “recognized clinically appropriate standard of care” exception
to the NQTL rule was removed, so that plans are no longer permitted to apply more stringent
limitations on MH/SUD services by simply stating that “recognized clinically appropriate standards
of care permit a difference.” (See NQTL section on the following page for more detail.)

Disclosure and Transparency under ERISA. Instruments under which the plan is established
or operated must be furnished to a participant or authorized representative within 30 days of
request. Plan documents/instruments include any document or instrument that specifies procedure,
formulas, methodologies or schedules to be applied in determining or calculating a participant’s
entitlement under the plan regardless of whether such information is contained in a document
designated as a “plan document.” Plans subject to these ERISA requirements include both self-
insured and fully funded large and small group plans.

NQTLs. Plans may not impose geographic location, facility type, provider specialty or other
limitations or exclusions that limit the scope or duration of benefits, including intermediate levels
of care, unless they are imposed comparably under the medical benefit. These are examples of
medical management techniques for which the NQTL rule applies. Thus, for instance, plans will
no longer be able to require a patient to go to an MH/SUD facility in their own state if the plan
allows plan members to go out-of-state for other medical/surgical services.

The final rules maintain the “comparable and no more stringently” standard on NQTLs and
continue to require plans to disclose the “processes, strategies, evidentiary standards and other
factors used by the plan or issuer to determine whether and to what extent a benefit is subject
to an NQTL and be comparable and applied no more stringently for MH/SUD than for medical/
surgical” benefits.

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PART II: Parity Background

A significant improvement in the final rules is that plan participants or those acting on their
behalf will now be able to request a copy of all relevant documents used by the health plan to
determine whether a claim is paid. (See disclosure section for more detail on what documents may
be requested. Current or potential enrollees may request this information and plans are required to
provide it within 30 days.)

Reimbursement Rates
The final rules re-affirm that provider reimbursement rates are a form of NQTL. The preamble
clarifies that plans and issuers can look at an array of factors in determining provider payment rates
such as service type, geographic market, demand for services, supply of providers, provider practice
size, Medicare rates, training, experience and licensure of providers. The final rules re-affirm that
these factors must be comparable and applied no more stringently to MH/SUD providers than as
applied to medical/surgical providers.

24 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
Health Plan
Coverage Checklist
My health plan coverage is through:

❑❑ My employer:
❍❍ My plan is a fully-insured plan; any plan denials are eligible for state
external review
❍❍ My plan is a self-insured plan; any denials are NOT eligible for state
external review
❍❍ My employer employs more than 50 people

❑❑ A policy I bought myself

❑❑ An association-sponsored policy (such as a trade or educational organization)
❑❑ Other

My health plan:

❑❑ Covers mental health and addiction benefits

❑❑ Manages mental health and addiction benefits directly
❑❑ Contracts with an outside entity (e.g., Managed Behavioral Health Organization
(MBHO)) to manage them

Plan phone number to call if I have a problem:

My primary care physician is:
My physician’s phone number:
My mental health/addiction provider’s phone number:
I need prior authorization for:

❑❑ I do not need a referral from my primary care physician

OR

❑❑ I need a referral from my primary care physician for:

❍❍ Lab and x-ray tests
❍❍ Other specialist visits
❍❍ Other

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 Benefit Coverage Checklist:
Exclusions and Limitations
Depending on your type of health insurance plan, you may have a Summary of Benefits and Coverage, a
Summary Plan Description, Evidence or Certificate of Coverage and a Benefits Booklet.

I have reviewed the Exclusions, Limitations and Helpful Tip:

Non-Covered sections of my benefit coverage. Keeping Good Records is Critical
My health plan will not pay for or limits the
following mental health/substance use disorder HELPFUL SUGGESTIONS FOR RECORD-KEEPING:
services:
• Decide who in the family will be the record-
•
keeper or how the task will be shared
• Get help from a friend or relative if needed
• • Set up a file system in a cabinet, drawer, box or
loose-leaf notebooks
•
• Review bills soon after receiving them
• Check all bills and explanations of benefits to
If I have in-network benefits only, is my provider
make sure they are correct
in my health plan network?
• Save and file all bills, payment receipts and
canceled checks
My plan will cover services at the following
• Keep a daily log of events and expenses
• Maintain a list of addiction/mental health care
hospitals:
team members and all other contact persons
• with their phone and fax numbers. Keep filed in a
notebook or file for easy access
•
KEEP RECORDS OF THE FOLLOWING:
•
• Medical bills from all health care providers
What should I do if I need care while I am outside • Claims filed
my plan’s service area?
• Reimbursements (payments from insurance
companies) received and explanations of benefits
• Dates, names and outcomes of contacts with
For non-urgent care:
insurers and others
Provider: • Non-reimbursed or outstanding medical and
Phone: related costs
• Long-distance telephone calls related to medical
For urgent care: or other types of medical care
• Admissions, clinical visits, lab work, diagnostic
Provider:
tests, procedures and treatments
Phone: • Drugs given and prescriptions filled

26 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
PART III: Appeals Overview

C
hallenging a coverage denial by a health plan is a legal right guaranteed to all insured
people, whether under medical or behavioral health benefits. All plans—including
Medicaid managed care, private individual and group insurance policies provided in and
outside of ACA exchanges and employer sponsored health plans—must provide a process to
reconsider or appeal an adverse determination (denial of
coverage) by a health plan. Appeal timelines and deadlines
vary. Each insured individual should carefully read appeal
instructions enclosed with denial letters and become familiar How to Get Answers to
with their plan’s appeal processes and timelines. Insurance-Related Questions

Questions about insurance coverage often

Patients and their providers can leverage a number of
arise when individuals are trying to access
different resources and regulations to support their adverse
mental health/addiction care. Here are
determination (denial of coverage) challenge as described
some tips for answering insurance-related
in this resource guide. Regulations governing the types of
questions:
appeals that an insured or authorized representative provider
can file, the process and timeframes are also addressed though • Speak with your insurer or managed care
this guide. In addition to a direct parity challenge through provider’s customer service department.
MHPAEA, appeal options include, but are not limited to, • Ask for the person’s name each and
federal and state laws supporting utilization management every time you call.
appeals or medical necessity, administrative grievance filings • Make a note of the person’s name and
and external review. the date and time of the call.
• Ask your provider for help.
MHPAEA also guarantees new rights to individuals with • Talk with the consumer advocacy office
mental health and substance use disorders and their providers of the government agency that oversees
that will make coverage rules more transparent and improve your plan (ask for and write down the
the appeals process. These new rights are: names of who you speak to).
See Appendix C in this toolkit for
1. Plans are required to provide the medical necessity
helpful links.
• Learn about the laws regarding
criteria (see “Terms to Know”) upon request to plan
insurance that protect the public.
participants and providers
2. Plans are required to provide a reason for the denial of
any claim to the insured and providers
3. Plans are required to disclose their parity compliance review and testing if a parity law
challenge is made

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PART III: Appeals Overview

Understanding Appeals

How does the appeals process work?

In general, the appeals process is similar in all plans except for Medicare prescription drug
plans, which have their own rules. There are several levels of appeals available to plan members
depending on the type of plan. Typically, an initial appeal for requested services or treatment must
be denied before a second level appeal can be sought.

The initial (first) and second levels are often called “internal appeals” because they are performed
by the health plan. These internal appeals must be exhausted before an “external review” (see
“Terms to Know”) may be requested.

If in the judgment of the attending provider or a health plan medical director a delay in treatment
poses a threat to the patient’s life, an expedited review should be requested. Health plans must
have expedited processes to deal with requests for medical services that a patient’s physician feels
are urgent. If a patient’s appeal involves an urgent need for care, the individual filing the appeal
must make that clear to the health plan so the appeal will be expedited. For example, federal
ERISA regulations require employer-sponsored health plans to respond to an urgent care claim
within 72 hours.

Response times vary from plan to plan depending on the type of dispute. The plan will usually
act more quickly if the service has not been provided or if the patient is already in the hospital
or treatment center. Some health plans report that they handle the first level of reviews within
one business day for services not yet provided, but others may take longer. Timeframes will vary
depending on what type of health insurance an individual may have (e.g., employer-based versus
individual market) and who regulates or oversees the individual’s policy. Timeframe requirements
can be established by federal and state laws and/or by accreditation standards. If more than one
source of timeframes apply, then the shortest timeframe will govern.

If the insured individual or the attending provider does not agree with the result of the plan’s initial
review, most plans allow either party to appeal the decision to another plan physician who was not
involved in the initial decision. Each health plan has its own rules about who will be members of
the review panel, but the plan must follow any applicable federal and state laws. It may include
physicians, consumers or representatives of the health plan. Federal ERISA regulations applicable
to employer-sponsored health plans require that if the appeal involves a medical judgment, the
reviewers must consult with a qualified health care professional. Many state laws and accreditation
standards also require a true “peer to peer” consultation.

28 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 PART III: Appeals Overview

In addition, most health plan offerings are subject to federal or state “external review”
requirements. In such cases, plan officials must notify the insured individual and their doctor that
the original adverse determination (denial) has been upheld and then tell the patient how to file
an external appeal.

What types of appeals are there?

There are a number of types and levels of appeals that an insured individual, attending provider or
advocate can utilize, some of which overlap. The resource guide describes the following type
of appeal:
• Internal Health Plan Appeals
ŊŊ Parity Appeal (i.e. MH/SUD vs. other physical coverage comparability analysis)
ŊŊ Clinical/Utilization Management (UM) Appeal (e.g., “medical necessity” appeal)
–– Expedited (for urgent circumstances)
–– Standard
ŊŊ Administrative/Grievance Procedure Appeal (e.g., payment or scope of coverage related to
the plan documents dispute)
• External Appeals
ŊŊ External Review Appeal
ŊŊ Regulator Complaints
ŊŊ Accreditation Audits
ŊŊ Arbitration Hearing
ŊŊ Judicial Hearing

How do the internal appeal options differ?

Each internal health plan appeal has a particular focus, but it is important to understand that
some issues subject to the grievance or appeal may overlap. The good news is that if the insured,
attending provider or their representative goes down one track, they can always switch gears and
file another type of internal appeal.

In fact, the insured has access to a number of internal appeal options to get the ball rolling.
Typically, there are two entry points to initiate an appeal based upon a parity violation:

• Clinical/Utilization Management Appeal. An insured individual, family member or

attending provider will typically file a UM appeal when the health plan has denied or reduced
the level of care based on what the plan deems is “medically necessary”. A UM decision

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PART III: Appeals Overview

is based upon evidence-based medical necessity criteria or Appeal Tracking Checklist

guidelines. The basis of the appeal may or may not be parity-
related. There are many Who to call regarding a health
plan appeal
other reasons why a health plan should cover an insured’s
MH/SUD services.

If the adverse determination was related to a clinical issue, Who to call:

then a medical necessity or UM appeal probably should be
filed. Here are some questions to ask:
Where to write:
ŊŊ Is the treatment, service or medically necessary item
indicated for this patient at this point in time?
ŊŊ Are essential treatments excluded or does the plan refuse to How soon must I appeal?
pay for entire levels of care?
ŊŊ Is the treatment considered experimental or a non-
How many days will it take to receive
standardized treatment? a response?
ŊŊ Is the plan using internally developed medical necessity
criteria that diverge from nationally recognized standards (List the response times for each level
of review)
of care?
Level 1:
• Administrative/Grievance Procedure Appeal
An administrative appeal typically addresses a nonclinical
Level 2:
issue and is filed when there is a dispute about the level of
benefits being covered by the insurance coverage itself, such
as a non-covered benefit or exclusion. Insured individuals may Expedited Review (For Urgent Care):
need to consult with their attending healthcare providers or
their state’s consumer assistance program or regulator to make
sure they are taking the correct follow-up action. The patient NOTE: Federal ERISA regulations for
or their advocate should review the summary plan description employer-sponsored health plans provide
(SPD) or certificate of coverage to become familiar with the that a health plan cannot require more
scope of coverage and any exclusions. Familiarity with federal
than two levels of appeals, and that if two
levels are used, both must be completed
and state mandated benefit laws can also be important (e.g.,
within the response time allowed by the
the ACA, which is the 2010 health reform law, mandates regulations.
MH/SUD coverage as one of ten essential health benefits;
many states have statutes mandating behavioral health benefit
coverage as well).

If the adverse determination was related to a coverage issue,

then an administrative appeal probably should be filed. Here
are some sample questions to ask:

30 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 PART III: Appeals Overview

ŊŊ Has the plan denied care for a behavioral health treatment because it is not a
covered benefit?
ŊŊ Has the plan refused to pay its full share of an out-of-network claim based upon the benefit
coverage description?
ŊŊ Is the plan excluding entire levels of care while providing similar levels of care for medical
conditions?
ŊŊ Is the plan excluding non-hospital facility types
while providing coverage for non-hospital facilities Managed Care
for medical conditions? Appeals Checklist

What type of appeal is more common ❑❑ Identify the type of insurance policy
regarding a parity violation? (fully insured or self-insured)
According to advocates, many appeals involving a dispute ❑❑ Understand the terms of the policy (and
related to a parity issue are initiated and handled through what it does and does not cover)
the UM appeals process. This is due to several factors.
❑❑ Determine if the plan is subject to ERISA,
For example, the UM appeals system has been in place ACA and/or MHPAEA. Your rights to plan
for decades and many parity violations involve medical document or external review remedies may
necessity coverage determinations (i.e. a “nonquantitative vary depending on which law(s) govern your
treatment limitation” as discussed throughout this resource plan type
guide). In addition, several court decisions have issued
❑❑ Obtain the medical necessity criteria for
rulings based upon a medical necessity test of the requested both the mental health/addiction and
service rather than delving into a parity test. In other cases, medical benefit so you can compare how
a parity appeal could be handled through the administrative coverage decisions are made
process or through another avenue. Patients or their
advocates should check in with the applicable regulator,
❑❑ If there is a possible violation of MHPAEA,
reference that in your appeal
plan administrator, attorney or other expert to confirm
which appeals process to use. ❑❑ Obtain the reason for the denial of care
❑❑ Request an analysis from the plan of how
What are the advantages of adding a the criteria was comparable and applied no
parity violation to a traditional clinical or more stringently to the MH/SUD benefits
administrative appeal? versus medical/surgical benefits
When filing an appeal, the insured, their attending provider
or advocate should take advantage of the additional
disclosure, transparency and analysis requirements afforded by MHPAEA. In many respects, this
gives the patient more due process to ensure that the health plan is not taking any shortcuts
regarding the obligations of the insurer to cover MH/SUD services to the same extent as medical/
surgical services. For example, an appeal that includes a challenge based on MHPAEA compliance
should entitle the insured or their attending provider to plan documents the individual would
not be eligible to receive in other appeal types. In some cases, the insurer and group health plan

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PART III: Appeals Overview

sponsor may be two different entities with different information available under MHPAEA, so the
insured or their authorized representative may need to reach out to one or both entities depending
on the specific circumstances of how the coverage is offered.

How is the initial UM determination made?

The UM or medical necessity decision-making process is usually comprised of several
important steps:
• Initial Clinical Review. In order to make an adverse determination (denial) for a
recommended treatment, the health plan must have
a “first-level review” or an “initial clinical review”
completed by an appropriately licensed or qualified
professional. This is not considered an appeal, but is a State of New Jersey
normal part of the peer review process within utilization Department of Banking
review before a formal adverse determination or denial
and Insurance
is made.
For one example of a state’s UM appeals
• Peer Clinical Review. During the initial clinical review process, see New Jersey. Click here.
process or upon reconsideration after the initial adverse
determination, the insured or their representative can
request a “peer clinical review.” Health plans must
conduct this additional layer of peer review for all cases where care is denied in part or in
full through initial clinical review or pre-review screening. The peer clinical reviewer used
by the insured’s health plan (or another qualified professional who is board certified in the
same or similar practice as the treating provider) must be available to have a “peer to peer”
conversation with the insured’s attending provider as part of the process.

What are the different levels of appeal?

When an adverse determination, such as a denial to pay for care, is made through the UM process,
the insured has several levels of appeals that they can pursue:

• Expedited or Standard Appeal. The insured or the attending provider must be informed
by the health plan about their rights to file an expedited appeal for urgent cases (where the
patient is in imminent danger) and a standard appeal for non-urgent cases. The health plan
must explain the entire process of how to file an appeal within the applicable timelines. The
insured, attending provider or treating facility must have the opportunity to submit all of the
appropriate documentation supporting their case.

In most cases, a health plan will offer a second level UM appeal process. The insured, their
provider or representative must check the plan documents and be sure to carefully read the
appeal instructions enclosed with the upheld denial on the first level appeal. Second level

32 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 PART III: Appeals Overview

appeals are oftentimes required to be exhausted, but for some plans, they are optional. Once
the internal UM appeals process is exhausted and if the adverse determination or denial has
been upheld, further appeal options are outlined below. Again, plan documents, instructions
enclosed with the second level denial being upheld and federal and state regulations will
direct the insured or their provider to the next step.

