Blue Cross payment cuts prompt protest by Minnesota mental health providers

Minnesota's largest health insurer is cutting payments for mental health therapy by double digits, sparking concern that the cuts will cause therapists to turn away patients and aggravate the state's shortage of mental health care.

Blue Cross and Blue Shield of Minnesota began making the reductions in July as part of an effort to cut overall mental health care spending after a review found that billing for standard one-hour therapy sessions had exceeded national averages over the past two years.

As therapists began seeing reimbursements cuts of 15 to 33 percent, word quickly spread within the profession, prompting some therapists to organize a protest outside the insurer's Eagan headquarters one week from Thursday.

"Our ultimate game plan is to tell them that we are not going to tolerate what they are going to do," said Rachel Flaherty, a marriage and family therapist in St. Paul. "We want to make sure that people have access to the mental health care that they need."

Others are exploring whether the cuts violate protections, if not the spirit, of federal and state parity laws that require insurers to treat mental health care the same as physical health. There are also concerns that some of the state's most vulnerable residents will suffer disproportionately because the company's Blue Plus HMO is the largest plan in Medical Assistance, serving about 370,000 Minnesotans.

Faced with questions and confusion about the cuts, Blue Cross told providers in a letter late last week that "unusually high claims trends" required a reset of rates to "appropriate" levels. The insurer said last week that it rolled back some of the rate decreases and that it will delay until January a cut that would reduce payment for the standard hourlong therapy session by about 18 percent.

"We have tried to listen and made essentially a good-faith effort to phase in these changes," said Eric Hoag, vice president for provider relations at Blue Cross. "Looking back, we could have done a better job with the communications."

Advocates, however, argue that the cuts are shortsighted. By underpaying for therapy, Blue Cross risks incurring higher costs later, said Thomas Belcher, chief financial officer for Greater Minnesota Family Services, an agency that provides in-home therapy for at-risk children in 34 counties.

"These kids are not going to go away if we can't provide services," said Belcher. "They are going to get placed in treatment facilities ... at a higher cost to society. How is this helpful long term?"

In addition to the rate reductions, some providers would be getting paid less because the insurer discovered that it had mistakenly overpaid them by nearly 24 percent for the past two years. As a result, the affected providers will be asked to repay a total of $4 million in overpayments made between last September and June. Blue Cross will work out repayment details with each provider separately.

"We understand that each provider's situation is unique," Hoag said. "We will be working with providers to figure out how we can recoup some of those overpayments."

The changes affect about 2,000 smaller and midsize providers that lack the market clout to negotiate their payment rates. So far, Hoag said, the changes have not prompted defections from Blue Cross provider networks.

"If they decide not to be in these networks, they can opt out," he said. "Although we hope that won't be the case."

Sue Abderholden, executive director of the National Alliance on Mental Illness of Minnesota, said health plans such as Blue Cross should be encouraging patients to seek mental health care, not discouraging it, because many problems go unaddressed and result in higher hospitalization costs, more encounters with the criminal justice system, and a loss of employment and housing.

"Arbitrary limits on treatment ... to control costs flies in the face of the intent of mental health parity," Abderholden said. This "could negatively impact patient access to care."

Abderholden also said the reductions have the potential to shrink the mental health workforce and discourage others from joining the profession. "Pretty much everywhere it is really hard to find providers," she said. "We have shortages."

The changes also mean that the Blue Plus Medical Assistance HMO will pay less for an hourlong therapy session than the state pays for patients who have Medical Assistance but are not covered by a managed care plan. Typically, state health care payment rates are the lowest in the market.

The Minnesota Department of Human Services, which administers Medical Assistance, said HMOs are allowed to set their own payment rates.

"We have heard concerns from providers about the planned rate changes and have discussed those concerns with Blue Plus," the department said in a written statement. "We are monitoring the situation to ensure that Medical Assistance enrollees have access to needed services."

But some agencies with large patient populations covered by Blue Plus Medical Assistance are bracing for the changes.

"A cut of 33 percent would be very devastating to an agency like mine," said Katy Armendariz, director of Minnesota CarePartner, which provides services designed to help children in foster care reunite with families. "It already is a pretty big concern with rates now," she said.

At Greater Minnesota Family Services, the cut to hourlong therapy rates would create a financial hit, but also ignores research showing that hourlong sessions produce results with at-risk children, according to Belcher.

"This type of session is precisely the one being targeted by these cuts," he said. "It seems ... penny-wise and pound-foolish to target services we know are effective."