Mental illness coverage to increase with ruling

January 14, 1994|By Laura Lippman | Laura Lippman,Staff Writer

A state law that requires insurance companies to offer greater coverage for mental illnesses, held up temporarily by a legal challenge by insurers, is now in effect.

Baltimore City Circuit Judge David Ross yesterday lifted an injunction that had been granted by another Circuit Court judge on Dec. 30. Judge Ross' action means that people receiving treatment for mental illnesses may be entitled to more substantial reimbursements for that treatment than in the past.

Under the law, Marylanders insured by commercial carriers and nonprofit companies such as Blue Cross and Blue Shield of Maryland are entitled to certain levels of mental health coverage. However, few insurers have yet outlined the benefits, set their rates or developed waivers for policyholders who wish to decline mental health coverage.

Companies cannot increase premiums for the improved coverage until rates are approved by the Maryland Insurance Division. They also cannot charge higher premiums retroactively.

The law, sometimes called the "parity" law, was passed by the legislature last year and signed into law May 27. It requires insurance companies to offer those with mental illnesses benefits comparable to those for other diseases. Health maintenance organizations, because they have less experience with mental health coverage, were given more time to develop benefits and rates.

"It's a victory for the citizens of Maryland because the mentally ill will no longer be discriminated against in terms of the benefits they receive," said Bette Stewart, executive director of Alliance for the Mentally Ill of Maryland.

However, she added yesterday: "It's very evident to me that this not something insurance companies favor. It's a victory for today."

She referred to the fact that the law still faces hurdles. The insurers' challenge will go to trial if Judge Ross does not dismiss the case at a Jan. 25 hearing. In another possible maneuver, insurers might request a delay from a higher court.

The insurance companies' strategy had not been determined last night, their lawyers said.

Today, representatives of insurers and advocates for the mentally ill were scheduled to discuss the law in separate meetings with members of the House of Delegates Economic Matters Committee.

James J. Doyle III, one of the lawyers representing several insurance companies and HMOs, said "the problems with the statute have still not been resolved."

The directive to offer comparable benefits for the treatment of mental illnesses was to have gone into effect Jan. 1. On Dec. 28, lawyers for several insurance companies and one policyholder sued to stop it from taking effect, claiming that the law was vague and unconstitutional.

Judge Ross, after listening to testimony all day Wednesday, thought otherwise.

"It seems to me the intent of the legislation is crystal clear," he said yesterday, in lifting the injunction.

He also said that the companies could not claim they would lose money under the law, because their own actuaries had testified that was not certain, especially during the first year.

The law was sponsored by Sen. Patricia R. Sher of Montgomery County and Del. Virginia M. Thomas of Howard County, both Democrats.

In its original form, the measure did not allow policyholders to waive mental health coverage. However, a waiver amendment was added in the final days of the 1993 General Assembly. Advocates for the mentally ill and their families say the waiver was added at the behest of the insurance industry.

Yet it was this provision that lawyers for the companies argued would make the coverage impossible to price and might cause insurers to lose money. "They kept saying it was going to be a bureaucratic nightmare and I said, 'That's your problem,' " said Ms. Sher, who plans to pursue legislation this year to dump the waiver. She said she believes that the insurance industry pressed for the waiver last year, thinking it would kill the bill.

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