• External Review. Most states and the federal government, through the ACA, have
established an additional layer of consumer protections called external review, which is
supposed to be handled by independent third parties. For background information on how
to file an external or independent review appeal, click here. Instructions for submitting an
external review, including contact information of the external review organization, timeframe
for submission, types of documents to include, etc. are enclosed with the plan’s decision to
uphold a denial on the second level internal appeal. Please read and follow the instructions
carefully. If insureds or their representatives have further questions, they should contact their
state regulator (for fully-insured plans) or federal regulators (for self-insured plans) to find out
what the insured or their attending providers’ specific rights are.

Please note that this option may not necessarily be available for insureds covered by self-
funded, grandfathered ERISA plans. In such cases, recourse may be limited to a civil lawsuit
in federal court.

• Other Options. After exhausting one or more of the internal or external review appeals
mechanisms, insureds or their representatives may consider filing formal grievance with
the applicable regulators or accreditation agencies. In addition, insureds might want to
consider filing a legal action against their health plans or third party claims administrators.
See Appendix C for links to the relevant regulators or the section below on accreditation
agencies.

How are administrative appeals handled?

In terms of a grievance associated with the amount of payment or “scope of coverage” issue
(benefit exclusions or limitations) under the insurance benefit plan, the health insurance plan and
applicable regulatory agency may have a different process to file a complaint or appeal than what is
used to file a UM appeal. Instructions for filing administrative appeals from administratively denied
care are typically enclosed with the denial letter. The insured or their representative could also
contact the applicable health plan or regulator to learn more. It is important to review the plan
documents such as the SPD, appeal instructions and/or applicable regulations to determine how
many levels of appeals are available through an administrative appeal.

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PART III: Appeals Overview

What are the timeframes to make a decision?

Different timeframes must be followed depending whether the care is being requested prior to care
(e.g., “prospective UM”), during care (e.g., “concurrent UM”) or after care has been delivered (e.g.,
“retrospective UM”).
• All appeals that concern future or ongoing medical care must be handled in a timely manner.
Timeframes have been standardized for all non-grandfathered plans by the ACA and
applicable state laws
• In cases involving life-threatening or urgent care, appeals must be handled on an expedited
basis
• Appeals involving care that has already been delivered (e.g., retrospective review of claims)
typically take longer

Please check with state, federal and/or accreditation guidelines to find what the specific timelines
are in a particular case. In most cases, if the patient is actively seeking care, health plans must
respond within 24 to 72 hours. Retrospective reviews of payment decisions can take 30 days
or more.

Do appeals cost money?

The answer is usually not, but it depends on the type of appeal:
• Internal Appeal. A health plan cannot charge an insured individual or the attending
provider to file or process an appeal.
• External Appeal. Most external reviews do not cost money, but there are one or two
rare exceptions. Check with your local regulator to be sure.
• Regulator/Accreditor Complaint. No charges should be incurred by the insured
individual or their attending provider to file a complaint with the applicable regulator
or accreditation agency.
• Arbitration/Litigation. After the health plan appeals process has been exhausted, an insured
individual or their attending provider may incur charges by using outside experts such as an
arbitration panel or lawyer.

34 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
PART IV: Parity Appeals

Background

What is the source of parity regulations?

A parity appeal can be based upon the federal parity law or a similar state law. In addition, if an
insured’s health plan is accredited by URAC pursuant to its Mental Health Parity Accreditation
Standards or by the National Committee for Quality Assurance (NCQA) pursuant to its Managed
Behavioral Healthcare Organization Standards, those requirements would apply.

What information should a person know about their insurance policy?

As a patient, provider or advocate, there are certain steps that must be taken to ensure the greatest
likelihood of successfully appealing a claim.

BEFORE DOING ANYTHING ELSE, THE INSURED OR THEIR

REPRESENTATIVE SHOULD:

Understand the insurance policy and benefits

Knowing what the insurance policy will and will not cover prior to a doctor’s appointment,
procedure or inpatient admission allows the insured individual to make more informed decisions
about their health care. Often, a summary plan description (SPD) and Benefit Booklet are made
available to the insured. This information should be offered through the insurance company’s
website, an online Exchange or in-house through an employer’s HR department. The insurance
broker, plan representative or human resources personnel will know where to find it if the insured
individual cannot locate it.

Know when the patient needs to obtain pre-authorization

The attending provider or facility will typically contact the plan to verify which types of services
under the plan require pre-notification, pre-authorization and/or referral. Individuals can also
find this information in the benefit plan documentation or by calling the insurance company’s
customer service.

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PART IV: Parity Appeals

What does a parity violation look like?

The term parity means “equal to” 1. The parity law is fundamentally grounded in ensuring equal
access to treatment services under both the behavioral health and medical benefits offered by
a health plan. Thus, the parity law requires that a health plan’s policies and practices to cover
behavioral health services cannot be more restrictive than policies and practices for medical or
surgical services. The comparisons between behavioral and medical/surgical benefits are made
according to the same classes of benefits, namely:
• Inpatient to inpatient
• Outpatient to outpatient
• In-network to in-network
• Out-of-network to out-of-network
• Emergency care to emergency care
• Prescription drugs to prescription drugs

A parity violation can take many forms. Some policies and practices covered under the parity
law are easily measured by a dollar amount or a number; for example, “financial requirements”
such as co-payments or deductibles and “quantitative limits” such as the number of outpatient visits
allowed each year. Under the parity law, financial requirements and quantitative limits cannot be
more restrictive for behavioral health services than for medical services in the same
class of benefits.

Other health plan practices or policies are called “nonquantitative treatment limitations” because
these limitations cannot be measured by a dollar amount or number (NQTL). The basic rule is that
a health plan cannot impose an NQTL that is not comparable or that is applied more stringently to
MH/SUD benefits than to medical/ surgical benefits.

Here are some common examples of policies and practices that may violate the federal parity law if
they are applied more restrictively to behavioral health benefits:
• Limits on the quantity or frequency of treatment. If a health plan places caps on the number
of inpatient days or outpatient behavioral health visits allowed each year, but does not have
the same caps on inpatient days or outpatient medical visits, the health plan is likely in
violation of the federal parity law. Similarly, if a health plan limits outpatient behavioral
health visits to once a week or every other week, but does not limit the frequency of medical
outpatient visits, there is likely a parity violation.

1 Guidance in this section provided courtesy of Community Catalyst Guidance for Advocates: Identifying Parity
Violations & Taking Action. Guidance for Advocates: Identifying Parity Violations & Taking Action.

36 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 PART IV: Parity Appeals

• More restrictive prior authorization policies for behavioral health. Many health plans
require prior authorization for non-emergency inpatient facility or hospital services, both
medical and behavioral health. However, if in practice a health plan’s prior authorization
routinely approves up to seven inpatient days for medical services but just three inpatient days
for behavioral health inpatient services, the plan is likely in violation of the federal parity law.
The parity violation is the result of the health plan applying the prior authorization process
more stringently to behavioral health services.
• Excessive concurrent review policies. When a patient is admitted to an inpatient or
residential treatment facility or to day treatment, or is in need of long-term outpatient
counseling, health plans may periodically review the medical necessity of the treatment in a
process known as concurrent review. If health plans require concurrent review too frequently
or impose overly burdensome requests on behavioral health care providers as compared with
medical care providers to justify continued treatment, the plan may be in violation of the
federal parity law.

In addition, under federal and state laws, health plans must make meaningful disclosures of plan
documents and clinical guidelines to enable a parity appeal, as well as other types of medical
necessity or administrative appeals.

What is the testing methodology to assess whether a parity violation

has occurred?
When an adverse determination (denial of coverage) for behavioral health services has been made,
or when behavioral health services have not been paid for at the same level as medical services,
there are two types of parity tests to help determine whether a violation has occurred:

Quantitative Treatment Limitation (QTL)

A parity violation may have occurred pursuant to a QTL analysis under one of these types of
scenarios for each class of benefits:
• Are the patient’s behavioral health benefits subject to higher out-of-pocket spending than at
least 2/3 of the medical benefits in the same class?
• Are the patient’s behavioral health co-insurance amounts higher than the co-pay or co-
insurance amounts applied to at least 2/3 of the medical benefits in the same class?
• Are the patient’s behavioral health day and visit limits applied more restrictively than the day
and visit limits applied to at least 2/3 of the medical benefits in the same class?

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PART IV: Parity Appeals

Does the net effect of the plan’s treatment limitation result in zero (0) days of coverage for MH/
SUD care? For example:
• Does the plan exclude levels of care for behavioral health services, while covering a full
continuum of care for medical/surgical services?
• Does the plan offer out-of-network coverage for behavioral care that is more limited than out-
of-network coverage for other medical conditions?
• Is the plan requiring the patient to receive in-state treatment for MH/SUD treatment while
permitting medical/surgical patients to receive care out-of-state?

Non-Quantitative Treatment Limitation (NQTL)

A parity violation may have occurred pursuant to an NQTL Helpful Tip
analysis under one of these types of scenarios. For example:
More than 20% of appeals of denials of
• Is a comparable treatment, service or medically
coverage or reimbursement by health
necessary item provided by the plan to covered
insurers are successful in favor of the
individuals with other medical conditions?
covered individual and an even higher
• Is the plan requiring the patient to “fail first” at MH/ number at the external review level.
SUD lower cost treatments? Just because this process can be long
• Are there differences between behavioral health and and complicated does not mean it is
medical/surgical coverage regarding: not worth it. Individuals should keep
all of the plan’s coverage information
ŊŊ Formulary design for prescription drugs?
and correspondence in a notebook or
ŊŊ Standards for provider admission to participate in a an online file to help ease the process
network, including reimbursement rates? and organize your appeals materials.
ŊŊ Plan methods for determining usual, customary and Individuals often do not win at the first
reasonable charges? level of appeal. Success is more likely
with ongoing and persistent appeals
ŊŊ Exclusions based on failure to complete a course
until all options are exhausted.
of treatment?
ŊŊ Restrictions based on geographic location, facility
type, provider specialty or other criteria that limit the scope or duration of benefits?

In addition, are there any separate treatment limitations applied to the behavioral health benefit
that are not applied to the medical/surgical benefit?

38 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 PART IV: Parity Appeals

Filing a Parity Appeal

What is a MH/SUD parity appeal?

The focus of this resource guide is to help the insured, a provider or an authorized representative
to challenge an adverse determination or denial of
coverage related to mental health and substance use
disorders (MH/SUD). MHPAEA and some state laws
allow insured individuals or their providers to challenge Critical Information
a coverage determination if the plan does not cover the
You may have to file your appeal within
same level or scope of services for MH/SUDs as the plan
a specified time period; it is vital that
covers for medical/surgical conditions. A parity appeal of
you do so.
denied or limited services may be based upon the insurer’s
determination that the behavioral services requested are For example, the health plan may require
not medically necessary or are not a covered service under that it receive your appeal within one year
the benefit plan. of the date of treatment or within 60 days
of the date the plan tells you it’s not paying
How should an individual initiate a your claim, whichever comes first.
parity appeal?
Federal ERISA regulations require that
In most cases, an individual or their authorized
employer-sponsored health plans (both
representative/provider will initiate the parity appeal
insured and self-funded) must give you at
through the clinical or administrative appeals system as
least 180 days to file an appeal.
described above. Adding a parity law compliance challenge
to the appeal will require a health plan to provide more Know your plan’s timetable for all stages of
disclosure of information, documents and the plan’s parity an appeal.
compliance review and testing.
If your dispute involves an urgent need for
health care, make sure that you understand
What should a person do if the pre-
and follow any special procedures and
authorization request is denied?
timelines that apply in such cases.
It is not unusual for a pre-authorization request to be
You may be eligible for a response within
denied. In cases where prior-approval (and resulting
one to three days if you have an urgent
payment) is not approved by the plan to cover a test,
need. Know your rights!
procedure, treatment services or provider type, it is
important to have a working relationship with a customer
service representative or case manager at the health plan
with whom the patient or authorized representative/provider can talk about the situation.
A first step should be to re-submit the request for care or the claim with a copy of the denial
letter. The patient may need the treating physician to explain or justify what has been done
or is being requested.

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PART IV: Parity Appeals

Sometimes the test or service will only need to be “coded” differently, or the health plan might
just need additional information. If questioning or challenging the denial in these ways is not
successful, then the patient may need to:
• Resubmit the request for care or claim a third time and request a doctor to doctor
(peer to peer) review
• Ask to speak with a supervisor who may have the authority to reverse a decision
• Request a written response outlining the reason for the denial
• Keep the originals of all letters
• Keep a record of dates, names and conversations about
the denial Helpful Tip
• Get help from a consumer service representative
Keep a log of every telephone call you
from a state or federal agency (see Appendix C for
make with the plan. Be sure to record
helpful links)
the date and the name of the person
• Do not back down when trying to resolve the matter you spoke to, take notes about the
• Formally appeal the denial in writing, explaining why conversation and request a Reference
the request for care or claim should be paid Number for your call. Keep copies of
every document you send the plan.

What information does someone need to Ask what will happen next and when it
file an appeal? will happen. If the plan representative
MHPAEA requires that plans use the same cost containment says they will have to find out the
techniques, both “quantitative” and “nonquantitative information and get back to you, ask
treatment limitations” (see “Terms to Know”) on behavioral when you can reasonably expect a reply
health conditions as imposed on other medical conditions. and put a reminder on your calendar.
As a result, to better prepare the appeal, the patient should Set a reminder on your computer if you
request the following from the plan: use one.

1. A copy of the plan’s summary plan description (SPD), If you don’t hear from the plan, it’s time
complete benefit booklet and any other evidence/ for another call!
certificate of coverage documents
2. A complete list of the medical/surgical conditions
covered by the plan and the terms under which they
are covered
3. A copy of the plan’s medical necessity criteria for MH/SUD services and for other
medical services
4. Any clinical guidelines used by the plan to make benefit determinations for both
medical and MH/SUD conditions

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 PART IV: Parity Appeals

5. If the plan is subject to ERISA (large and small employer group plans), request all plan
documents or instruments related to how the plan is established or operated

What timeframes apply?

The federal ERISA regulations applicable to employer-sponsored health plans establish maximum
response times for different types of appeals: 72 hours for urgent care appeals; 15 days for standard
appeals; 30 days for post-service decisions for plans with two levels of appeal; 60 days for post-
service decisions for plan with one level of appeal.

State law and accreditation standards also establish response times for appeals for health plans. If
a health plan is subject to more than one source of standards, the most rigorous standards should
apply (i.e. the shortest timeframe to consider an appeal that benefits the patient).

What are some tips for a

successful appeal?
Appeals are only successful when they are:
• Presented according to the particular plan’s appeals
Helpful Hint
process and timeframe. It is important that the
insured individual, their attending provider or their Start by calling your state insurance
representative educate themselves about the particular regulator to learn more about your rights to
plan’s appeals processes file a grievance. See contact information in
• Factual, and clearly state their intent to appeal the Appendix C.
adverse determination (denial)
• Remain focused and to the point even as the person
jumps some of the bureaucratic hoops associated with most appeals

The most important element of an appeal letter is that it MUST be tailored to the specific
patient’s clinical need(s) as documented in the case/medical record and provide a clinical
justification in support of the recommended treatment, item or service. Individuals filing an
appeal should work with their treating provider to help get this information.

Because individuals are entitled to behavioral health benefits under MHPAEA at the same levels
as medical/surgical benefits, we also recommend that patients include the legal rationale to support
why the service or treatment should be covered under the law. The sample letters and legal
rationales in this resource guide help provide examples.

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PART IV: Parity Appeals

Plan Compliance with the NQTL Rule

In order for plans to comply with the parity law, they are required to do their own parity
compliance testing. In terms of NQTLs, plans must demonstrate that “any processes, strategies,
evidentiary standards, or other factors used in applying the nonquantitative treatment limitation to
MH/SUD benefits in the classification are comparable to, and are applied no more stringently than,
the processes, strategies, evidentiary standards, or other factors used in applying the limitation with
respect to medical surgical/benefits in the classification.” On the next page, please find a helpful
checklist for providers to obtain documents from the plan to ensure that the limits on MH/SUD
benefits are comparable and not more stringently applied.

42 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
Provider Request for
Documentation
Provider request for documentation of the specific criteria applied
“no more stringently than”

To: From:

Mgd Care Co: Provider:

Fax: Fax:

Phone: Phone:

Please disclose specific criteria and the processes, strategies, evidentiary standards and
other factors [insert plan name] used to apply such criteria or protocols to deny coverage
as detailed herein. Please document how this criteria and/or protocols are comparable to
the medical/surgical criteria and/or protocols and how they were applied to the behavioral
health services requested in a no more stringent manner than to similar service categories
under the medical/surgical benefits provider under the plan.

