Hot Topics in Behavioral Health in 2021

Erica Erman and Gregory Moore discussed some of the top developments in behavioral health during Dickinson Wright’s Health Law Summit. Below is a summary of what was discussed. Click here to view the full webinar.

Table of Contents

  • Development #1: New Trends in Parity Enforcement
    • Recent Litigation, Including Wit v. United Behavioral Health
  • Development #2: Integration of Physical and Behavioral Health
    • The History of Behavioral Health
    • Why is Reintegration Necessary?
    • Social Determinates
  • Development #3: Increased Focus on All Levels of Care in Treatment and Recovery
    • Treatment Improvement Protocols
    • Stretching the Continuum of Care
    • IMDs – Institutions for Mental Disease
  • Development #4: Psychiatric Boarding Issues (Among Others) Have Forced Increased Development in Crisis Delivery Systems
  • Development #5: M&A Activity in Behavioral Health Remains Hot Hot Hot

Development #1: New Trends in Parity Enforcement

The enforcement of parity, or the idea that mental health and substance use disorder (SUD) benefits should be on par with medical and surgical benefits, is currently on the forefront of behavioral healthcare law. Alongside other important legislation such as the Mental Health Parity Act (MHPA) and sections of the Affordable Care Act, the passage of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA or the “Parity Act”), sought to lessen the historical stigma surrounding behavioral health care issues, and prevents group health plan and health insurance issuers from imposing more restrictive limitations on mental health and SUD benefits than on medical/surgical benefits. Plans must have “essential health benefits,” which includes “behavioral health” (treatment for mental illness, substance use disorders, and developmental disabilities) under the Affordable Care Act.

Enforcement of the Parity Act has ramped up in recent years. Where litigation to enforce the Parity Act has been successful, the arguments have been based in the Employee Retirement Income Security Act (ERISA), which places insurers, health plans, and administrators in the position of fiduciaries. As fiduciaries, they are required to enforce the Parity Act.

Recent Litigation, Including Wit v. United Behavioral Health

One of the most famous pieces of litigation on the topic is the ongoing Wit v. United Behavioral Health (UBH) from a federal court in California. The plaintiffs argued that the guidelines used to determine the coverage level of care were more restrictive than generally accepted standards of care in behavioral health. When UBH applied and used those guidelines, they wrongfully denied coverage to many patients. The court agreed and recognized general effective standards of care, finding that the guidelines were more restrictive, and that the insurer’s financial department had tainted the guidelines by prioritizing financial considerations. UBH was ordered to reprocess over 60,000 claims that had been inappropriately denied. The case is still ongoing.

More recent litigation has been focused on identifying disparities in treatment limitations. One of the main areas of confusion is how to tell if limitations related to mental health or SUD benefits are actually more restrictive than limitations on medical or surgical benefits. There are two types of treatment limitations covered by the Parity Act; (1) quantitative limitations are easier to identify and numerically based, such as a limit on the annual number of visits to a provider a plan will cover, and (2) non-quantitative limitations (NQTLs) are more difficult to compare, comprised of exclusions based on failure to complete a course of treatment, geographic location of the care, facility type, etc. All potential limitations must be on par across the board.

Due to the difficulty in comparing limitations, Congress passed provisions in the Consolidated Appropriations Act of 2021. Under the new provisions, plan sponsors and issuers are required to submit comparative analyses to the Department of Health and Human Services (HHS), the Department of Labor (DOL), or their respective state authority upon request. Patients or their representatives can also request these analyses, and they must be provided shortly after the request. If a regulator encounters noncompliance, they must take corrective action. New guidance is expected by June 27, 2022.

Additionally, the DOL is stepping up enforcement of late. Walsh v. UBH, a more recent case from August 2020, resulted in a $15.6 million settlement with an insurer (including over $2 million in penalties) for overcharging patients by reducing reimbursements for out of network mental health services, based on the type of license held by the provider, and sending mental health services to utilization reviews more frequently, which resulted in denials of coverage. This case marks the first time the DOL has sought financial penalties though litigation; previously, corrective action such as reprocessing claims or expanding coverage was taken.

Most recently, the DOL, HHS and the Treasury Department delivered their biennial report to Congress required under MHPAEA and the 21st Century Cures Act.  The report, published in January of 2022, highlights the need for the DOL to have authority to assess civil monetary penalties for parity violations and makes a request of Congress to give the DOL such authority.


