Mental Health Reimbursement from Michigan’s Senate Bill 27
New Legislation Update— The 7 key breakdowns of the new mental health coverage The Michigan Senate Bill 27, recently signed into law, aims to enhance mental health benefits in the state. This legislation requires insurers to treat mental health and substance use claims on par with other health claims, potentially streamlining access to treatments.
The new mental health coverage law is expected to alleviate barriers for patients seeking care and have an impact on the healthcare field, benefiting patients, providers, and payers in Michigan. The Michigan Legislature enacted Senate Bill 27, a law that mandates insurers to treat mental health and substance use claims the same as other health claims. This expansion of mental health coverage is expected to alleviate barriers for patients seeking care and have a positive impact on the healthcare field in Michigan.
It benefits patients, providers, and payers by potentially simplifying the process of accessing mental health and substance use treatments and reducing the barriers patients face in seeking treatment. law and what it means for the 3 Ps of the healthcare field – Patients, Providers, and Payers. The Michigan Legislature enacted Senate Bill 27, a law that could potentially simplify the process of accessing mental health and substance use treatments for Michiganders. This law mandates that insurers treat mental health and substance use claims the same as other health claims, potentially reducing the barriers patients face in seeking treatment.
Governor Whitmer recently signed Senate Bill 27 of 2024 into law.
Key Breakdown #1:
(1) An insurer that delivers, issues for delivery, or renews in this state a health insurance policy shall provide coverage for mental health and substance use disorder services. All of the following apply to the coverage required under this subsection:
RHL Comment: this section mandates that all insurance payors operating in Michigan must provide coverage for mental health and substance use disorder treatments. Shall means must.
Key Breakdown #2:
- Any financial requirements or quantitative treatment limitations applicable to mental health and substance use disorder benefits in any classification must be no more restrictive than the predominant financial requirements or quantitative treatment limitations applied to substantially all benefits provided for medical/surgical benefits in the same classification and there must be no separate cumulative financial requirements that are applicable only with respect to mental health or substance use disorder benefits.
RHL Comment: The new law brings significant changes to the way insurance payers operate. In the past, they often placed extra costs or “quantitative limitations” on mental health and substance use disorder treatment that were not present for other treatments. However, under the new law, these practices are no longer allowed, ensuring a more equitable and accessible healthcare system.
So, if there is no co-pay for out-of-network surgeries for other conditions, there cannot be a co-pay for out-of-network surgeries for mental health or substance use disorder. If there is a $15 co-pay for other services for inpatient in-network patients, there cannot be a $30 co-pay for mental health or substance use disorder services for inpatient in-network patients. Suppose there is a 12-visit limit on physical therapy visits in a certain period for outpatient in-network patients. In that case, there cannot be a 6-visit limit in that same period for outpatient in-network patients.
However, this only applies within the same classification. An insurer is still free to make you pay more for out-of-network substance use/mental health treatment than they might for in-network treatments for different conditions.
Key Breakdown #3:
(b) Except as otherwise provided in subsections (3) and (4), nonquantitative treatment limitations may be imposed on mental health or substance use disorder benefits in any classification only if the processes, strategies, evidentiary standards, or other factors used in developing and applying the nonquantitative treatment limitation to mental health or substance use disorder benefits in the same classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in developing and applying the limitation with respect to medical/surgical benefits in the same classification.
RHL Comment: It is unclear exactly what effect this section will have. The legislature’s intent seems to be that insurers must use comparable methodology to determine non-quantitative treatment limitations that would be used for substance use/mental health treatments within the same classification and are applied no more stringently. However, how this will be enforced is questionable.
(c) The insurer may divide its benefits furnished on an outpatient basis into the following subclassifications:
- Office visits, such as physician visits.
(ii) Any other outpatient benefit, such as outpatient surgery, facility charges for day treatment centers, laboratory charges, and other medical items.
Key Breakdown #4:
(2) Benefits provided under subsection (1) must meet all applicable federal parity requirements, including, but not limited to, 42 USC 300gg-26 and the regulations promulgated under that section. An insurer that meets the federal parity requirements described in this subsection is considered to meet the requirements under subsection (1) if the federal parity requirements are not less stringent than the requirements under subsection (1).
RHL Comment: 42 USC 300gg-26 is a federal law with many of the same requirements as SB 27 and some additional ones. This section says that if your plan satisfies the federal law, it probably satisfies the Michigan law. However, if any part of Michigan law has stricter requirements than the federal law, you are subject to Michigan’s requirements.
Key Breakdown #5:
(3) If a health insurance policy has multiple tiers of in-network providers, including a preferred tier with better cost-sharing than another tier, the plan can divide its in-network benefits based on these tiers as long as it meets certain requirements. This applies regardless of the type of services provided by the providers.
