New York State Seal
STATE OF NEW YORK
INSURANCE DEPARTMENT
25 BEAVER STREET
NEW YORK, NEW YORK 10004

The Office of General Counsel issued the following informal opinion on April 5, 2001, representing the position of the New York State Insurance Department.

Re: Managed Care Contracts, Coverage of Psychological Services

Question Presented:

Is a Managed Care Organization (MCO) that issues a contract in New York required to cover court ordered services (i.e. psychological evaluations) for an at-risk juvenile beyond the limits of its policy or contract?

Conclusion:

There is no such obligation.

Facts:

A State Government Commission is studying how the Commonwealth should provide service to youth at risk. It has been stated by one of the Commission members that New York may have a statute requiring an MCO to provide court ordered services, even when the mandated services go beyond that which the MCO has contracted to provide. You inquire if this observation is correct.

Analysis:

N.Y. Ins. Law § 4801(c) (McKinney 2000) defines a managed care health insurance contract:

… a "managed care health insurance contract" or "managed care product" shall mean a contract which requires that all medical or other health care services covered under the contract, other than emergency care services, be provided by, or pursuant to a referral from, a designated health care provider chosen by the insured (i.e. a primary care gatekeeper), and that services provided pursuant to such a referral be rendered by a health care provider participating in the insurer's managed care provider network. …

Such contracts, which must contain those benefits mandated by New York’s statutes and regulations, may be issued by commercial insurers where the required contract provisions are regulated by N.Y. Ins. Law Art. 32 (McKinney 2000), or Not-For-Profit Health Service Corporations where the required contract provisions are regulated by N.Y. Ins. Law Art. 43 (McKinney 2000). In addition, Health Maintenance Organizations, which are Managed Care Organizations as defined by N.Y. Pub. Health Law § 4401(1) (McKinney 2000), are jointly regulated by this Department and the Department of Health. N.Y. Pub. Health Law § 4406(1) (McKinney 2000) provides that the subscriber contracts of an HMO are regulated by this Department in accordance with New York Insurance Law Article 43.

Pursuant to N.Y. Ins. Law § 4321(b) (McKinney 2001), HMOs must offer a standardized individual enrollee contract that contains the same benefits as are required for a mandated out-of-network benefits contract for individuals. Pursuant to N.Y. Ins. Law §§ 4322(b)(17) & (19) (McKinney 2000), the mandated out of network contract must cover:

(17) Inpatient diagnosis and treatment of mental, nervous or emotional disorders or ailments up to thirty days per calendar year combined with inpatient treatment of alcoholism and substance abuse.

* * * * *

(19) Outpatient diagnosis and treatment of mental, nervous or emotional disorders or ailments up to thirty non-emergency and three emergency visits per calendar year.

Commercial insurers and Health Service Corporations may offer such standardized individual contracts. If so, in accordance with New York Insurance Law § 3216(l) and § 4304(l) (McKinney 2000), respectively, they must offer the same benefits as are required of HMOs pursuant to N.Y. Ins. Law § 4322 (McKinney 2000).

As to group policies of health insurance issued by both commercial and not-for-profit insurers, while the Federal Mental Health Parity Act does not mandate coverage of mental health services pursuant to 42 U.S.C.A. § 300gg-5(b) (West 2000), if such coverage is provided, an insurer may not discriminate between coverage of mental health services and other services in aggregate limits. See 42 U.S.C.A. § 300gg-5(a) (West 2000). The United States Secretary of Health & Human Services has promulgated a regulation, 45C.F.R. § 146.136 (2001), explicating the statutory requirements.

N.Y. Ins. Law § 3221(l)(5)(A) (McKinney 2000), regulating policies issued by commercial insurers, requires that insurers make specified mental health coverage available in group policies covering in-patient hospital care:

Every insurer delivering a group policy or issuing a group policy for delivery, in this state, which provides coverage for inpatient hospital care must make available, and if requested by policyholder provide, coverage for the diagnosis and treatment of mental, nervous or emotional disorders or ailments, however defined in such policy, at least equal to the following: (i) with respect to benefits based upon confinement as an inpatient in a hospital as defined by subdivision ten of section 1.03 of the mental hygiene law, such benefits may be limited to not less than thirty days of active treatment in any calendar year; (ii) with respect to benefits for outpatient care provided in a facility issued an operating certificate by the commissioner of mental hygiene pursuant to the provisions of article thirty-one of the mental hygiene law, or in a facility operated by the department of mental hygiene, or by a psychiatrist or psychologist licensed to practice in this state or a professional corporation or university faculty practice corporation thereof, such benefits may be limited to not less than seven hundred dollars in any calendar year.