Development #2: Integration of Physical and Behavioral Health

Traditionally, physical health and behavioral health have been treated differently by payors, including government payors. Beginning with the Social Security Act Amendments of 1965, which separated behavioral health and physical medicine at many levels, an entirely separate care delivery system was developed for the two types of patient care, including how services were paid for and delivered. The separate payor system on the behavioral health side focused on public payor dollars, which kept commercial insurers out of the system until they were forced in. Understanding how the money flows in behavioral health is key to understanding how to develop or partner in that area, and how the industry as a whole is going to move forward in integrating mental and physical health care.

The History of Behavioral Health

Looking at the history of behavioral health is important to better understand our current situation. By the mid-1970s, behavioral health patients were known as those individuals with severe and persistent illnesses who were (mostly involuntarily) institutionalized in large mental health hospitals. Over the years, there have been a variety of government efforts to reintegrate and “fix” the system. Noting the human rights of patients in these institutions as well as their ability to be treated in outpatient facilities, the government began its first effort: writing provisions into Medicaid to deinstitutionalize the mentally ill. These provisions blocked state governments from using federal funds to pay for mental health services in a facility with more than 12 beds, which effectively brought these individuals back into the community and allowed services to pop up in different delivery systems to serve patients with varying degrees of mental illness, including those with more minor or moderate issues.

Why is Reintegration Necessary?

Reintegration of physical and mental health care is required because doing so will provide a clearer picture of the patient’s health. Statistics illustrate the necessity: one in five individuals will suffer a behavioral health episode in a 12 month period. Of those, 80% will interface with the healthcare system during the episode, usually through an emergency room (ER) or their primary care physician. 70% of those individuals will go undiagnosed or untreated, simply because their doctor isn’t looking for mental health issues as a source of their ailment. As a result, both the patient and doctor’s time is wasted. The financial impact of these missed signals can be huge. Addressing the underlying issues which brought the individual to the health care system in the first place is the easiest way to reduce or even avoid high cost readmissions or hospitalizations. Essentially, reintegration will force the medical system look at the patient as a whole, not just as their physical ailment.

Social Determinates

A study by Dr. Jeffrey Brinner out of the Camden Institute in New Jersey takes a look at, among other things, Social Determinates, or what impact an individual’s personal circumstances might have on the health care they receive. In a replication of Dr. Brinner’s study performed in Southeast Michigan, it was shown that a diabetic former wrestler had been in and out of the hospital over 20 times over the course of the previous year. Though he was given a diet to follow upon discharge, he repeatedly ended up in the ER. After a social worker was brought into the situation, it was discovered that the wrestler was unable to read the instructions he was given, and was unwilling to share that with his discharge planner. This example illustrates how integrating physical and behavioral health care can save medical institutions time and money.

Popular methods of integrating behavioral and physical health care range from co-locating a behavioral health professional in physical health care facilities to educating and training physical care providers to be involved in behavioral health diagnosis and to some level, treatment.


Development #3: Increased Focus on All Levels of Care in Treatment and Recovery

In behavioral health care, there is an increased focus on all levels of care, from diagnosis, to treatment, to recovery. This cycle is known as the continuum of care, and it’s crucial to meet the patient where they are in the process. This shouldn’t be used as a cost-control measure, but rather to put the individual at the level of care which is arguably least restrictive. This method usually has the added benefit of being the least costly, as less time and money is wasted by attempting less costly measures initially. When payors or physical health professionals are entering into contracts with behavioral health professionals, we must look at the entire continuum of care rather than one level of care.

Treatment Improvement Protocols

The federal government has provided information on how reintegration can be achieved through research performed by agencies such as the Substance Abuse and Mental Health Services Administration, or SAMHSA. SAMHSA has published a tremendous amount of research in their series on treatment improvement protocols (TIP), which discusses evidence-based best practices in behavioral health. One such TIP, known as TIP #57, deals with trauma-informed care, or the delivery of all kinds of services, both physical and mental, by meeting the client where they are. Many patients will arrive to the healthcare system with symptoms or issues caused by unaddressed trauma, which must be dealt with or the patient is at risk of recidivism.

Guidance in the area focuses on getting patients in at the appropriate level in the continuum of care. It is a deconstruction of the current model, where ambulances bring patients straight to the ER, which introduces further tension in the situation as the patient’s point of access to the system will always be an emergency situation.

Stretching the Continuum of Care

Examples of stretching the continuum of care do exist, though there are some inhibitors to that from a policy standpoint. In Michigan, for example; if an individual goes to an ER, the ER will perform an assessment. Following their assessment, the patient then goes from the ER to a pre-screening unit (PSU), which are contracted with the state on a local level. The PSU then performs a secondary assessment to determine of the patient is in need of services.

