Autism Treatment Denials Spark Lawsuits

This article was updated at 9:18 ET to correct an editing error.

Efforts to gain health insurance coverage for an autism treatment called applied behavior analysis have taken several steps forward in Michigan and California.

Health plans traditionally balk at authorizing the treatment. Blue Cross and Blue Shield of Michigan is facing a class action suit for denying an autism treatment called applied behavior analysis, while Blue Shield of California, under pressure from state officials, has reached a settlement to provide coverage for ABA services under certain circumstances.

Autism is a complex neurobiological disorder often characterized by language and communication difficulties, as well impaired social interaction. Despite extensive research, the cause remains unknown and there is no known cure. According to the Centers for Disease Control, 1 in 110 American children are diagnosed with an autism disorder.

Health plans across the country, including Kaiser Permanente, CIGNA, Empire Blue Cross Blue Shield, and Anthem Blue Cross, have been reluctant to cover the costs of ABA treatments, which can involve 20 to 40 hours per week of one-on-one therapy and can cost $30,000 to $50,000 annually. The health plans often contend that is ABA is experimental or that it is an educational service and doesn't meet the definition of medical care. In addition, licensure of ABA therapists can be a sticking point.

Medicaid, however, does cover ABA, and the U.S. Surgeon General and the American Academy of Pediatrics have recognized the success of behavioral treatments for autism.

Some 27 states have laws on the books that require private health insurers to cover the diagnosis and treatment of autism disorders, including ABA. Legislation is pending in Michigan and California. Most states limit annual ABA benefits to under $50,000 but have no lifetime benefit restrictions. Louisiana state law limits lifetime ABA benefits to $144,000. The federal Affordable Care Act will require coverage for behavioral therapies beginning in 2014.

On Thursday the U.S. District Court in Detroit granted class action status to a suit involving the Michigan Blue's rejection of beneficiary claims based on the "investigational/experimental" nature of ABA treatment. A copy of the ruling was supplied by the plaintiff's attorney.

This is at least the fourth time the Michigan plan has faced a similar lawsuit for denying coverage for ABA treatment. In April 2010, more than 100 families shared a $1 million settlement when the health plan agreed to reimburse families who had paid out-of-pocket for the ABA treatment after May 1, 2003 at Beaumont Hospital in Royal Oaks, Mich.

In June 2010, the health plan agreed to a $125,000 settlement with a family rather than take that case to court. A third case is pending.

In a telephone interview, John Conway, a Detroit-based attorney who has worked on the Michigan cases as well as lawsuits against other health insurers, explained that in health plan files obtained under a court order for the initial lawsuit the Michigan Blues plan acknowledged that ABA was a valid treatment for autism.

"They simply deny ABA treatment because it is expensive," he said.

In an e-mail statement, Helen Stojic, spokesperson for the Michigan Blues said the class action designation "was a decision to continue the case and is not a ruling on the merits of the case. We believe that we have been more progressive than other Michigan insurance companies in addressing autism. In 2009, we became the first insurer in the state to offer businesses with our coverage the option to purchase coverage for autism treatment programs that provide intensive early intervention ABA. To the best of our knowledge, we are the only insurer in Michigan to offer this coverage option to businesses."

Conway and Gerard Mantese have filed several other lawsuits against insurers that deny benefits for ABA. On July 12 a federal judge in Detroit refused to dismiss a class action suit against Empire Blue Cross Blue Shield of New York. The two are awaiting a decision on a motion for class action in a lawsuit against CIGNA. Mantese and Conway represent military beneficiaries seeking coverage of ABA therapy from the Department of Defense and its insurer, TRICARE. In March 2011, a federal court in Washington D.C. granted class action status to the military beneficiaries in that case.

In general health plans oppose state coverage mandates citing increased healthcare costs as the reason. Efforts to obtain comments from several health plans as well as America's Health Insurance Plans, an industry group, were unsuccessful.

Blue Shield of California signed an agreement last week with the California Department of Managed Health Care that will require the health plan's HMO products to cover applied behavioral analysis. In the agreement the department "asserts that ABA is a covered healthcare service that health plans must arrange."

The Los Angeles Times reports that Anthem Blue Cross and Kaiser Permanente HMO are ready to sign similar agreements.

In a statement Paul Markovich, the Blue Shield CFO, made it clear that the health plan disputes the department's stand and will "seek guidance from the courts regarding what the law requires." He also notes that "our policies specify that services by unlicensed people are not covered and ABA services are frequently provided by unlicensed people."

Lorri Unumb contends that the licensure issue is unfounded. The vice president of state government affairs for Autism Votes, an advocacy group that supports legislation mandating autism treatments, notes that California doesn't have a licensing process for ABA therapists and when that is the case a state will usually just rely on the national board certification.

Thanks to the way the governance of health plans is structured in California, the DMHC agreement covers only HMOs; PPOs are governed by the state Department of Insurance.

On Thursday the DOI issued a press release announcing enforcement action it planned to take against Blue Shield's PPO plans for denying autism treatment. The order to show cause requires representatives of Blue Shield to appear before an administrative court judge to address a number of violations, including denying coverage on the grounds that ABA is experimental and not including ABA providers in its network.

In an e-mail exchange, a spokesperson for the DOI said ABA is not specifically mentioned in the state's mental health parity law but that the department interprets that law to require coverage because "it is the established standard of care for treating autism and repeatedly has been upheld in independent medical review as medically necessary."

The DOI also takes issue with the health plan's contention that ABA services are often supplied by unlicensed providers noting, like Unumb, that there is no ABA-related license in California but that treatment can be provided by nationally certified providers of ABA therapy.

In the Blue Shield press release Markovich said the insurer is prepared to sign a similar agreement with DOI that it has with DMHC. The DOI spokesperson replied "we cannot speculate on the signing of such an agreement. The immediate next step is the administrative law hearing, the date of which will soon be set."