Patient/Insured’s Name:

Insurance Company:

Insurance Policy ID#:

Level(s) of care requested:

Should you have any questions regarding this request, please contact me at the phone
number listed above.

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PART V: Other Appeal Types

Medical Necessity/Utilization
Management Appeals
Helpful Tip

What is a utilization management (UM) or Expect to provide the following

“medical necessity” appeal? information in your written appeal:
A UM appeal allows patients, attending providers and • Your name, address and telephone
family members to challenge an adverse determination number
based upon a finding by the health plan that the care is • Your insurance plan number or group
not medically necessary or clinically appropriate. This code and member identification
type of appeal is often closely associated with a parity number or Social Security number
appeal. It is not uncommon for the parity and UM appeals • Your provider’s name and bill
to be combined when an individual or their provider is • Referrals to specialist services
trying to get requested behavioral health services covered (if relevant)
by the health plan. • Description of the service or
procedure that you requested to
What are the sources of regulations? be covered
To date, the vast majority of state insurance departments • Information supporting why the
regulate UM appeals. In addition, the U.S. Department service should be covered
of Labor (DOL) regulates self-funded ERISA plans. • Explanation of benefits (EOB) forms
Further, URAC and NCQA have adopted specific UM • References to the sections from the
accreditation standards that might be applicable to the Evidence of Coverage or Summary
individual’s health plan. It is important to assess which Plan Description that apply to your
regulations and standards apply to the patient’s given situation
circumstance. • Clinical information on your medical
condition or treatment, such as your
What is the difference between medical record, treatment guidelines
prospective, concurrent and retrospective from your plan, information from
UM decisions? medical journal articles or studies
It is important to understand that UM decision-making that says the treatment is more cost-
and appeal timelines may vary depending when the effective in the long-term
patient is receiving care. As a result, different regulations, • Documentation that the services are
standards and health plan policies might apply. Regarding covered by the plan or are required by
a particular episode of care, here is a general guide: state or federal law
• Legal rationale
• Prospective UM takes place before the patient is
going to receive care or is admitted for treatment

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PART V: Other Appeal Types

• Concurrent UM takes place while the patient is receiving care or in the facility or hospital
• Retrospective UM takes place after the patient has received care or has been discharged from
the facility or hospital

Timeframes can differ dramatically for each type of UM review. It is important to check with the
patient’s health plan, government agency overseeing the insurance policy, patient advocate or
other person who is familiar with the regulatory requirements or plan/timelines.

Administrative/Grievance Appeal

What is an administrative appeal?

If an adverse determination or denial for MH/SUD services does not involve a clinical
determination of necessity for the services and instead involves an administrative basis for
denying care, the insured, their attending provider or representative can file a grievance with the
health plan. In most states, administrative appeals cover a range of issues including an adverse
determination or denial of coverage related to services or provider types (settings) not covered by
the plan or payment issues.

What are the sources of the regulations?

To date, the vast majority of states regulate how an individual or provider can file an administrative
appeal or grievance against a health plan. In addition, the DOL adopted grievance and appeal
requirements that cover all ERISA plans. As highlighted below, the ACA also provides a
framework for filing a grievance. Further, URAC and NCQA have adopted specific grievance
procedure requirements that might be applicable to the health plan in question. It is important to
assess which regulations and standards apply to the patient’s given circumstance.

What are the new federal appeals procedure protections?

NEW FEDERAL RULES AS A RESULT OF HEALTH CARE REFORM LAW

PLEASE NOTE: If the health plan is “new” (came into existence after March
23, 2010 or has made significant changes to the plan’s costs or benefits), the below
processes and procedures apply. The new rules do not apply to “grandfathered” health
plans (plans in existence prior to March 23, 2010). Additionally, plans can lose their
grandfathered status if they make significant changes to plan’s costs or benefits.

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 PART V: Other Appeal Types

Internal Review
For new plan years beginning on or after September 23, 2010 (for the majority of plans, the
new plan year starts January 1), new regulations became effective as a result of the ACA, which
standardizes the internal appeals process used by new plans that patients can use to appeal coverage
or reimbursement decisions made by their health plans.

Under the new regulations, the internal appeals process for new plans must:
• Allow consumers to appeal when a health plan denies a claim for a covered service
or rescinds coverage
• Give consumers detailed information about the grounds for the denial of claims or coverage
• Require plans to notify consumers about their right to appeal and instructs them on how to
begin the appeals process
• Ensure a full and fair review of the denial
• Provide consumers with an expedited appeals process in urgent cases

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Helpful Form: Patient Request for Medical
Necessity Criteria for Behavioral Health Coverage
Sample Facsimile/Email Request
[Date]

Via Facsimile – [Fax No#] (or Email)

[Insurance Company and/or Managed Behavioral Health Company]

[Member Services Dept. or other applicable dept.]
[Address, if needed]

Dear [Member Services or other applicable dept.]:

My name is [insured patient’s name] and I am insured under policy # [insert policy #] and group #
[insert group #]. My plan is governed by the Federal Mental Health Parity and Addiction Equity Act.

I am currently a patient at [insert name of provider], and I hereby request a copy of the specific reason(s) for denial of the
treatment services requested and of the specific medical necessity criteria that you are relying on in denying reimbursement
for my treatment services. I am also requesting a copy of the medical/surgical “medical necessity” criteria for similar service
categories and the plan’s analysis of how the behavioral health criteria is comparable to and is applied no more stringently
than the medical/surgical criteria for similar service categories:

❑❑ Detoxification
❑❑ Inpatient rehab
❑❑ Residential
❑❑ Partial hospitalization
❑❑ Intensive outpatient
❑❑ Outpatient
❑❑ Prescription drugs
I have paid for this benefit, and [insert name of provider] is licensed by the state of [insert state] [and nationally accredited, if
applicable] to provide these treatment services. My attending physician has admitted me to this/these level(s) of care and is
recommending my continued treatment. I am in dire need of these treatment services and they are covered by my benefit plan
and should be paid for.

I request that you immediately fax this relevant information to me so that I may fully understand how you reached a different
decision than my treating physician in refusing to cover my treatment services.

Please fax the above requested information to my attention at fax # [insert #]. If you would like to speak with me, please
contact [insert name of applicable care provider contact].

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 PART V: Other Appeal Types

External Review

What is an external review appeal?

If the insured, their attending provider or authorized representative is not satisfied with the health
plan’s decision after completing the plan’s internal review process, they may be able to appeal the
plan’s adverse determination or denial of coverage to the state’s external review program and/or
under the new ACA requirements.

Most state and federal laws require the insured, their attending provider or representative to
complete all the steps in the plan’s internal appeals procedure before requesting external review.
Most jurisdictions specify time limits for the internal review, and some allow the individual to file
for external review if they have not received a response from the plan within the required time. In
emergency circumstances, patients may be permitted to file concurrent external appeals at the same
time as internal appeals.

If the patient or their attending doctor/facility has completed all the steps in the internal
appeals process and the plan has upheld the initial denial, they should receive a follow-up
written communication from the health plan explaining the rational for upholding the “adverse
determination” along with instructions on how to file an external review appeal. Usually the
individual must file within a specified period, often within 4 months after receiving the adverse
determination, in order to be eligible for external review.

If a delay in receiving services will cause the patient serious harm, most states have what is called
an “expedited review”, which requires a decision in a much shorter period, usually within 72 hours
of the external review organization’s receipt of the appeal. (Note: the entire expedited external
appeals process can take up to 10 days due to current bureaucratic delays in many states.)

What are the sources of regulations?

External review requirements can come from several sources, including federal law, state law and
accreditation standards. As highlighted below, most states regulate external appeals, and the new
federal health care reform law includes external review requirements. Further, URAC has adopted
external review accreditation standards that might be applicable to the insured’s health plan.

It is important to assess which regulations and standards apply to the patient’s given circumstance.
Here are some examples:

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PART V: Other Appeal Types

Commercial Coverage
• If a health plan is “non-grandfathered” and offers coverage through the commercial
marketplace or the Exchanges, federal or state law will apply depending on whether the state
has adopted regulations similar to the NAIC (see discussion below)
• If the health plan is “grandfathered” (was in existence before March 23, 2010 and has not
made significant changes to the plan’s costs or benefits) and offered through the commercial
marketplace or the Exchanges, state law will apply

Self-Insured Coverage
• If the health plan is “non-grandfathered” and is offering self-insured, employer-based coverage,
the new federal requirements will apply
• If the health plan is a “grandfathered” offering and is self-insured, employer-based coverage,
neither the existing federal nor state requirements will apply. Therefore, the patient may have
to turn to filing a legal suit in civil court

Accredited Coverage
• If a health plan is accredited by URAC for external review, URAC’s External Review
Standards will apply in addition to the applicable federal or state law(s)

A good starting point is to contact your plan administrator, local consumer advocate or state
regulator (as highlighted in Appendix C) to sort out which regulations and standards apply.

What are the new federal external review requirements?

AGAIN, PLEASE NOTE: If the health plan is “new” (came into existence after March 23, 2010
or has made significant changes to the plan’s costs or benefits) the below processes and procedures apply.

The federal regulations issued as part of the health care reform law creates a national standard
for how the external review process works for adverse determinations (denied claims). Under the
federal external review protections, the new requirements apply to any issues involving “medical
judgment.” The ACA external review rules include “whether a plan is complying with the
nonquantitative treatment limitation provisions of the Mental Health Parity and Addiction Equity
Act and its implementing regulations, which generally require, among other things, parity in the
application of medical management techniques” as a type of claim eligible for external review. The
term “medical judgment” is also intended to encompass benefit plan exclusions of provider–types or
levels of care. With respect to eligibility disputes under the benefit contract, state external review
laws may govern the appeal.

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 PART V: Other Appeal Types

Generally speaking, the source of external review regulations will vary depending on the type of
health plan coverage, the issue in dispute and how rigorous the state standards are. Therefore,
consumers should check with their state insurance regulator, referenced in Appendix C, or other
advocate/expert to determine which laws apply.

Under the new federal standards, plans will have to:

• Allow insured individuals to file a request for external review within four months after
the date they received a notice of an adverse benefit determination or final internal adverse
benefit determination
• Complete, within five business days of receiving the request for external review, a preliminary
review of the request, to determine if the insured individual:
ŊŊ Is or was covered under the plan;
ŊŊ Was denied care based on the claimant’s ineligibility under the terms of the plan, thus
making the claim ineligible for federal external review;
ŊŊ Exhausted the internal process, if required; and
ŊŊ Provided all necessary information to process the review
• Then, within one business day after completion of the above, the plan must notify the
claimant in writing if the request is not eligible or if it is incomplete. If the claim is complete
but not eligible for external review, the written notice must include reasons for its ineligibility
and contact information for the DOL’s Employee Benefits Security Administration (including
its toll-free number)

If the claim is incomplete, written notice must describe what information is needed to complete
the request and also give the claimant the remainder of the four month filing period or the 48 hour
period following the claimant’s receipt of the notice to correct the problem.

If the claim is eligible for external review, the plan must assign the request to an independent
review organization (IRO). The IRO must notify the claimant of the request’s eligibility and
acceptance for external review and that the claimant can submit in writing, within 10 business
days, additional information that the IRO must consider during its review. The plan must provide
to the IRO within five business days after the IRO’s assignment the documents and information
considered in the plan’s denial of the claim.

If the plan does not provide documents and information, the IRO may terminate its review and
reverse the claim denial. If this happens, the IRO needs to notify the claimant and the plan within
one business day of its decision to reverse; then the plan has to carry out the IRO’s decision.

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PART V: Other Appeal Types

The IRO provides a new review of the claim and will not be bound by any decisions or conclusions
reached during the plan’s internal claims and appeals process. It can consider additional
information and documents, beyond what was provided as part of any earlier review. This includes
materials outside of the plan’s claims file. The IRO must complete its review and provide notice
of the decision to the plan and the claimant within 45 days of its receipt of the external review
request.

What is the new expedited federal external review process?

Effective July 2011, the Affordable Care Act’s regulations set out procedures for expedited review
in the following situations:

1. Following an adverse benefit determination involving a medical condition for which the
timeframe for completion of an expedited internal appeal would seriously jeopardize the
life or health of the claimant or would jeopardize the claimant’s ability to regain maximum
independence.
2. An admission, availability of care, continued stay or health care item or service for which the
claimant received emergency services but has not been discharged from a facility.

If the plan receives one of these appeals, it must “immediately” conduct the preliminary review
previously described above and then “immediately” provide a written notice to the insured
detailing whether the claim is eligible for external review and, if not eligible, why not and what
materials are needed to complete the request. “Immediately” customarily means within 24 hours,
but the regulation does not specify.

If the appeal meets the criteria for an external review, the plan will assign it to an IRO that has
to, in turn, decide the external review request as expeditiously as the claimant’s medical condition
requires, but no more than 72 hours after the IRO receives the request for expedited review.

When do state external review laws apply?

The new federal external regulations defer to state law in some circumstances. Specifically, states
are encouraged to make changes in their external appeals laws to adopt standards established by
the National Association of Insurance Commissioners (NAIC) before July 1, 2011. The NAIC
standards call for:

• External review of plan decisions to deny coverage for care based on medical necessity,
appropriateness, health care setting, level of care or effectiveness of a covered benefit.
• Clear information for consumers about their right to internal and external appeals—both in
the standard plan materials and at the time the company denies a claim.

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 PART V: Other Appeal Types

• Expedited access to external review in some cases, including urgent situations or cases where
their health plan did not follow the rules in the internal appeal.
• Health plans to pay the cost of the external appeal under state law; states may not require
consumers to pay more than a nominal fee.
• Review by an independent body assigned by the state. The state must also ensure that
the reviewers meet certain standards, keep written records and are not affected by conflicts
of interest.
• Emergency processes for urgent claims and a process for experimental or
investigational treatment.
• Final decisions are binding so, if the consumer wins, the health plan is expected to pay for
the services that were previously denied.

If state laws do not meet these new standards, consumers in those states will be protected by the
federal external appeals standards.

Who can initiate a state-based external review appeal?

Most states have external review programs they oversee and/or regulate, but the details of these
programs vary considerably. External review programs differ from state-to-state in the types of
disputes that are eligible for appeal, the process used to resolve the appeal and the time limits
imposed at each step of the process. In most states, state external review requirements apply to all
types of health plans. In a few states, they apply only to managed care plans (such as HMOs, PPOs
or POS plans). Click here for state by state processes.

An individual can typically rely on their state’s external review program if the health plan is an
insured, employer-sponsored plan or an individual insurance plan that the patient has purchased
on their own or through an Exchange. In some instances, commercially-insured plans (that are not
grandfathered) also may be subject to the new federal external review law if the state where the
patient lives has not met the ACA or NAIC standards for external review.

Remember, state external review laws do not apply to employer-sponsored health plans that
are self-insured. These plans will typically be subject to the federal protections described in this
resources guide (unless they are grandfathered). In addition, state external review programs also do
not apply to Medicare and Medicaid beneficiaries. If the patient is a Medicare beneficiary, he
or she must follow the Medicare review process described in the Medicare handbook. If the
patient is a Medicaid beneficiary, state or local Medicaid offices must be contacted about their
appeals procedure.

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PART V: Other Appeal Types

In most states, the patient can give someone else written authorization to appeal for them, or
the provider may appeal on the patient’s behalf with their
written authorization. A sample authorized representative
form can be found in Appendix B. Helpful Hints

What types of issues can a state-based Steps to take if your appeal fails
external review appeal be initiated for?
Most states require that the issue on appeal involve “medical Step #1 – Appeal again and again:
necessity.” That means that the patient’s doctor must believe Most insurance companies must offer
a particular procedure, treatment or prescription drug is and/or support three to four levels of
essential for the patient’s health and recovery. The health appeals, and each appeal will involve
plan, for a variety of reasons, may disagree. For example, the
new people, increasing the chance that
the insurance company will agree with
plan may believe a particular treatment is ineffective for the
the proposed care plan.
patient’s condition, so it will not pay for it or reduce the level
of coverage. Step #2 – Request an appeal review
by an external party:
Further, the patient and the doctor may want a medical A review by somebody who is not on the
treatment, but the health plan will not cover the cost insurance company’s staff will be more
because it considers the treatment experimental or objective. There may or may not be a
investigational. Most states will allow the individual to charge to you and/or your provider for
submit this type of dispute to external review. such a review.