After establishing subclassifications, a health insurance policy cannot impose stricter financial requirements or treatment limitations on mental health or substance use disorder benefits compared to medical and surgical benefits in the same subclassification.
RHL Comment: Loophole alert – Section 3 is a problem. Above, we talked about how mental health and substance use treatments cannot have different amounts for things like co-pays or deductibles and restrictions on the number of visits as other services within the same classification (in-network inpatient, in-network outpatient, out-of-network inpatient, out-of-network outpatient, prescription, or emergency services). However, this section allows insurers to create subclassification designations, such as preferred providers or different tiers. If that is the case, the same rule applies within that subclassification as it would within one of the listed classifications. Mental health and substance use services within the preferred provider classification cannot have copays or visit limits different from other services in the preferred provider classification.
This provides a reasonably simple loophole for insurers: for example, if an insurer wants higher copays for inpatient in-network treatment for mental health and substance use disorder than for other inpatient in-network treatments, they can create different tiers within the classification and put providers who don’t provide mental health or substance use services in a tier with lower copays and higher visit limits, then put providers who provide mental health or substance use services in a lower tier with higher copays and lower visit limits.
Key Breakdown #6:
(4) If a health insurance policy applies different levels of financial requirements to different tiers of prescription drug benefits that are based on reasonable factors determined in accordance with the requirements for nonquantitative treatment limits and without regard to whether a drug is generally prescribed with respect to medical and surgical benefits or with respect to mental health or substance use disorder benefits, the health plan satisfies the parity requirements of this section with respect to prescription drug benefits. As used in this subsection, “reasonable factors” include cost, efficacy, generic versus brand name drugs, and mail order versus pharmacy pick-up.
RHL Comment: In other words, if a prescription drug for mental health/substance use disorder is more expensive because of some other reason besides the fact that it is typically prescribed for mental health/substance use disorder, it’s okay. This type of statutory language invites people to invent pretextual reasons but points for trying.
Key Breakdown #7:
(5) As used in this section:
(a) “Classification” means any 1 of the following:
(i) Inpatient in-network.
(ii) Inpatient out-of-network.
(iii) Outpatient in-network.
(iv) Outpatient out-of-network.
(v) Emergency services.
(vi) Prescription drugs.
(b) “Financial requirements” means deductibles, copayments, coinsurance, and out-of-pocket maximums. Financial requirements do not include aggregate lifetime or annual dollar limits.
(c) “Nonquantitative treatment limitations” means those limitations that are not expressed numerically but otherwise limit the scope or duration of benefits for treatment under a health insurance policy or coverage and include, but is not limited to, the limitations described under 45 CFR 146.136. Nonquantitative treatment limitations do not include a complete exclusion of all benefits for a certain condition or disorder.
(d) “Predominant” means that term as defined in 45 CFR 146.136.
(e) “Quantitative treatment limitations” include limitations that are expressed numerically, such as limits on benefits based on the frequency of treatment, number of visits, days of coverage, days in a waiting period, or other similar limits on the scope or duration of treatment, and includes, but is not limited to, the limitations described under 45 CFR 146.136. Quantitative treatment limitations do not include a complete exclusion of all benefits for a certain condition or disorder.
(f) “Substantially all” means that term as defined in 45 CFR 146.136.
RHL Comments: These are definitions for some of the terms of art used in the statute. They mostly speak for themselves.
Three Takeaways
Takeaway #1
Takeaways for Patients—If you are a patient who uses your insurance company’s mental health or substance use disorder coverage, hopefully, your copays and deductibles for those services will go down, and the number of visits you can have to things like therapists, drug abuse counseling, in-patient rehabs, etc. during a plan period will go up. There are a few vague statements and troubling loopholes, but the hope is that it will benefit patients.
If you are a patient with health coverage that didn’t include mental health or substance use disorder before, it will now. This is great news for you. While your new coverage may not be perfect, it is better than nothing.
Takeaway #2
Takeaways for Providers – Hopefully, you will not have to reapply for benefits for your patients as often. Hopefully, you will be able to keep treating patients without having to “ration” things like therapist visits during each time period to make sure your patient doesn’t go without for too long. Providers should be mindful of denials and underpayments related to their claims and pursue appeal rights as appropriate for claims not paid. Clearly understand the payer policies to help ensure correct communication with patients and know what the reimbursement and payment liabilities between the payer, patient, and the correct contractual adjustment is.
Takeaway #3
Takeaways for Payers – if a patient needs mental health or substance use disorder treatment, cover them! Don’t make them pay more for treatment than other types of patients do. Don’t make them prove their illness to you more often than other patients. Just because these conditions aren’t always visible doesn’t mean they don’t exist. Mental and physical illness should not be treated under different standards. This law has made it more difficult for payers to do that. While section 3 seems to have some loopholes that could be exploited, hopefully, insurers will choose to do the right thing and conform to the intent of the legislature, which is clear.