Those in the behavioral health space undoubtedly know of the psychiatric boarding issue, or the inability to place individuals who have been evaluated as needing to be admitted into the appropriate environment due to lack of providers. These individuals can stay in the ER for days, weeks, or even months. To solve this issue, our team took a look at Michigan’s PSUs and noted that their sole purpose is to conduct a test to determine the individual’s needs as the PSU has no authority to deliver services. As a result, the law was changed to allow PSUs to do some stabilization services, as well as open an avenue for behavioral health urgent cares in the state of Michigan.

To maximize the system’s potential, other legislative changes need to take place – namely, in medical licensing systems at both the facility and professional level. The adult foster care licensing system is closely aligned with the behavioral health system; when the system was put in place, this setup was the most logical way to deliver care to those patients living in a group environment. In many states with adult foster care programs, there is no clinical license to deliver behavioral health other than in conjunction with an adult foster care license. This is a facility license, meaning the facility itself is in working order, which ignore the clinical aspect of the system. In many states, legislators are making positive changes to address the issue, including the passage of laws to allow for residential programs. Though the system must avoid institutionalizing patients as in the past, consider an SUD client who might need a residential environment to remove them from the triggering event, or a psychiatric patient who can only be properly cared for in a residential environment. The clinical models being delivered in those residential settings must be monitored without applying the strict standards of adult foster care.

Many states are also looking into peer support services, which can be a very effective modality of mental health treatment, particularly in the SUD area. Peer support service models allow individuals who, as a part of their care plan, take part in coaching, counseling, or case management by a peer who’s also recovering. Opening up such avenues is crucial to providing care to the volume of patients who need it.

IMDs – Institutions for Mental Disease

Clearly, there is a need for inpatient psychiatric care. As the federal government has changed their position on institutions for mental disease (IMD), though federal law still says behavioral health care cannot be paid for through Medicaid, they’ve introduced a waiver through the state Medicaid plans which allows facilities to request permission to deliver services in a facility larger than 12 beds. Due to the waiver, more and more large facilities are opening in states where allowed; this allows the public payment system to support the advancement of those providers. Unfortunately, payors in the commercial market are largely resistant to paying for care in residential environments at this time. Further education is required from a policy standpoint.


Development #4: Psychiatric Boarding Issues (Among Others) Have Forced Increased Development in Crisis Delivery Systems

Crisis delivery systems are especially noteworthy at this point because a tremendous amount of development can go on in this area. Lawyers who advise on healthcare systems looking to add service delivery or departments, or those trying to enter into joint ventures with those in behavioral health, must understand the system of delivery to develop the right kinds of relationships.

The renewed focus on behavioral health has led Congress to fund a national crisis hotline, which will be available next July at 9-8-8. Calling the hotline will connect the individual with a crisis counselor who will triage the situation, then determine if the individual needs crisis intervention. Though there are a variety of different crisis lines at both the local and national level, the sheer number of crisis lines can leave those who may call for assistance confused; they just don’t know who to call or what resources are available. Beyond evaluating the individual, the crisis counselor can recommend the use of mobile crisis solutions to treat the individual and help them go from a moment of crisis to a more stable place.

Additionally, Behavioral Health Urgent Care locations are becoming more common; to put it simply, they are a mental health version of a typical urgent care office. The medical professionals in these locations can assist with crisis stabilization in the non-public payor system, manage medication for patients who are having difficulty obtaining their required dosage in the short term, and handle other minor to moderate issues. Hurdles allowing this system to appropriately deliver care do exist, unfortunately: for example, an ambulance can only take a patient to an ER for medical clearance. The system needs to be adjusted to allow paramedics the proper level of medical clearance to perform basic diagnoses and bring patients to the right place to receive assistance.


Development #5: M&A Activity in Behavioral Health Remains Hot Hot Hot

A very fragmented system means that implementation of systems of care across many providers that are them rolled into the same company can be extremely lucrative. Prior to the implementation of the Affordable Care Act, there was not much parity enforcement taking place. There was also very little in terms of reimbursement from either public or private insurers for behavioral health care. That, alongside the government’s new emphasis on parity and willingness to impose financial punishment if violations are discovered, has opened up a more stable stream of revenue for potential investors.


Related Services

Health Care, Behavioral Health Care


About the Authors

Gregory Moore is a Member in Dickinson Wright’s Troy office. He can be reached at 248-433-7268 or His biography can be accessed here.



Erica Erman is an associate in Dickinson Wright’s Phoenix office. She can be reached at 602-889-5342 or Her biography can be accessed here.