Step #3 – Enlist the help of a

External reviews are available for “determinations involving
consumer assistance program or
medical judgment,” which is a reasonably broad category,
your employer’s Human Resources
including medical necessity, appropriateness, health care
Department, if applicable:
setting, level of care and effectiveness determinations, but Your state may have established a
it does not include certain coverage or eligibility decisions. Consumer Assistance Program to assist
Importantly, any external appeal that challenges parity you with health insurance problems, and/
law compliance, regardless of whether the appeal relates or your employer’s Human Resources
to clinical medical necessity or other types of treatment staff may be available to assist you with
limitations, falls within the definition of “determinations benefit problems you encounter.
involving medical judgment.” The insured individual
should check to see what process is in place in the state STEP #4 – Send your appeal to your
where their insurance plan is issued (as further discussed in
State Insurance Commissioner,
Member of Congress and relevant
this reference guide).
plan accrediting body to ask them to
intervene with your insurer.
Several states require that the dispute involve a minimum
amount of money, usually from $100 to $500. In other states,
the right to appeal a denied claim is not limited by the
amount of money involved.

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 PART V: Other Appeal Types

How is a state-based external review appeal started?

Every state has a different procedure for handling external reviews. The patient will usually receive
instructions for filing an external appeal when the internal appeal is denied by the health plan.
In some states, the patient begins the external appeal by contacting the health plan again. Others
require that the individual contact the state’s department of insurance or other state agency to
initiate the appeal.

The actual review may be performed by the state agency itself or through an independent review
organization (IRO) hired by the state or selected by the plan. Usually patients do not have to pay
for such reviews, though some states charge a nominal amount, usually $25 to $50. Several states
have provisions to waive these charges if the patient demonstrates that the filing fee would cause
financial hardship.

Although some states schedule a hearing and allow patients to speak directly with the reviewer,
most do not. In many states, it is not clear whether the patient and the health plan must accept the
decision made on external review. In such cases, the individual may be able to appeal to the court
system if they are not satisfied with the result of the external review. The individual will likely need
to contact a lawyer to determine what rights they may have if they are not satisfied with the result
of an external review.

Filing a Regulatory Complaint

How can government officials help?

A number of different government agencies might be able to help a patient depending on where
they live and who oversees the person’s health plan coverage.

Types of Insurance

Commercial Insurance. State Insurance Commissioners are the primary enforcement authority
when it comes to parity for most insurance plans. Contact the patient’s state insurance department
to learn about available complaint processes for consumers. The state regulators in charge of most
appeals programs are listed in Appendix C. If they do not oversee the external review program
directly, they can tell you who does in their respective states.

If the state insurance commissioner cannot or does not assist the patient, they can contact the
regional office of the federal Department of Labor’s Employee Benefit Security Administration
(EBSA). Be sure to contact the regional EBSA Office that governs the plan, which is determined
by the principle place of business of the employer in the case of employer group plans. Also be sure
to obtain the tracking number for your case.

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PART V: Other Appeal Types

Employer Self-Insured. If the plan is a self-insured group employer plan (sometimes called
an ERISA or self-funded plan), the individual can submit a complaint directly to the federal
government. EBSA can be contacted online to initiate a consumer complaint:
www.askebsa.dol.gov.

Medicaid. If the plan is a Medicaid managed care plan, the state Office of Medicaid is responsible
for helping the patient with the appeal and enforcing the parity laws.

Medicare. MHPAEA does not apply to Medicare; the

U.S. Center for Medicare and Medicaid Services (CMS) is
Useful Information
responsible for assisting Medicare beneficiaries with their
appeal.
The following agencies specialize in
health plan accreditation:
Department of Defense/Veteran’s Affairs. MHPAEA does
not apply to DOD/VA plans. If the patient is in a military • URAC: www.urac.org
plan, the U.S. Department of Defense and/or the Veteran’s • NCQA: www.ncqa.org
Affairs is responsible for helping the individual facilitate • AAAHC: www.aaahc.org
their appeal.

State Attorneys General. Though the state’s Attorney

General (AG) is not the primary enforcement authority for filing an appeal or complaint raising
a parity law violation, an AG’s office has significant investigative and enforcement tools at its
disposal. For example, the New York Attorney General’s Office has demonstrated significant
enforcement power by reviewing consumer complaints of parity violations, investigating health
plans against which complaints were filed, and assessing penalties and issuing assurances of
discontinuance when violations were found.

Members of Congress Constituent caseworkers for the patient’s Members of Congress may also be
able to assist.

Use your zip code to find your Member of Congress.

• U.S. House: www.house.gov
• U.S. Senate: www.senate.gov

56 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 PART V: Other Appeal Types

Accreditation Audits

How can an individual initiate a complaint about a health plan with an

accreditation agency?
Accreditation agencies are public or private agencies that give authorization or approval of health
plans. Most accreditation agencies allow the insured, their attending providers or representative
to file a complaint against an accredited health plan. The first step is to look up the health plan
on the online directory to see if they are accredited. The insured or their advocate then can file
a complaint by calling the accreditation agency to find out the process. Many states and federal
agencies “recognize” accreditation standards are part of the licensing and regulatory oversight
process. If the complaint is serious enough, the health plan may lose its accreditation or be put on
probation, which can have serious consequences for the health plan.

What is an accreditation audit?

Typically, accreditation agencies will complete desktop and onsite audits of the health plan
both upon renewal of their accreditation and on a random basis during the accreditation period.
When a serious complaint is filed, including a patient safety issue, most accreditation agencies
must complete an unannounced onsite audit. This ensures that the health plan is addressing any
deficiencies.

Arbitration

What is an arbitration appeal?

Arbitration is a process in which two parties present their views of a dispute to a neutral third
party, an arbitrator, who will then decide how to resolve the dispute. The health plan may
offer or, in some cases, require that the patient resolve the dispute through a process called
arbitration. Arbitration may be binding, in which case the parties agree ahead of time to abide
by the arbitrator’s decision, or it may be non-binding, in which case the arbitrator’s decision is
simply advisory.

What rules govern arbitration?

A number of different rules could impact how the insured or the ordering provider pursues an
arbitration claim. Typically, the rights to arbitration would be outlined in the insurance policy or
in the participating provider’s network contract. Many health plans offer an arbitration process
that follows the American Arbitration Association or similar type group. Other sources of
regulations could come from state or federal requirements depending on how the insurance
coverage is regulated.

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PART V: Other Appeal Types

Commercial Insurance
Specifically, the insured’s state may have rules that regulate how health plans can use arbitration.
If a plan requires that the insured agree to arbitration to settle disputes over claims for benefits, the
insured or their representative may want to contact the state insurance commissioner to determine
what their rights might be.

Self-Insured
In addition, federal ERISA regulations provide that if an employer-sponsored health plan uses
arbitration as part of its internal review, the arbitration must follow the same federal rules that
apply to any internal appeal, including one that says the patient cannot be charged a fee for the
arbitration. In such cases, if an employer-sponsored health plan requires that the insured enter into
mandatory arbitration, it must be one of the two allowed levels of internal appeal and the insured
may challenge the arbitrator’s decision in court (in other words, the arbitrator’s decision cannot be
binding).

When should an individual or provider initiate an arbitration appeal?

It depends. In most cases, the patient or their advocate will probably want to exhaust all of the
state and federal remedies for internal and external review as highlighted above. After those appeal
remedies are exhausted, a patient might want to consider filing for an arbitration appeal rather than
going to court. It is advisable that the patient consult with an attorney before making this decision
to make sure that they are fully aware of their rights, responsibilities and obligations associated with
any arbitration proceeding.

Judicial Action

Is filing a judicial or court action an option?

Yes. When an insured patient has exhausted the internal appeal remedies with the health plan,
they may be entitled to file a lawsuit against the health plan and/or the plan’s s third party claims
administrator. Although this option can be expensive and time-consuming, there may be times
where this might be the final recourse for the patient to get the coverage that they need.

It is recommended that individuals consult a number of different attorneys before securing

legal counsel. Make sure that the patient understands the terms of engagement with the lawyer,
including how the attorney will be compensated.

When does someone have legal standing to initiate a court action?

An insured party will have standing to file a court complaint after they have exhausted their
internal administrative remedies with the health plan. This means that insured parties must

58 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 PART V: Other Appeal Types

complete all levels of internal health plan appeals. Insured parties are not required to submit
external appeals, which are voluntary. After exhaustion of administrative remedies, insured parties
wishing to file lawsuits must do so within time periods specified by applicable state or federal laws.

It is important to hire a reputable attorney who has expertise in health or insurance law. Depending
on the circumstances, the insured may sue in state or federal court.

What is a class action lawsuit and can it help?

A class action lawsuit is a type of lawsuit where a number of plaintiffs join in a group to sue a
common defendant on a similar set of facts and on similar legal claims. A number of class action
lawsuits have been filed against several large insurers for mental health and substance use disorder
coverage disputes. The advantage of these lawsuits is that the law firms handling these legal actions
typically take a fee only if they are successful, so the insured does not need to fund the attorneys
directly for their time. The disadvantage is class actions often take years to reach a conclusion, so
aggrieved patients need to be patient.

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PART VI: Final Thoughts

I
t is our hope that the information, resources and other tips provided herein are helpful to
consumers, provider, and all readers of this resource guide. Please note that this guide will be
updated as final Medicaid managed care parity regulations are issued. The Paul Wellstone and
Pete Domenici Mental Health Parity and Addiction Equity Act is a landmark law, and it may
take some time before its full impact is realized. Be patient. We understand that filing appeals is
complicated. It requires patients to make contacts with plans, seek help from providers, document
these contacts, gather information and write letters. Get a notebook or create an electronic file,
gather the documentation, remain courteous, write everything down and take it one step at a time.

We want to hear from you and help you if we can! Copy us at [email protected]
and/or [email protected] on your appeals.

Helpful Tip

When a plan excludes coverage of a treatment, service or level of care, it is very helpful to include
guidelines or a research study showing why that particular treatment, service or level of care is
recommended or effective in treating someone with your condition with your appeals letter.

Ask your provider or advocate to help you find guidelines or a study if you have difficulty.
www.guideline.gov is another good resource.

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 Appendix A: Terms to Know

Accrediting Body: An impartial external organization such as the National Committee for
Quality Assurance (NCQA) and URAC that performs a comprehensive process in which a health
care organization undergoes an examination of its systems, processes and performance to ensure
that it is conducting business in a manner that meets predetermined criteria and is consistent with
national standards.

Adverse Determination: Any action by a health plan that denies or limits payment for the
requested behavioral or medical treatment or services.

Appeal: A legal right for an insured individual, their provider or an authorized representative to
seek relief against a health plan or third party determination to deny or limit payment for requested
behavioral or medical treatment or services.

Appealing a Claim: The process to seek reversal of a denied behavioral health or medical claim.
Most insurance carriers have their own process and timeline, but are subject to state and federal
regulations.

Arbitration: An often binding process for the resolution of disputes outside of courts.

Balance Billing: The amount you could be responsible for (in addition to any co-payments,
deductibles or coinsurance) if you use an out-of-network provider, which may represent the fee for
a particular service that exceeds what the insurance plan allows as the charge for that service.

Behavioral Health: A descriptive phrase that covers the full range of mental health conditions
and substance use disorders (MH/SUD).

Carrier: The insurance company that issues your insurance policy. The term is synonymous with
health plan or health insurer.

Carve-Out: An independent managed behavioral health organization that manages the mental
health and substance use disorder benefits separately from the plan’s medical benefits.

Claim: A bill (or invoice), typically in a standardized form, containing a description of care
provided, applicable billing codes and a request for payment, submitted by the provider to the
patient’s insurance company (or the plan’s third party administrator).

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 Appendix A: Terms to Know

Class Action: A lawsuit certified by a court that allows a number of plaintiffs to join in one
lawsuit when they are suing a common defendant or defendants under common factual and
legal grounds.

Classification: One of the six categories of benefits governed by MHPAEA (e.g., in-network
inpatient, out-of-network inpatient, in-network outpatient, out-of-network outpatient, emergency
room and prescription drugs).

Clinical Appeal: An appeal that involves a “medical-necessity determination” or other issue

related to the medical appropriateness of care.

Clinical Practice Guideline: A utilization and quality management tool designed to help
providers make decisions about the most appropriate course of treatment for a particular patient.

Co-Payment: A dollar amount that an insured patient is expected to pay at the time of service.

Deductible: A dollar amount an insured patient must pay before the insurer will begin to make
benefit payments.

Denial: Refusal of a request for payment or reimbursement of behavioral health or medical

treatment services.

Denied Claim: Non-payment of a claim for reimbursement of behavioral health or medical

services delivered to the insured patient. The insurance company must inform the patient of the
non-payment of the claim and explain why the services are not being reimbursed.

Effective Date: The date your insurance coverage actually begins. You are not covered until the
policy’s effective date.

Employee Assistance Programs (EAPs): Mental health or substance use disorder treatment
services that are sometimes offered by insurance companies or employers. Typically, individuals do
not have to directly pay for services provided through an employee assistance program. EAPs are
deemed to be part of an employer’s single group plan for purposes of parity law application.

Employee Retirement Income Security Act (ERISA): A broad-reaching federal law that
establishes the rights of health plan participants, requirements for the disclosure of health plan
provisions and funding and standards for the investment of pension plan assets.

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Appendix A: Terms to Know

Exclusions: Specific conditions, services, treatments or treatment settings for which a health
insurance plan will not provide coverage.

Explanation of Benefits: A statement sent from the health insurance company to an insured
member listing services that were billed by a health care provider, how those charges were
processed, the total amount paid and the total amount of patient responsibility for the claim.

External (Independent) Review: External review is part of the health insurance claims denial
process. It typically occurs after all internal appeals have been exhausted, when a third party
(that is intended to be independent from the plan) reviews your claim to determine whether the
insurance company is responsible for paying the claim(s). External review is one of several steps
that comprise the appeal and review process.

CAUTIONARY NOTE: Patients and providers should be cautioned that not all external appeals
are reviewed by truly “independent” organizations. In self-funded ERISA cases, IROs are hired by
the health plans or their agents that issued the denials the IROs are reviewing. Many IROs are also
assigned by states to review denials made by the same organizations in fully-insured cases. Since
external appeals are generally voluntary, consumers and their advocates should weigh the prospect
that a health plan may attempt to rely on an external review denial to justify its internal denials
when future care is sought or during any court case that may arise.

Fail First: Refers to a medical management protocol used by some health plans that requires
that a patient demonstrate that they failed at a lower-cost therapy or treatment before the plan
will authorize payment for a higher-cost intervention. Fail-first is considered a non-quantitative
treatment limitation (NQTL) and must be comparable to and not applied more stringently to
behavioral health benefits than as applied to medical/surgical benefits. (Note: fail-first protocols
used to deny coverage for entire levels of care under the behavioral health benefit have been found
to violate the parity law, as they are not typically utilized for medical conditions, except in the
prescription drug class of benefits.)

Financial Requirements: Includes deductibles, copayments, coinsurance and

out-of-pocket maximums.

Formulary: A listing of drugs, classified by therapeutic category or disease class, that are
considered preferred therapy for a given population and that are to be used by an MCO’s providers
in prescribing medications.

Fully Insured Plan: Employer-sponsored insurance plan where the employer contracts with
another organization to assume financial responsibility for the enrollees’ medical claims and for all

64 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 Appendix A: Terms to Know

incurred administrative costs. These plans are regulated by state insurance commissions. The term
is synonymous with “fully-funded plan.”

Grandfathered Plans: Health Plans and other designated insurance arrangements that were in
existence prior to March 23, 2010.

Grievance Appeal: A complaint by the insured related to a payment issue or the four corners of
the benefit plan.

Health Insurance Portability and Accountability Act (HIPAA): A federal law that outlines
the requirements that employer-sponsored group insurance plans, insurance companies and
managed care organizations must satisfy in order to provide health insurance coverage in the
individual and group health care markets.

Independent Review Organization: A third party organization that is intended to be

unaffiliated with the health plan and to have no stake in the outcome of the review. Please refer to
CAUTIONARY NOTE under definition for External (Independent) Review.

Inpatient: A term used to describe care rendered in a hospital or non-hospital based facility (e.g.,
inpatient detoxification, residential detoxification, inpatient rehabilitation, residential treatment,
skilled nursing care, inpatient physical rehabilitation), as defined by the plan.

Managed Behavioral Health Organization (MBHO): An organization that provides

behavioral health services by implementing managed care techniques.

Medicaid: A joint federal and state program that provides hospital, medical and behavioral
coverage to the low-income population and certain aged and disabled individuals.

Medical/Surgical Benefits: For purposes of this reference guide, the phrase refers to insurance
coverage for medical and surgical (non-behavioral health) services.

Medically Necessary: Health care services that are clinically indicated for the diagnosis and/or
treatment of a medical or behavioral health condition.