As to outpatient treatment, N.Y. Comp. R. & Regs. tit. 11, §52.7(f) (1999) (Reg. 62) provides that in order for a policy to be considered a major medical policy, it must provide specified coverage for mental health services:

…mental health care consisting of coverage for diagnosis and treatment of mental illness for at least: (1) 30 days per year of inpatient care in a hospital as defined by subdivision ten of section 1.03 of the Mental Hygiene Law; (2) 30 outpatient visits per year at no less than $30 per visit and a yearly maximum of no less than $1,500 … in a facility issued an operating certificate by the commissioner of mental health pursuant to the provisions of article 31 of the Mental Hygiene Law, or in a facility operated by the office of mental health, or by a psychiatrist or psychologist licensed to practice in this state, or a professional corporation thereof; and (3) Outpatient crisis intervention services consisting of at least three psychiatric emergency visits per year. … benefits for such a visit shall be no less than $60 per visit. However, benefits provided under this paragraph may be used to reduce benefits otherwise payable under paragraph (1) or (2) of this subdivision.

N.Y. Ins. Law § 4303(h) (McKinney 2000), regulating subscriber contracts issued by Health Service Corporations, requires in pertinent part:

A...corporation which provides coverage for physician services must make available and, if requested by all persons holding individual contracts in a group, whose premiums are paid by a remitting agent or by the contract holder in the case of a group contract…provide coverage for the diagnosis and treatment of mental, nervous or emotional disorders or ailments, however defined in such contract, at least equal to the following: with respect to benefits for outpatient care provided by a psychiatrist or psychologist licensed to practice in this state, a certified social worker…or a professional corporation or university faculty practice corporation thereof, such benefits may be limited to not less than seven hundred dollars in any calendar year…Such coverage may be subject to annual deductibles and coinsurance as may be deemed appropriate by the superintendent. Such deductibles and coinsurance may be consistent with those imposed on other benefits within a given contract…

In accordance with N.Y. Pub. Health Law § 4406(1) (McKinney 2000) the same requirement is imposed on HMOs.

There are extensive provisions for the evaluation and treatment of at-risk youth set forth in N.Y. Dom. Rel. Law (McKinney 2000), the N.Y. Family Court Act (McKinney 2000), and the N.Y. Soc. Serv. Law (McKinney 2000). Since many of the at-risk youth are indigent, in many instances, the cost of such evaluation and treatment becomes a charge on the local social services district.

For the local social service district to be reimbursed by an insurer that provides coverage, N.Y. Soc. Serv. Law § 366(3)(b)(i) (McKinney 2000) provides that the local social services district shall have a right of subrogation against any insurer obligated to provide benefits. Further, N.Y. Ins. Law § 320 (McKinney 2000) provides, in pertinent part:

(a) Every insurer doing an insurance business in this state…except any corporation subject to article forty-three of this chapter, shall, upon request of the state department of social services or of a local social services district for any records, or any information contained in such records, pertaining to the coverage of any individual for such individual's medical costs under any individual or group policy…pursuant to such policy…in accordance with the limitations of subsection (c) hereof, make the requested records or information available upon a certification by the department of social services or the social services district that such individual is an applicant for or recipient of medical assistance, or is a person who is legally responsible for such an applicant or recipient, pursuant to the social services law.

(c) The department of social services or a local social services district shall request only that information necessary to determine whether any insurance benefits have been or should have been claimed and paid with respect to items of medical care and services received by a particular individual for which medical assistance coverage would otherwise be available.

N.Y. Ins. Law § 4311(McKinney 2000) requires that similar information be provided by Health Service Corporations and HMOs. The name of the former State Department of Social Services has been changed to Office of Temporary and Disability Assistance.

The obligation of an insurer or HMO to pay for mental health services for at-risk youth is governed by the terms of the policy or subscriber contract. There is no provision in law that would obligate an insurer or HMO to pay any amounts beyond those limits, merely because of a court order.

For further information you may contact Principal Attorney Alan Rachlin at the New York City Office.