Parity in Practice: Fixing an Access Flaw Before It Cost the Plan $75K

A self-funded health plan received an appeal from a participant who was denied reimbursement for out-of-network mental health treatment due to a lack of prior authorization. The member explained that in-network providers had wait times exceeding six weeks, and the treatment was urgently needed for a severe mental health crisis. Initially, the TPA upheld the denial based on the plan’s strict preauthorization requirements. The plan sponsor escalated the issue to the PACE for review, concerned about potential parity and access issues.

 

The Phia Group examined the plan’s mental health and medical/surgical treatment provisions, finding that medical services did not require preauthorization in urgent cases, suggesting a nonquantitative treatment limitation (NQTL) violation under the Mental Health Parity and Addiction Equity Act (MHPAEA). The PACE recommended overturning the denial and reimbursing the out-of-network care as in-network. The plan reprocessed the claim, significantly reducing costs while ensuring compliance with MHPAEA. In response, the plan also revised its policy to allow for exceptions when timely in-network care is unavailable, helping to prevent future costly claims.

 

By partnering with The Phia Group, the plan saved over $75,000 rather than paying the out-of-network charges at full price. This case not only resulted in substantial savings but also demonstrated the importance of reviewing mental health access standards for parity compliance to prevent unnecessary financial strain on the plan.