Medical Necessity Appeal: An appeal filed when the health plan has denied payment or
reimbursement for level of care or service based on a “lack of medically necessity”. Synonymous
with “UM appeal”.

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Appendix A: Terms to Know

Medicare: A federal government program established under Title XVIII of the Social
Security Act of 1965 to provide hospital expense and medical expense insurance to elderly and
disabled persons.

Mental Health Condition and Substance Use Disorder (MH/SUD): The phrase used in
the Mental Health Parity and Addiction Equity Act (MHPAEA), accompanying regulations and
certain state laws to describe the range of behavioral health conditions.

National Committee for Quality Assurance (NCQA): One of several accrediting bodies that
performs evaluations of health plan procedures and performance.

Network: The group of physicians, hospitals and other medical care professionals that a managed
care plan has contracted with to deliver medical and/or behavioral health services to its members.

Non-Quantitative Treatment Limitation (NQTL): Any non-financial treatment limitation

imposed by a health plan that limits the scope or duration of treatment (i.e. pre-authorization,
medical necessity, utilization review, exclusions, etc.).

Out-of-Network: Physicians, hospitals, facilities and other health care providers that are not
contracted with the plan or insurer to provide health care services at discounted rates. Depending
on an individual’s plan, expenses incurred by services provided by out-of-plan health care
professionals may not be covered or may be only partially covered.

Outpatient Care: Treatment that is provided to a patient on a non-24 hour basis without an
overnight stay in a hospital or other inpatient or residential facility.

Partial Hospitalization Services: Also referred to as “partial hospital days”, this refers to
outpatient services performed as an alternative to or step-down from inpatient mental health or
substance use disorder treatment.

Pre-Authorization: Confirmation of coverage by the insurance company for a service or product

before receiving the service or product from the medical provider. This is also known as prior
authorization.

Provider Payment: The amount of money paid to the health care provider by the insurance
company for services rendered.

66 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 Appendix A: Terms to Know

Quantitative Treatment Limitation (QTL): Limits based on frequency of treatment, number of

visits, days of coverage or days in a waiting period. A limitation that is expressed numerically, such
as an annual limit of 50 outpatient visits.

Usual, Customary and Reasonable Fees (UCR): Often defined as the average fee charged by
a particular type of health care practitioner within a geographic area for a particular type of service.
These fees are sometimes used by insurers to determine the amount of coverage for health care
services provided by out-of-network providers. The insured may be responsible for any copayment,
coinsurance and deductible, as well as any remaining portion of the provider’s fee that is not
covered by the UCR fee.

Reason Codes: A letter or number system typically presented and defined at the bottom of an
Explanation of Benefits (EOB) used to explain how the insurance claim was processed and why the
insurance company denied all or part of your claim.

Self-Insured Plan (ERISA): A plan offered by employers who directly assume the major cost of
health insurance for their employees. Self-insured employee health benefit plans are exempt from
many state laws and instead are subject to federal (ERISA) law. Synonymous with self-funded plan.

Summary Plan Description (SPD): A description of the benefits included in your health plan.

URAC: One of several accrediting bodies that performs regular evaluations of health plans
processes and performance. URAC, for example, has a specific standard for plan parity compliance.

Utilization Management (UM) Appeal: Synonymous with “medical necessity appeal”.

Disclaimer: This list of terms is not intended to be exhaustive. These terms are useful in understanding the
parity law and navigating the appeals process.

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 Appendix B:
Model Appeal Letters

Introduction

This section includes templates or sample letters of appeal with accompanying legal rationale to
support entitlement to coverage for submission to health plans by the insured patient or treating
provider (which is often the patient’s authorized representative). The samples set forth herein will
be helpful for the four types of appeals described in this resource guide:
• Parity Appeal
• UM Appeal
• Grievance Appeal
• External Review Appeal

The appeal documentation will also be critical for other legal proceedings such as arbitration or a
civil lawsuit.

The seven samples were selected based on input from real-life claims submitted by Coalition
members around the country. These templates represent the most commonly denied claims of
mental health and substance use disorder services as of January 2015.

The types of appeals letters are for:

1. If a plan excludes or refuses to cover mental health or substance use services based on
facility type
2. If a plan excludes or refuses to cover mental health or substance use services based on levels
of care
3. If a plan excludes or refuses to cover office-based diagnostic and treatment interventions
4. If a plan has prior authorization or concurrent review requirements for inpatient levels of care
5. If a plan has prior authorization or concurrent review requirements for outpatient
psychotherapy
6. If a plan has prior authorization or concurrent review requirements for other outpatient levels
of care (PHP, IOP)

68 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 Appendix B: Model Appeals Letters

7. If a plan refuses to allow a psychiatrist or addiction medicine physician to bill for

evaluation and management (E&M) services for mental health or substance use under
established E&M CPT codes while permitting other physicians to use these codes for medical/
surgical conditions

Using the Templates

Parity requires plans to provide equal medical/surgical and mental health/substance use benefits.
As a result, when preparing to file an appeal, the patient or provider will need to look at the
health plan’s SPD and compare the medical/surgical benefits with the mental health/substance use
benefits to see whether the financial requirements and the numerical and non-numerical treatment
limitations imposed on the mental health and substance use benefits appear to be generally the
same as or different than those imposed on the medical/surgical benefits.

These templates provide real examples of the reasons why plans have denied claims. We include
effective legal rationales to help appeal these denials. In some of the examples, an individual
may have to substitute one of the benefits listed in the sample appeal for a benefit that they have
been denied. We could not include every type of mental health and substance use benefit in these
sample appeals letters. Look for the sample letter that most closely resembles the patient’s specific
denied claim. Every place where [ ] is, the patient or provider must substitute their own text to
personalize the templates.

Guidance for individuals/providers/advocates using

these templates
1. Customize the wording of the letter to state at what point in the process your treatment
services were denied (e.g., the pre-authorization request, concurrent review request, etc.)
2. Include specific details on the patient’s medical and clinical condition, but keep it brief; try
not to exceed three pages plus attachments
3. Make sure that the patient or the provider is not duplicating efforts. Individuals usually have
only two or three opportunities to appeal and do not want to waste one of these opportunities
by not coordinating individual and provider appeals
4. The insured must customize the appeal letter. There are placeholders [ ] in the letters where
information specific to the appeal should be inserted
5. If the patient sees a “note” on the template, the note must be deleted before customizing and
sending the appeal letter

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Appendix B: Model Appeals Letters

Sample Appeal Letters

Disclaimer: The following documents are intended as general educational materials. The Parity
Implementation Coalition and The Kennedy Forum are not law firms and do not provide legal
advice. The opinions expressed herein are the consensus of the Parity Implementation Coalition
and The Kennedy Forum regarding the Paul Wellstone and Pete Domenici Mental Health Parity
and Addiction Equity Act of 2008 and are not a comprehensive analysis of all applicable rules
governing access to care. Patients and providers challenging health plan denials of mental health
or substance use disorder benefits are encouraged to seek knowledgeable counsel to discuss their
particular circumstances.

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 Appendix B: Model Appeals Letters

Appeal Letter Sample 1: Denial Based on Freestanding or

Residential Facility-Type Exclusions

Note: Highlights facility-related adverse determinations or denials.

[Insert Date]

[If URGENT, then indicate URGENT APPEAL]

[Insert Name]
[Insert Company Name/Plan]
[Insert Address]

Re: [Insert Patient’s Name]

[Insert Patient’s Date of Birth]
[Insert Patient’s Insurance ID Number]
[Insert Patient’s Group ID Number]
[Insert Disputed Service, provider of service, and dates of disputed coverage]

Dear [Name of contact at health insurance plan]:

I have been a member of your plan since [date] and am now writing to appeal your decision to deny coverage
for [state the name of the specific treatment or service denied AND if it is urgently needed to prevent harm
or the inability to regain maximal function]. It is my understanding based on your letter dated [insert date of
denial] that this [treatment or service] has been denied because: [Quote the specific reason given in the denial
letter].

I have enclosed a letter from [name of clinician] explaining why [he/she] recommends [treatment or service],
[his/her] qualifications. I have also attached a rationale for why I am entitled to this service under the Paul
Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). [If the
treatment is urgent, then the treating professional should indicate so in the attached letter.]

I also hereby request that you: 1) provide me with a copy of the SBC and/or SPD and complete benefit plan
booklet for both the medical/surgical and mental health/substance use disorder benefits within 30 days; 2)
explain the specific plan provisions you are relying upon to exclude coverage for this facility type and the
services they provide; 3) provide me with plan documents under which the plan is established or operated,
with information on the processes, strategies, evidentiary standards and other factors used to exclude coverage
for [freestanding or residential treatment facilities] under the behavioral health benefit; and 4) explain how
that is comparable to and applied no more stringently than coverage or non-coverage for similar provider
types under the medical/surgical benefit. Should you require additional information, please do not hesitate to
contact me at [phone number]. I look forward to hearing from you in the near future.

Sincerely,

[Insert your name]

Cc: [insert patient’s name]

[insert State Insurance Commissioner’s Name]
[insert your Member of Congress’ name]

Enclosure: Parity Implementation Coalition Analysis

[Clinical guidelines where appropriate]

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Appendix B: Model Appeals Letters

The Parity Implementation Coalition has adopted the following position statement with respect to any
covered mental health and substance use disorders with blanket exclusions of certain provider or facility
types (e.g., freestanding or residential treatment facilities).

***

Foundationally, the Affordable Care Act, Section 2706 provides that non-grandfathered group health
plans may not discriminate against “any health care provider who is acting within the scope of that
provider’s license or certification under applicable State law.” This includes duly licensed freestanding
and/or residential treatment facilities.

In addition, and far more specifically, with respect to both grandfathered and non-grandfathered plans,
the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008
(“Federal Parity Act”)2 requires, without exception:

In the case of a group health plan or a health insurance issuer offering group or individual
health insurance coverage that provides both medical and surgical benefits and mental
health or substance use disorder benefits, such plan or coverage shall ensure that . . .

(ii) the treatment limitations applicable to such mental health or substance use disorder
benefits are no more restrictive than the predominant treatment limitations applied to
substantially all medical and surgical benefits covered by the plan (or coverage) and there are
no separate treatment limitations that are applicable only with respect to mental health or
substance use disorder benefits.

The statute defines “treatment limitations” as “limits on the frequency of treatment, number of
visits, days of coverage or other similar limits on the scope or duration of treatment.” The regulations
implementing the Federal Parity Act reinforce that treatment limitations can be either quantitative (i.e.
numeric) or non-quantitative (i.e. non-numeric). The regulations permit only six benefits classifications
for purposes of applying the parity requirements: (1) inpatient, in-network; (2) inpatient,
out-of-network; (3) outpatient, in-network; (4) outpatient, out-of-network; (5) emergency care; and
(6) prescription drugs.

The Interim Final Regulations provide that “if a plan provides benefits for a mental health condition
or substance use disorder in one or more classifications but excludes benefits for that condition or

2 The Federal Parity Act was enacted as a set of parallel amendments to the Employee Retirement Income Security Act
(“ERISA”), the Public Health Service Act, and the Internal Revenue Code. 75 Fed. Reg. 5411. Accordingly, the federal
agencies charged with implementing the Parity Act are the Department of Labor, Department of Health and Human Services,
and the Department of the Treasury (collectively, the “Departments”). After the Parity Act was passed, the Departments
jointly issued a Request for Information soliciting comments on what regulations would be required. 74 Fed. Reg. 19155 (Apr.
28, 2009). The Departments later jointly issued Interim Final Regulations (“IFRs”) on February 2, 2010, see 75 Fed. Reg. 5410
et seq., and Final Regulations on November 13, 2013. See 78 Fed. Reg. 68240 et seq.

72 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 Appendix B: Model Appeals Letters

disorder in a classification in which it provides medical/surgical benefits, the exclusion of benefits in that
classification for a mental health condition or substance use disorder otherwise covered under the plan
is a treatment limitation.” The Final Regulations underscore that the Federal Parity Act “specifically
prohibits separate treatment limitations that are applicable only with respect to mental health or
substance use disorder benefits.” The Final Regulations expressly illustrate that coverage limits based on
“facility type” are non-quantitative.

When a plan excludes medically necessary services (i.e. facility type) for covered mental health or
substance use disorders based on provider or facility-type, but offers medically necessary treatment
services for comparable provider or facility-types for medical/surgical conditions within the same
classification, it improperly imposes treatment limitations (i.e. exclusions of facility type) that are not
comparable to and applied more stringently than the treatment limitations imposed under the medical
and surgical benefits within a classification, and moreover, is applying separate treatment limitations
“only” with respect to mental health or substance use disorder benefits. The following example of the
impermissible nature of these types of exclusions is set forth in the Final Regulations:

Facts. A plan generally covers medically appropriate treatments. The plan automatically
excludes coverage for inpatient substance use disorder treatment in any setting outside of
a hospital (such as a freestanding or residential treatment center). For inpatient treatment
outside of a hospital for other conditions (including freestanding or residential treatment
centers prescribed for mental health conditions, as well as for medical/surgical conditions),
the plan will provide coverage if the prescribing physician obtains authorization from the
plan that the inpatient treatment is medically appropriate for the individual, based on
clinically appropriate standards of care.

Conclusion. Although the same nonquantitative treatment limitation—medical

appropriateness—is applied to both mental health and substance use disorder benefits
and medical/surgical benefits, the plan’s unconditional exclusion of substance use disorder
treatment in any setting outside of a hospital is not comparable to the conditional exclusion
of inpatient treatment outside of a hospital for other conditions.

Since the net result of facility-type exclusions is zero (0) days of coverage for medically appropriate
treatment, the limitation also violates the prohibition on disparate quantitative limits. This is because
the limitation is “more restrictive” than the “predominant limitations on “substantially all” the
medical/surgical benefits in the classification. Thus, a plan that covers skilled nursing facilities, physical
rehabilitation facilities, home health services or other non-hospital medical/surgical levels of care, while
categorically excluding coverage for non-hospital facilities, such as freestanding or residential treatment
centers for mental health or substance use disorders, violates both the quantitative and non-quantitative
treatment limitations rules of the Federal Parity Act.

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Appendix B: Model Appeals Letters

Appeal Letter Sample 2:

Denial Based on Level of Care Exclusions

Note: Highlights adverse determinations where care is categorically limited or denied.

[Insert Date]

[If URGENT, then indicate URGENT APPEAL]

[Insert Name]
[Insert Company Name/Plan]
[Insert Address]

Re: [Insert Patient’s Name]

[Insert Patient’s Date of Birth]
[Insert Patient’s Insurance ID Number]
[Insert Patient’s Group ID Number]
[Insert Disputed Service, provider of service, and dates of disputed coverage]

Dear [Name of contact at health insurance plan]:

I have been a member of your plan since [date] and am now writing to appeal your decision to deny coverage
for [state the name of the specific treatment or service denied AND if it is urgently needed to prevent harm
or the inability to regain maximal function]. It is my understanding based on your letter dated [insert date of
denial] that this [treatment or service] has been denied because: [Quote the specific reason given in the denial
letter].

I have enclosed a letter from [name of clinician] explaining why [he/she] recommends [treatment or service],
[his/her] qualifications. I have also attached a rationale for why I am entitled to this service under the
Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). [If the
treatment is urgent, then the treating professional should indicate so in the attached letter.]

I also hereby request that you: 1) provide me with a copy of the SBC and/or SPD and complete benefit plan
booklet for both the medical/surgical and mental health/substance use disorder benefits within 30 days; 2)
explain the specific plan provisions you are relying upon to exclude coverage of these services; 3) provide
me with plan documents under which the plan is established or operated, with information on the processes,
strategies, evidentiary standards and other factors used to exclude coverage for [indicate level of care] under
the behavioral health benefit; and 4) explain how that is comparable to and applied no more stringently
than coverage or non-coverage for similar services under the medical/surgical benefit. Should you require
additional information, please do not hesitate to contact me at [phone number]. I look forward to hearing
from you in the near future.

Sincerely,

[Insert your name]

Cc: [insert patient’s name]

[insert State Insurance Commissioner’s Name]
[insert your Member of Congress’ name]

Enclosure: Parity Implementation Coalition Analysis

[Clinical guidelines where appropriate]

74 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 Appendix B: Model Appeals Letters

The Parity Implementation Coalition has adopted the following position statement with respect to any
covered mental health and substance use disorders for which levels of care are categorically excluded.

***

Foundationally, the Affordable Care Act, Section 2706 provides that non-grandfathered group health
plans may not discriminate against “any health care provider who is acting within the scope of that
provider’s license or certification under applicable State law.”

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008
(“Federal Parity Act”)3 requires, without exception:

In the case of a group health plan or a health insurance issuer offering group or individual
health insurance coverage that provides both medical and surgical benefits and mental
health or substance use disorder benefits, such plan or coverage shall ensure that . . .

(ii) the treatment limitations applicable to such mental health or substance use disorder
benefits are no more restrictive than the predominant treatment limitations applied to
substantially all medical and surgical benefits covered by the plan (or coverage) and there are
no separate treatment limitations that are applicable only with respect to mental health or
substance use disorder benefits.

The statute defines “treatment limitations” as “limits on the frequency of treatment, number of
visits, days of coverage or other similar limits on the scope or duration of treatment.” The regulations
implementing the Federal Parity Act reinforce that treatment limitations can be either quantitative
(i.e. numeric) or non-quantitative (i.e. facility type). The regulations permit only six benefits
classifications for purposes of applying the parity requirements: (1) inpatient, in-network; (2) inpatient,
out-of-network; (3) outpatient, in-network; (4) outpatient, out-of-network; (5) emergency care; and
(6) prescription drugs.

The Interim Final Regulations provide that “if a plan provides benefits for a mental health condition
or substance use disorder in one or more classifications but excludes benefits for that condition or
disorder in a classification in which it provides medical/surgical benefits, the exclusion of benefits in that
classification for a mental health condition or substance use disorder otherwise covered under the plan
is a treatment limitation,” and the Final Regulations underscore that the Federal Parity Act “specifically

3 The Federal Parity Act was enacted as a set of parallel amendments to the Employee Retirement Income Security Act
(“ERISA”), the Public Health Service Act, and the Internal Revenue Code. 75 Fed. Reg. 5411. Accordingly, the federal
agencies charged with implementing the Parity Act are the Department of Labor, Department of Health and Human Services,
and the Department of the Treasury (collectively, the “Departments”). After the Parity Act was passed, the Departments
jointly issued a Request for Information soliciting comments on what regulations would be required. 74 Fed. Reg. 19155 (Apr.
28, 2009). The Departments later jointly issued Interim Final Regulations (“IFRs”) on February 2, 2010, see 75 Fed. Reg. 5410
et seq., and Final Regulations on November 13, 2013. See 78 Fed. Reg. 68240 et seq.

Parity Implementation Coalition + The Kennedy Forum 75

Appendix B: Model Appeals Letters

prohibits separate treatment limitations that are applicable only with respect to mental health or
substance use disorder benefits.”

The Final Regulations also provide that “[t]he Departments did not intend that plans and issuers could
exclude intermediate levels of care covered under the plan from MHPAEA’s parity requirements.” “Plans
and issuers must assign covered intermediate mental health and substance use disorder benefits to the
existing six benefit classifications in the same way that they assign comparable intermediated medical/
surgical benefits to these classifications.” For example, if the plan treats skilled nursing treatment services
as inpatient benefits, then the plan must treat residential treatment services as inpatient benefits, if the
plan treats home health care as an outpatient benefit, it must treat PHP and IOP as outpatient benefits.
When a plan excludes medically necessary services (e.g., residential level of care, PHP, IOP) for covered
mental health or substance use disorders but offers multiple levels of care for medical/surgical conditions
within the same classification, it improperly imposes treatment limitations that are not comparable to
and applied more stringently than the treatment limitations imposed under the medical and surgical
benefits within a classification, and moreover, is applying such separate treatment limitations “only”
with respect to mental health or substance abuse benefits. The following impermissible example is
highlighted by the Final Regulations:

A plan generally covers medically appropriate treatments. The plan automatically excludes
coverage for inpatient substance use disorder treatment in any setting outside of a hospital
(such as a freestanding or residential treatment center). For inpatient treatment outside
of a hospital for other conditions (including freestanding or residential treatment centers
prescribed for mental health conditions, as well as for medical/surgical conditions), the
plan will provide coverage if the prescribing physician obtains authorization from the plan
that the inpatient treatment is medically appropriate for the individual, based on clinically
appropriate standards of care.

Conclusion. Although the same nonquantitative treatment limitation—medical

appropriateness—is applied to both mental health and substance use disorder benefits
and medical/surgical benefits, the plan’s unconditional exclusion of substance use disorder
treatment in any setting outside of a hospital is not comparable to the conditional exclusion
of inpatient treatment outside of a hospital for other conditions.

Since the net result of level of care exclusions is zero (0) days of coverage for medically appropriate
treatment, the limitation also violates the prohibition on disparate quantitative limits. This is because
the limitation is “more restrictive” than the “predominant limitations on “substantially all” the
medical/surgical benefits in the classification. Thus, a plan that covers skilled nursing facilities, physical
rehabilitation facilities, home health services or other non-hospital medical/surgical levels of care, while
categorically excluding coverage for levels of care such as residential, PHP or IOP for mental health or
substance use disorders, violates both the quantitative and non-quantitative treatment limitation rules of
the Federal Parity Act.

76 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 Appendix B: Model Appeals Letters

Appeal Letter Sample 3: Denial Based on Blanket Exclusions

of Office-Based Diagnostic and Treatment Interventions

Note: Highlights adverse determinations and denials related psychological testing for diagnostic
assessments or other treatment services like individual psychotherapy and family counseling.

[Insert Date]

[If URGENT, then indicate URGENT APPEAL]

[Insert Name]
[Insert Company Name/Plan]
[Insert Address]

Re: [Insert Patient’s Name]

[Insert Patient’s Date of Birth]
[Insert Patient’s Insurance ID Number]
[Insert Patient’s Group ID Number]
[Insert Disputed Service, provider of service, and dates of disputed coverage]

Dear [Name of contact at health insurance plan]:

I have been a member of your plan since [date] and am now writing to appeal your decision to deny coverage
for [state the name of the specific treatment or service denied AND if it is urgently needed to prevent harm
or the inability to regain maximal function]. It is my understanding based on your letter dated [insert date of
denial] that this [treatment or service] has been denied because: [Quote the specific reason given in the denial
letter].

I have enclosed a letter from [name of clinician] explaining why [he/she] recommends [treatment or service],
[his/her] qualifications. I have also attached a rationale for why I am entitled to this service under the Paul
Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). [If the
treatment is urgent, then the treating professional should indicate so in the attached letter.]

I also hereby request that you: 1) provide me with a copy of the SBC and/or SPD and complete benefit plan
booklet for both the medical/surgical and mental health/substance use disorder benefits within 30 days; 2)
explain the specific plan provisions you are relying upon to exclude coverage of these services; and 3) provide
me with plan documents under which the plan is established or operated, with information on the processes,
strategies, evidentiary standards and other factors used to exclude coverage for outpatient diagnostic services
and treatment under the behavioral health benefit. Should you require additional information, please do not
hesitate to contact me at [phone number]. I look forward to hearing from you in the near future.

Sincerely,

[Insert your name]

Cc: [insert patient’s name]

[insert State Insurance Commissioner’s Name]
[insert your Member of Congress’ name]

Enclosure: Parity Implementation Coalition Analysis

[Clinical guidelines where appropriate]

Parity Implementation Coalition + The Kennedy Forum 77

Appendix B: Model Appeals Letters

The Parity Implementation Coalition has adopted the following position statement with respect to any
covered mental health and substance use disorders with blanket exclusions of office-based diagnostic
and treatment interventions (such as psychological testing for diagnostic assessments or other treatment
services like individual psychotherapy and family counseling).

***

Foundationally, the Affordable Care Act, Section 2706 provides that non-grandfathered group health
plans may not discriminate against “any health care provider who is acting within the scope of that
provider’s license or certification under applicable State law.”

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008
(“Federal Parity Act”) 4 requires, without exception:

In the case of a group health plan or a health insurance issuer offering group or individual
health insurance coverage that provides both medical and surgical benefits and mental
health or substance use disorder benefits, such plan or coverage shall ensure that . . .

(ii) the treatment limitations applicable to such mental health or substance use disorder
benefits are no more restrictive than the predominant treatment limitations applied to
substantially all medical and surgical benefits covered by the plan (or coverage) and there are
no separate treatment limitations that are applicable only with respect to mental health or
substance use disorder benefits.

The statute defines “treatment limitations” as “limits on the frequency of treatment, number of visits,
days of coverage, or other similar limits on the scope or duration of treatment.” The regulations
implementing the Federal Parity Act reinforce that treatment limitations can be either quantitative
(i.e. numeric) or non-quantitative (i.e. non-numeric). The regulations create six benefits classifications
for purposes of applying the parity requirements: (1) inpatient, in-network; (2) inpatient,
out-of-network; (3) outpatient, in-network; (4) outpatient, out-of-network; (5) emergency care; and
(6) prescription drugs.

The Interim Final Regulations provide that “if a plan provides benefits for a mental health condition
or substance use disorder in one or more classifications but excludes benefits for that condition or
disorder in a classification in which it provides medical/surgical benefits, the exclusion of benefits in that

4 The Federal Parity Act was enacted as a set of parallel amendments to the Employee Retirement Income Security Act
(“ERISA”), the Public Health Service Act, and the Internal Revenue Code. 75 Fed. Reg. 5411. Accordingly, the federal
agencies charged with implementing the Parity Act are the Department of Labor, Department of Health and Human Services,
and the Department of the Treasury (collectively, the “Departments”). After the Parity Act was passed, the Departments
jointly issued a Request for Information soliciting comments on what regulations would be required. 74 Fed. Reg. 19155 (Apr.
28, 2009). The Departments later jointly issued Interim Final Regulations (“IFRs”) on February 2, 2010, see 75 Fed. Reg. 5410
et seq., and Final Regulations on November 13, 2013. See 78 Fed. Reg. 68240 et seq.

78 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 Appendix B: Model Appeals Letters

classification for a mental health condition or substance use disorder otherwise covered under the plan
is a treatment limitation,” 75 Fed. Reg. 5410, 5413 (Feb. 2, 2010), and the Final Regulations underscore
that the Federal Parity Act “specifically prohibits separate treatment limitations that are applicable only
with respect to mental health or substance use disorder benefits.” 78 Fed. Reg. 68240, 68245 (Nov. 13,
2013).

When a plan excludes medically necessary services for covered mental health or substance use disorders
but offers multiple services for medical/surgical conditions within the same classification, it improperly
imposes treatment limitations (i.e. exclusions of medically necessary services) that are not comparable
to and applied more stringently than the treatment limitations imposed under the medical and surgical
benefits within a classification, and moreover, applies such separate treatment limitations “only” with
respect to mental health or substance abuse benefits.

Since the net result of excluding office-based diagnostic and treatment interventions is zero (0) days of
coverage for medically appropriate treatment, the limitation also violates the prohibition on disparate
quantitative limits. This is because the limitation is “more restrictive” than the “predominant limitations
on “substantially all” the medical/surgical benefits in the classification.

Parity Implementation Coalition + The Kennedy Forum 79

Appendix B: Model Appeals Letters

Appeal Letter Sample 4:

Medical Necessity Denial for Inpatient Services

Note: Highlights prior authorization or concurrent review requirements or inpatient services.

[Insert Date]

[If URGENT, then indicate URGENT APPEAL]

[Insert Name]
[Insert Company Name/Plan]
[Insert Address]

Re: [Insert Patient’s Name]

[Insert Patient’s Date of Birth]
[Insert Patient’s Insurance ID Number]
[Insert Patient’s Group ID Number]
[Insert Disputed Service, provider of service, and dates of disputed coverage]

Dear [Name of contact at health insurance plan]:

I have been a member of your plan since [date] and am now writing to appeal your decision to deny coverage
for [state the name of the specific treatment or service denied AND if it is urgently needed to prevent harm
or the inability to regain maximal function]. It is my understanding based on your letter dated [insert date of
denial] that this [treatment or service] has been denied because: [Quote the specific reason given in the denial
letter].

I have enclosed a letter from [name of clinician] explaining why [he/she] recommends [treatment or service],
[his/her] qualifications. I have also attached a rationale for why I am entitled to this service under the Paul
Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). [If the
treatment is urgent, then the treating professional should indicate so in the attached letter.]

I also hereby request that you: 1) provide me with a copy of the SBC and/or SPD and complete benefit plan
booklet for both the medical/surgical and mental health/substance use disorder benefits within 30 days; 2)
explain the specific plan provisions you are relying upon to deny coverage of these services; and 3) provide
me with plan documents under which the plan is established or operated, with information on the processes,
strategies, evidentiary standards and other factors used to develop and apply preauthorization and concurrent
review requirements for inpatient services under the behavioral health benefit; and 4) explain how that is
comparable to and applied no more stringently than the development and application of pre-authorization
and concurrent review requirements for similar inpatient service categories under the medical/surgical
benefit. Should you require additional information, please do not hesitate to contact me at [phone number]. I
look forward to hearing from you in the near future.

Sincerely,

[Insert your name]

Cc: [insert patient’s name]

[insert State Insurance Commissioner’s Name]
[insert your Member of Congress’ name]

Enclosure: Parity Implementation Coalition Analysis

[Clinical guidelines where appropriate]

80 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 Appendix B: Model Appeals Letters

The Parity Implementation Coalition has adopted the following position statement with respect to any
covered mental health and substance use disorders requiring prior authorization or concurrent reviews
for inpatient levels of care.

***

Foundationally, the Affordable Care Act, Section 2706 provides that non-grandfathered group health
plans may not discriminate against “any health care provider who is acting within the scope of that
provider’s license or certification under applicable State law.”

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008
(“Federal Parity Act”)5 requires, without exception:

In the case of a group health plan or a health insurance issuer offering group or individual
health insurance coverage that provides both medical and surgical benefits and mental
health or substance use disorder benefits, such plan or coverage shall ensure that . . .

(ii) the treatment limitations applicable to such mental health or substance use disorder
benefits are no more restrictive than the predominant treatment limitations applied to
substantially all medical and surgical benefits covered by the plan (or coverage) and there are
no separate treatment limitations that are applicable only with respect to mental health or
substance use disorder benefits.

The statute defines “treatment limitations” as “limits on the frequency of treatment, number of visits,
days of coverage, or other similar limits on the scope or duration of treatment.” The regulations
implementing the Federal Parity Act reinforce that treatment limitations can be either quantitative
(i.e. numeric) or non-quantitative (i.e. non-numeric). The regulations create six benefits classifications
for purposes of applying the parity requirements: (1) inpatient, in-network; (2) inpatient,
out-of-network; (3) outpatient, in-network; (4) outpatient, out-of-network; (5) emergency care; and
(6) prescription drugs.

Both the Interim Final Regulations and the Final Regulations expressly identify “preauthorization,”
“concurrent review,” “case management,” and “utilization review” as “medical management techniques”
used by plans to assess medical necessity. Although health plans may condition both mental health/
substance use disorder and medical/surgical benefits on medical necessity, the regulations nonetheless

5 The Federal Parity Act was enacted as a set of parallel amendments to the Employee Retirement Income Security Act
(“ERISA”), the Public Health Service Act, and the Internal Revenue Code. 75 Fed. Reg. 5411. Accordingly, the federal
agencies charged with implementing the Parity Act are the Department of Labor, Department of Health and Human Services,
and the Department of the Treasury (collectively, the “Departments”). After the Parity Act was passed, the Departments
jointly issued a Request for Information soliciting comments on what regulations would be required. 74 Fed. Reg. 19155 (Apr.
28, 2009). The Departments later jointly issued Interim Final Regulations (“IFRs”) on February 2, 2010, see 75 Fed. Reg. 5410
et seq., and Final Regulations on November 13, 2013. See 78 Fed. Reg. 68240 et seq.

Parity Implementation Coalition + The Kennedy Forum 81

Appendix B: Model Appeals Letters

require that any processes and strategies used to assess medical necessity for mental health/substance use
disorder care be comparable to and applied no more stringently than those used to assess the medical
necessity of medical/surgical care. Thus, health plans may not require preauthorization only for inpatient
admissions for mental health or substance use disorders without requiring the same for medical/surgical
care within the corresponding classifications.

Additionally, as highlighted by the Final Regulations, health plans may not apply concurrent reviews
more stringently for inpatient mental health or substance use care than for medical/surgical care within
the corresponding classifications:

Facts. A plan requires prior authorization from the plan’s utilization reviewer that a
treatment is medically necessary for all inpatient medical/surgical benefits and for all
inpatient mental health and substance use disorder benefits. In practice, inpatient benefits
for medical/surgical conditions are routinely approved for seven days, after which a treatment
plan must be submitted by the patient’s attending provider and approved by the plan. On the
other hand, for inpatient mental health and substance use disorder benefits, routine approval
is given only for one day, after which a treatment plan must be submitted by the patient’s
attending provider and approved by the plan.

Conclusion. In this [e]xample, the plan violates the rules . . . because it is applying a stricter
nonquantitative treatment limitation in practice to mental health and substance use disorder
benefits than is applied to medical/ surgical benefits.

82 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 Appendix B: Model Appeals Letters

Appeal Letter Sample 5:

Medical Necessity Denial for Outpatient Psychotherapy

Note: Applies to prior authorization or concurrent review requirements.

[Insert Date]

[If URGENT, then indicate URGENT APPEAL]

[Insert Name]
[Insert Company Name/Plan]
[Insert Address]

Re: [Insert Patient’s Name]

[Insert Patient’s Date of Birth]
[Insert Patient’s Insurance ID Number]
[Insert Patient’s Group ID Number]
[Insert Disputed Service, provider of service, and dates of disputed coverage]

Dear [Name of contact at health insurance plan]:

I have been a member of your plan since [date] and am now writing to appeal your decision to deny coverage
for [state the name of the specific treatment or service denied AND if it is urgently needed to prevent harm
or the inability to regain maximal function]. It is my understanding based on your letter dated [insert date of
denial] that this [treatment or service] has been denied because: [Quote the specific reason given in the denial
letter].

I have enclosed a letter from [name of clinician] explaining why [he/she] recommends [treatment or service],
[his/her] qualifications. I have also attached a rationale for why I am entitled to this service under the Paul
Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). [If the
treatment is urgent, then the treating professional should indicate so in the attached letter.]

I also hereby request that you: 1) provide me with a copy of the SBC and/or SPD and complete benefit plan
booklet for both the medical/surgical and mental health/substance use disorder benefits within 30 days; 2)
explain the specific plan provisions you are relying upon to deny coverage of these services; 3) provide me
with plan documents under which the plan is established or operated, with information on the processes,
strategies, evidentiary standards and other factors used to develop and apply preauthorization and concurrent
review requirements for outpatient psychotherapy under the behavioral health benefit; and 4) explain
how that is comparable to and applied no more stringently than the development and application of pre-
authorization and concurrent review requirements for similar outpatient service categories under the medical/
surgical benefit Should you require additional information, please do not hesitate to contact me at [phone
number]. I look forward to hearing from you in the near future.

Sincerely,

[Insert your name]

Cc: [insert patient’s name]

[insert State Insurance Commissioner’s Name]
[insert your Member of Congress’ name]

Enclosure: Parity Implementation Coalition Analysis

[Clinical guidelines where appropriate]

Parity Implementation Coalition + The Kennedy Forum 83

Appendix B: Model Appeals Letters

The Parity Implementation Coalition has adopted the following position statement with respect to any
covered mental health and substance use disorders requiring prior authorization or concurrent reviews
for outpatient psychotherapy.

***

Foundationally, the Affordable Care Act, Section 2706 provides that non-grandfathered group health
plans may not discriminate against “any health care provider who is acting within the scope of that
provider’s license or certification under applicable State law.”

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008
(“Federal Parity Act”)6 requires, without exception:

In the case of a group health plan or a health insurance issuer offering group or individual
health insurance coverage that provides both medical and surgical benefits and mental
health or substance use disorder benefits, such plan or coverage shall ensure that . . .

(ii) the treatment limitations applicable to such mental health or substance use disorder
benefits are no more restrictive than the predominant treatment limitations applied to
substantially all medical and surgical benefits covered by the plan (or coverage) and there are
no separate treatment limitations that are applicable only with respect to mental health or
substance use disorder benefits.

The statute defines “treatment limitations” as “limits on the frequency of treatment, number of visits,
days of coverage, or other similar limits on the scope or duration of treatment.” The regulations
implementing the Federal Parity Act reinforce that treatment limitations can be either quantitative
(i.e. numeric) or non-quantitative (i.e. non-numeric). The regulations create six benefits classifications
for purposes of applying the parity requirements: (1) inpatient, in-network; (2) inpatient,
out-of-network; (3) outpatient, in-network; (4) outpatient, out-of-network; (5) emergency care; and
(6) prescription drugs.

Both the Interim Final Regulations and the Final Regulations expressly identify “preauthorization,”
“concurrent review,” “case management,” and “utilization review” as “medical management techniques”
used by plans to assess medical necessity. Although health plans may condition both mental health/

6 The Federal Parity Act was enacted as a set of parallel amendments to the Employee Retirement Income Security Act
(“ERISA”), the Public Health Service Act, and the Internal Revenue Code. 75 Fed. Reg. 5411. Accordingly, the federal
agencies charged with implementing the Parity Act are the Department of Labor, Department of Health and Human Services,
and the Department of the Treasury (collectively, the “Departments”). After the Parity Act was passed, the Departments
jointly issued a Request for Information soliciting comments on what regulations would be required. 74 Fed. Reg. 19155 (Apr.
28, 2009). The Departments later jointly issued Interim Final Regulations (“IFRs”) on February 2, 2010, see 75 Fed. Reg. 5410
et seq., and Final Regulations on November 13, 2013. See 78 Fed. Reg. 68240 et seq.

84 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 Appendix B: Model Appeals Letters

substance use disorder and medical/surgical benefits on medical necessity, the regulations nonetheless
require that any processes, strategies, evidentiary standards or other factors used to assess medical
necessity for mental health/substance use disorder care be comparable to and applied no more
stringently than those used to assess the medical necessity of medical/surgical care. For purposes of parity
compliance, health plans may not apply medical management techniques such as preauthorization or
concurrent reviews to all outpatient mental health/substance abuse benefits while doing so for only a de
minimis portion of benefits within the corresponding medical/surgical classifications. In fact, this specific
scenario was highlighted in the Interim Final Regulations:

A group health plan limits benefits to treatment that is medically necessary. The plan
requires concurrent review for inpatient, in-network mental health and substance use
disorder benefits but does not require it for any inpatient, in-network medical/surgical
benefits. The plan conducts retrospective review for inpatient, in-network medical/
surgical benefits . . . Although the same nonquantitative treatment limitation—medical
necessity—applies to both mental health and substance use disorder benefits and to medical/
surgical benefits for inpatient, in-network services, the concurrent review process does not
apply to medical/surgical benefits. The concurrent review process is not comparable to the
retrospective review process . . . such a difference… is not permissible for distinguishing
between all medical/surgical benefits and all mental health or substance use disorder benefits.

Further reinforced in the Final Regulations, “Cross-walking or pairing specific mental health or substance
use disorder benefits with specific medical/surgical benefits is a static approach that the Departments do
not believe is feasible, given the difficulty in determining ‘equivalency’ between specific medical/surgical
benefits and specific mental health and substance use disorder benefits and because of the differences
in the types of benefits that may be offered by any particular plan.” 78 Fed. Reg. at 68243. Accordingly,
health plans cannot require preauthorization for outpatient psychotherapy without requiring the same for
all outpatient, office-based medical/surgical visits.

Likewise, health plans cannot impose concurrent reviews (that effectively impose preauthorization)
to ration outpatient psychotherapy already in effect if the same is not imposed for outpatient medical/
surgical office visits within the corresponding classifications.

Moreover, not only must the processes and strategies assessing medical necessity (such as
preauthorization and concurrent reviews) be comparable between mental health/substance use benefits
and medical/surgical benefits within the same classifications, but the processes and strategies assessing
medical necessity for mental health or substance use disorder benefits must also be applied “no more
stringently than” those applied to medical/surgical benefits within the corresponding classifications.
Thus, requiring treatment plans or submission of continued service requests for mental health or
substance use care when the same is not required at all or at the same frequencies for medical/surgical
care within the same classifications would violate the “comparability” and “no more stringent than” tests
of the nonquantitative treatment limitation parity rule.

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Appendix B: Model Appeals Letters

Appeal Letter Sample 6: Medical Necessity Denial for

Non-Psychotherapy, Outpatient Levels of Care

Note: Applies to prior authorization or concurrent review requirements (i.e. PHP, IOP).

[Insert Date]

[If URGENT, then indicate URGENT APPEAL]

[Insert Name]
[Insert Company Name/Plan]
[Insert Address]

Re: [Insert Patient’s Name]

[Insert Patient’s Date of Birth]
[Insert Patient’s Insurance ID Number]
[Insert Patient’s Group ID Number]
[Insert Disputed Service, provider of service, and dates of disputed coverage]

Dear [Name of contact at health insurance plan]:

I have been a member of your plan since [date] and am now writing to appeal your decision to deny coverage
for [state the name of the specific treatment or service denied AND if it is urgently needed to prevent harm
or the inability to regain maximal function]. It is my understanding based on your letter dated [insert date of
denial] that this [treatment or service] has been denied because: [Quote the specific reason given in the denial
letter].

I have enclosed a letter from [name of clinician] explaining why [he/she] recommends [treatment or service],
[his/her] qualifications. I have also attached a rationale for why I am entitled to this service under the Paul
Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). [If the
treatment is urgent, then the treating professional should indicate so in the attached letter.]

I also hereby request that you: 1) provide me with a copy of the SBC and/or SPD and complete benefit plan
booklet for both the medical/surgical and mental health/substance use disorder benefits within 30 days; 2)
explain the specific plan provisions you are relying upon to deny coverage of these services; 3) provide me
with plan documents under which the plan is established or operated, with information on the processes,
strategies, evidentiary standards and other factors used to develop and apply preauthorization and concurrent
review requirements for outpatient services under the behavioral health benefit; and 4) explain how that is
comparable to and applied no more stringently than the development and application of pre-authorization
and concurrent review requirements for similar outpatient service categories under the medical/surgical
benefit . Should you require additional information, please do not hesitate to contact me at [phone number]. I
look forward to hearing from you in the near future.

Sincerely,

[Insert your name]

Cc: [insert patient’s name]

[insert State Insurance Commissioner’s Name]
[insert your Member of Congress’ name]

Enclosure: Parity Implementation Coalition Analysis

[Clinical guidelines where appropriate]

86 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 Appendix B: Model Appeals Letters

The Parity Implementation Coalition has adopted the following position with respect to any covered
mental health and substance use disorders requiring prior authorization or concurrent reviews for
outpatient levels of care.

***

Foundationally, the Affordable Care Act, Section 2706 provides that non-grandfathered group health
plans may not discriminate against “any health care provider who is acting within the scope of that
provider’s license or certification under applicable State law.”

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008
(“Federal Parity Act”)7 requires, without exception:

In the case of a group health plan or a health insurance issuer offering group or individual
health insurance coverage that provides both medical and surgical benefits and mental
health or substance use disorder benefits, such plan or coverage shall ensure that . . .

(ii) the treatment limitations applicable to such mental health or substance use disorder
benefits are no more restrictive than the predominant treatment limitations applied to
substantially all medical and surgical benefits covered by the plan (or coverage) and there are
no separate treatment limitations that are applicable only with respect to mental health or
substance use disorder benefits.

The statute defines “treatment limitations” as “limits on the frequency of treatment, number of visits,
days of coverage, or other similar limits on the scope or duration of treatment.” The regulations
implementing the Federal Parity Act reinforce that treatment limitations can be either quantitative
(i.e. numeric) or non-quantitative (i.e. non-numeric). The regulations create six benefits classifications
for purposes of applying the parity requirements: (1) inpatient, in-network; (2) inpatient,
out-of-network; (3) outpatient, in-network; (4) outpatient, out-of-network; (5) emergency care; and
(6) prescription drugs.

Both the Interim Final Regulations and the Final Regulations expressly identify “preauthorization,”
“concurrent review,” “case management,” and “utilization review” as “medical management techniques”
used by plans to assess medical necessity. Although health plans may condition both mental health/
substance use disorder and medical/surgical benefits on medical necessity, the regulations nonetheless

7 The Federal Parity Act was enacted as a set of parallel amendments to the Employee Retirement Income Security Act
(“ERISA”), the Public Health Service Act, and the Internal Revenue Code. 75 Fed. Reg. 5411. Accordingly, the federal
agencies charged with implementing the Parity Act are the Department of Labor, Department of Health and Human Services,
and the Department of the Treasury (collectively, the “Departments”). After the Parity Act was passed, the Departments
jointly issued a Request for Information soliciting comments on what regulations would be required. 74 Fed. Reg. 19155 (Apr.
28, 2009). The Departments later jointly issued Interim Final Regulations (“IFRs”) on February 2, 2010, see 75 Fed. Reg. 5410
et seq., and Final Regulations on November 13, 2013. See 78 Fed. Reg. 68240 et seq.

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Appendix B: Model Appeals Letters

require that any processes, strategies, evidentiary standards or other factors developed and applied to
assess medical necessity for mental health/substance use disorder care must be comparable to and applied
no more stringently than how they are developed and applied to assess the medical necessity of medical/
surgical care. Thus, health plans may not require preauthorization or concurrent review for outpatient
level of care admissions for mental health or substance use disorders without requiring the same for
outpatient medical/surgical care within the corresponding classifications.

88 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 Appendix B: Model Appeals Letters

Appeal Letter Sample 7: Service Coding

Note: Applies to billing issues related to behavioral health coverage.

[Insert Date]

[If URGENT, then indicate URGENT APPEAL]

[Insert Name]
[Insert Company Name/Plan]
[Insert Address]

Re: [Insert Patient’s Name]

[Insert Patient’s Date of Birth]
[Insert Patient’s Insurance ID Number]
[Insert Patient’s Group ID Number]
[Insert Disputed Service, provider of service, and dates of disputed coverage]

Dear [Name of contact at health insurance plan]:

I have been a member of your plan since [date] and am now writing to appeal your decision to deny coverage
for [state the name of the specific treatment or service denied AND if it is urgently needed to prevent harm
or the inability to regain maximal function]. It is my understanding based on your letter dated [insert date of
denial] that this [treatment or service] has been denied because: [Quote the specific reason given in the denial
letter].

I have enclosed a letter from [name of clinician] explaining why [he/she] recommends [treatment or service],
[his/her] qualifications. I have also attached a rationale for why I am entitled to this service under the Paul
Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). [If the
treatment is urgent, then the treating professional should indicate so in the attached letter.]

I also hereby request that you: 1) provide me with a copy of the SBC and/or SPD and complete benefit plan
booklet for both the medical/surgical and mental health/substance use disorder benefits within 30 days; 2)
explain the specific plan provisions you are relying upon to exclude coverage of these services; and 3) provide
me with plan documents under which the plan is established or operated, with information on the processes,
strategies, evidentiary standards and other factors applicable to service coding under the behavioral health
benefit; and 4) explain how that is comparable to and applied no more stringently than those applicable to
service coding under the medical/surgical benefit Should you require additional information, please do not
hesitate to contact me at [phone number]. I look forward to hearing from you in the near future.

Sincerely,

[Insert your name]

Cc: [insert patient’s name]

[insert State Insurance Commissioner’s Name]
[insert your Member of Congress’ name]

Enclosure: Parity Implementation Coalition Analysis

[Clinical guidelines where appropriate]

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Appendix B: Model Appeals Letters

The Parity Implementation Coalition has adopted the following position statement with respect to
service coding for any covered mental health and substance use disorders.

***

Foundationally, the Affordable Care Act, Section 2706 provides that non-grandfathered group health
plans may not discriminate against “any health care provider who is acting within the scope of that
provider’s license or certification under applicable State law.”

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008
(“Federal Parity Act”)8 requires, without exception:

In the case of a group health plan or a health insurance issuer offering group or individual
health insurance coverage that provides both medical and surgical benefits and mental
health or substance use disorder benefits, such plan or coverage shall ensure that . . .

(ii) the treatment limitations applicable to such mental health or substance use disorder
benefits are no more restrictive than the predominant treatment limitations applied to
substantially all medical and surgical benefits covered by the plan (or coverage) and there are
no separate treatment limitations that are applicable only with respect to mental health or
substance use disorder benefits.

The statute defines “treatment limitations” as “limits on the frequency of treatment, number of visits,
days of coverage, or other similar limits on the scope or duration of treatment.” The regulations
implementing the Federal Parity Act reinforce that treatment limitations can be either quantitative
(i.e. numeric) or non-quantitative (i.e. non-numeric). The regulations create six benefits classifications
for purposes of applying the parity requirements: (1) inpatient, in-network; (2) inpatient,
out-of-network; (3) outpatient, in-network; (4) outpatient, out-of-network; (5) emergency care; and
(6) prescription drugs.

Whereas the Interim Final Regulations held that “if a plan provides benefits for a mental health
condition or substance use disorder in one or more classifications but excludes benefits for that condition
or disorder in a classification in which it provides medical/surgical benefits, the exclusion of benefits in
that classification for a mental health condition or substance use disorder otherwise covered under the

8 The Federal Parity Act was enacted as a set of parallel amendments to the Employee Retirement Income Security Act
(“ERISA”), the Public Health Service Act, and the Internal Revenue Code. 75 Fed. Reg. 5411. Accordingly, the federal
agencies charged with implementing the Parity Act are the Department of Labor, Department of Health and Human Services,
and the Department of the Treasury (collectively, the “Departments”). After the Parity Act was passed, the Departments
jointly issued a Request for Information soliciting comments on what regulations would be required. 74 Fed. Reg. 19155 (Apr.
28, 2009). The Departments later jointly issued Interim Final Regulations (“IFRs”) on February 2, 2010, see 75 Fed. Reg. 5410
et seq., and Final Regulations on November 13, 2013. See 78 Fed. Reg. 68240 et seq.

90 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 Appendix B: Model Appeals Letters

plan is a treatment limitation,” the Final Regulations underscore that the Federal Parity Act “specifically
prohibits separate treatment limitations that are applicable only with respect to mental health or
substance use disorder benefits.” The Final Regulations specifically establish that any limitations on
“service coding” are non-quantitative.

Thus, a plan that categorically refuses to allow a psychiatrist or addiction specialist physician to bill
for evaluation and management services for mental health or substance use disorders under established
evaluation and management (“E&M CPT”) physician codes while permitting all other non-psychiatric
physicians to use these codes for medical/surgical disorders plainly violates the parity requirements by
applying a treatment limitation (“service coding”) exclusively to benefits for mental health or substance
use disorders.

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 Appendix C: Helpful Resources

State Resources

External Review Process by State from the Kaiser Family Foundation:

http://kff.org/other/state-indicator/external-appeals-review-processes/

State Laws Mandating or Regulating Mental Health/Addiction Benefits:

http://www.ncsl.org/IssuesResearch/Health/StateLawsMandatingorRegulatingMentalHealthB/
tabid/14352/Default.aspx

State insurance commissioners oversee insured plans.

State Insurance Regulators

Alaska American Samoa

Lori Wing-Heier Tau Tanuvasa
Division Director, Commissioner of Insurance
Department of Commerce and AP Lutali Executive Office Building
Economic Development, Pago Pago, American Samoa 85018
Division of Insurance 011(684) 633-4116
PO Box 110805 [email protected]
Juneau, AK 99811
(907) 465-2515 Arizona
[email protected] Germaine L. Marks
Director, Department of Insurance
Alabama 2910 N. 44th Street, Ste. 210
Gwen Davis Phoenix, AZ 85018
Director, Division of Healthcare Facilities (602) 364-2393
201 Monroe Street, Suite 710 [email protected]
Montgomery, AL 36104
(334) 206-5998
[email protected]

92 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 Appendix C: Helpful Resources

Arkansas Connecticut
Mary Fuller Anne Melissa Dowling
Director, Acting Insurance Commissioner
Utilization Review Certification Program PO Box 816
5800 West 10th Street, Suite 400 Hartford, CT 06142
Little Rock, AR 72204 (860) 297-3800
(501) 661-2771 [email protected]
[email protected]
Delaware
California Karen Weldin-Stewart
Shelley Rouillard Insurance Commissioner
Director, 2055 Limestone Road, Suite 200
Department of Managed Health Care Wilmington, DE 19808
980 Ninth Street, Suite 500 (302) 674-7300
Sacramento, CA 95814 [email protected]
(916) 322-2078
[email protected] District of Columbia
Chester A. McPherson
Dave Jones Acting Commissioner of Insurance,
Commissioner, Securities & Banking
California Department of Insurance 810 First Street, N.E., Suite 701
Consumer Services and Washington, D.C. 20002
Market Conduct Branch (202) 727-8000
Consumer Services Division [email protected]
300 South Spring Street, South Tower
Los Angeles, CA 90013 Florida
(213) 897-8921 Ruby Schmigel
www.insurance.ca.gov Regulatory Specialist
2727 Mahan Drive, MS #31
Colorado Tallahassee, FL 32308
Marguerite Salazar (850) 487-2717
Insurance Commissioner [email protected]
1560 Broadway, Suite 850
Denver, CO 80202
(303) 894-7499
[email protected]

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Appendix C: Helpful Resources

Georgia Indiana
Edith Johnson Rebecca Vaughan, LTCP
Support Services Specialist Director, Indiana LTCS Partnership Program
2 Martin Luther King, Jr. Drive, and UR, IRO, MCR and DMPO Licensing
West Tower, Suite 6-604 311 W. Washington Street, Suite 300
Atlanta, GA 30334 Indianapolis, IN 46204
(404) 657-1705 (317) 232-2187
[email protected] [email protected]

Guam Iowa
Artemio B. Ilagan Nick Gerhart
Commissioner of Insurance Commissioner of Insurance
Building 13-1, Mariner Avenue 601 Locust Street
Tiyan, Barrigada, Guam 96913 Des Moines, IA 50309
(671) 635-1817 (515) 281-4409
[email protected] [email protected]

Hawaii Kansas
Lloyd Lim Julie Holmes
Health Insurance Branch Administrator Director, Accident & Health Division
PO Box 3614 420 SW 9th
Honolulu, HI 96811 Topeka, KS 66612
(808) 586-2804 (785) 296-7850
[email protected] [email protected]

Idaho Kentucky
Bill Deal Sharon P. Clark
Director, Insurance Department Commissioner
700 W. State Street, 3rd Floor Health & Life Division
Boise, ID 83720 PO Box 517, 215 West Main Street
(208) 334-4398 St. Frankfort, KY 40601
[email protected] (502) 564-3630
[email protected]
Illinois
Andrew Boron
Director, Department of Insurance
320 W. Washington Street
Springfield, IL 62867
(217) 558-2309
[email protected]

94 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 Appendix C: Helpful Resources

Louisiana Minnesota
Korey Harvey Mary Lou Houde
Deputy Commissioner of Insurance Director, Minnesota Department of Commerce
1702 N. Third Street, P.O. Box 94214 857th Place East, Suite 500
Baton Rouge, LA 70802 St. Paul, MN 55101-2198
(225) 219-4770 (651) 539-1744
[email protected] [email protected]

Maine Mississippi
Patty Woods Vickey Berryman
Claims Examiner Director of Licensure
34 State House Station 143B Lefleurs Square
Augusta, ME 04333 Jackson, MS 39211
(207) 624-8475 (601) 364-1100
[email protected] [email protected]

Maryland Missouri
Ellen Woodall Angela Nelson
Chief Administrator Director, Missouri Department of Insurance,
200 St. Paul Place, Suite 2700 Financial Institutions & Professional Registration
Baltimore, MD 21202 301 West High Street, PO Box 690
(410) 468-2170 Jefferson City, MO 65102
[email protected] (573) 751-2430
[email protected]
Massachusetts
Nancy Schwartz Montana
Director, Bureau of Managed Care Greg Dahl
1000 Washington Street Deputy Insurance Commissioner
Boston, MA 02118 840 Helena Avenue
(617) 521-7347 Helena, MT 59601
[email protected] (406) 444-2040
[email protected]
Michigan
John Gardner
Manager, Insurance and Financial Services
611 W. Ottawa Street, 3rd Floor
Lansing, MI 48933
(517) 241-2349
[email protected]

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Appendix C: Helpful Resources

Nebraska New York

Jason McCartney Jeanette M. Hill
Administrator Project Manager, Utilization Review
941 O Street, Suite 400 Corning Tower, Room 1911
Lincoln, NE 68508 Albany, NY 12237
(402) 471-4707 (518) 474-4156
[email protected] [email protected]

Nevada North Dakota

Steven Hughey Yvonne Keniston
Assistant Chief, Producer License Section Records/Applications
1818 E. College Pkwy., Suite 103 600 East Boulevard Avenue, Dept. 401
Carson City, NV 89706 Bismarck, ND 58505-0320
(775) 687-0700 (701) 328-2440
[email protected] [email protected]

New Hampshire Ohio

Diane Cygan Department of Insurance, Office of Life,
Financial Records Auditor Health and Managed Care Services
21 South Fruit Street, Suite 14 50 W. Town Street, Suite 300
Concord, NH 03301 Columbus, OH 43215
(603) 271-2261 (614) 644-2644
[email protected] [email protected]

New Jersey Oklahoma

Holly Gaenzle Ann Johnston, RN
Chief, Department of Banking and Insurance Rate and Form Analyst
PO Box 325 5 Corporate Plaza, 3625 NE 56th, Suite 100
Trenton, NJ 08625 Oklahoma City, OK 73112
(609) 777-9470 (405) 521-2828
[email protected] [email protected]

New Mexico Oregon

Kathi Padilla Rhett Stoyer
Acting Bureau Chief Consumer Advocate Liaison
PO Box 1689 350 Winter Street, NE
Santa Fe, NM 87504 Salem, OR 97301
(505) 827-3811 (503) 947-7268
[email protected] [email protected]

96 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 Appendix C: Helpful Resources

Pennsylvania South Dakota

William Wiegmann Merle Scheiber
Director, Division of Certification Director, Division of Insurance
Room 912, Health & Welfare Building 445 East Capitol Avenue
625 Forster Street Pierre, SD 57501
Harrisburg, PA 17120 (605) 773-3563
(717) 787-5193 [email protected]
[email protected]
Tennessee
Puerto Rico Brian Hoffmeister
Angela Weyne Director, Policy Analysis Section,
Insurance Commissioner Life and Health Unit
GAM Tower, Urb. 500 James Robertson Pkwy, Suite 500
Tabonuco, Suite 400 Nashville, TN 37243
Guaynabo, PR 00968 (615) 741-2825
(787) 304-8686 [email protected]
[email protected]
Texas
Rhode Island Debra Diaz-Lara
Valentina Adamova Director, Texas Department of Insurance,
Healthy Policy Analyst MCQA Office
3 Capitol Hill, Room 410 333 Guadalupe Street
Providence, RI 02908-5097 Austin, TX 78701
(401) 222-6015 (512) 322-4266
[email protected] [email protected]

South Carolina Utah

Ben Duncan Nancy Askerlund
Agency Contact Person Director, Utah Insurance Department,
1201 Main St., Suite 100 Life & Health Insurance Division
Columbia, SC 29201 State Office Building, Suite 3110
(803) 737-6343 450 N State St.
[email protected] Salt Lake City, UT 84114
(801) 537-9293
[email protected]

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Appendix C: Helpful Resources

Vermont West Virginia

Dawn S. Bennett Michael D. Riley
Health Care Administrator Insurance Commissioner
89 Main Street PO Box 50540
Montpelier, VT 05620 1124 Smith Street
(802) 828-2923 Charleston, WV 25305
[email protected] (304) 558-2100
[email protected]
Virginia
Erik O. Bodin Wisconsin
Director, Virginia Department of Health Ted Nickel
9960 Maryland Drive, Suite 401 Commissioner of Insurance
Richmond, VA 23233 125 South Webster Street
(804) 367-2102 Madison, WI 53703
[email protected] (608) 266-3585
[email protected]
Virgin Islands
Ira Mills Wyoming
Tax Assessor, Division of Banking and Insurance Brenda Patch
1131 King Street, Suite 101 Senior Health Policy and Planning Analyst
Christiansted, St. Croix, VI 00820 106 E. 6th Ave.
(340) 773-6449 Cheyenne, WY 82001
[email protected] (307) 777-2447
[email protected]
Washington
Mike Kreidler
Insurance Commissioner
PO Box 40255
Olympia, WA 98504
(360) 586-3109
[email protected]

98 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
 Appendix C: Helpful Resources

Federal Resources

Agency for Healthcare Research and Quality section on “Questions and Answers About Health
Insurance”: www.ahrq.gov/consumer/insuranceqa/

U.S. Department of Health and Human Service’s website on the Affordable Care Act health
reform law: www.healthcare.gov

U.S. Department of Health and Human Services & Centers for Medicare and Medicaid
Services list of exempt state and local plans:
http://www.cms.gov/CCIIO/Resources/Fact-Sheets-and-FAQs/non_federal_governmental_
plans_04072011.html

U.S. Department of Health and Human Services, Substance Abuse and Mental Health Services
Administration (SAMHSA): www.samhsa.gov
For information about addiction and mental health generally.

http://www.samhsa.gov/health-financing/implementation-mental-health-parity-addiction-
equity-act
For information about parity.

National Association of Insurance Commissioners:

http://naic.org/state_web_map.htm

U.S. Centers for Medicare and Medicaid Services (CMS): http://www.cms.gov/CCIIO/Programs-

and-Initiatives/Other-Insurance-Protections/mhpaea_factsheet.html

U.S. Department of Labor, Employee Benefits, Security Administration (EBSA):

www.dol.gov/ebsa or toll-free hotline: 1.866.444.EBSA (3272)
Information on requirements of employer-based insurance coverage and self-insured health plans. EBSA
has benefit advisors who are available to answer questions and provide assistance in obtaining your benefits.

U.S. House: www.house.gov

Use your zip code to find your Member of Congress. Your Member of Congress can help answer questions
and resolve problems with government programs such as Medicaid.

U.S. Senate: www.senate.gov

Your Senator can help answer questions and resolve problems with government programs such as Medicaid.

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 Appendix D: Parity Implementation
Coalition Members

The Parity Implementation Coalition members advanced parity legislation for over twelve years in
an effort to end discrimination against individuals and families who seek services for mental health
and substance use disorders and remain committed to its effective implementation.

• The American Academy of Child and Adolescent Psychiatry: www.aacap.org

• The American Psychiatric Association: www.psych.org
• The American Society of Addiction Medicine: www.asam.org
• Cumberland Heights: www.cumberlandheights.org
• The Hazelden Betty Ford Foundation: www.hazeldenbettyford.org
• MedPro Billing: www.medprobill.com
• Mental Health America: www.mentalhealthamerica.net
• National Alliance on Mental Illness: www.nami.org
• National Association of Addiction Treatment Providers: www.naatp.org
• National Association of Psychiatric Health Systems: www.naphs.org
• The Watershed Addiction Treatment Programs: www.thewatershed.com
• Young People in Recovery: www.youngpeopleinrecovery.org

100 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates
Appendix E: Abbreviations

AAAHC: MCO:
Accreditation Association for Ambulatory Managed Care Organization
Health Care, Inc.
MH/SUD:
ACA: Mental Health/Substance Use Disorder
Affordable Care Act
NAIC:
BHO: National Association of Insurance
Behavioral Health Organization Commissioners

CMS: NCQA:
Centers for Medicare and Medicaid Services National Committee for Quality Assurance

DOI: NQTL:
Department of Insurance (state level) Non-Quantitative Treatment Limitations

DOD/VA: QTL:
U.S. Department of Defense/Veteran’s Affairs Quantitative Treatment Limitations

DOL: SPD:
U.S. Department of Labor Summary Plan Description

ERISA: Treasury:
Employee Retirement Income Security Act U.S. Department of Treasury

FAQ: UM:
Frequently Asked Questions Utilization Management

HHS: UR:
U.S. Department of Health and Human Utilization Review
Services
URAC:
IRO: Formerly the Utilization Review Accreditation
Independent Review Organization Commission, which now just goes by URAC

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 Appendix F:
About The Kennedy Forum

T
he Kennedy Forum was founded in 2013 as a way to convene cutting-edge thinkers who
are united by the potential for reform in mental health service delivery made possible
by new laws, new technologies and an enhanced understanding of effective services and
treatments. Our inaugural event in October 2013 brought a call for the Forum to develop a
platform to advance the best thinking across a host of issues in our field. To meet this demand, The
Kennedy Forum is organized as a think tank, poised to drive real, lasting and meaningful policy
change, bringing the nation closer to fulfilling President Kennedy’s vision as outlined in the 1963
Community Mental Health Act.

Today, The Kennedy Forum’s work is not singular in its focus; we are promoting mental health
coverage through a series of initiatives by:

• Ensuring health plan accountability and compliance with the letter and spirit of the parity
law, in large part by educating consumers, providers and regulators, so that each group holds
themselves and others accountable for enforcing it.
• Establishing ways to promote provider accountability through evidence-based outcomes
measures that are validated and quantifiable.
• Implementing proven collaborative practice models that promote the integration of MH/SU
disorder services into mainstream health care.
• Using technology to optimize electronic/digital communications and enhance assessment/
treatment tools.
• Promoting brain fitness and wellness, which includes identifying opportunities to translate
neuroscience research findings into preventative and treatment interventions.

Please monitor our website, www.thekennedyforum.org, to track our ongoing activities in support
of these five initiatives and other activities central to The Kennedy Forum’s mission.

The Parity Implementation Coalition includes the American Psychiatric Association, American Society of Addiction
Medicine, Cumberland Heights, Hazelden Betty Ford Foundation, MedPro Billing, Mental Health America, National
Alliance on Mental Illness, National Association of Psychiatric Health Systems, National Association of Addiction
Treatment Providers, The Watershed Addiction Treatment Programs and Young People in Recovery. The organizations
advanced parity legislation and implementing regulations for over fourteen years in an effort to end discrimination
against individuals and families who seek services for mental health and substance use disorders and remain committed to
its effective implementation. More information about the Coalition is available at www.parityispersonal.org.

102 Parity Resource Guide for Addiction & Mental Health Consumers, Providers & Advocates