Medical Necessity Criteria

Wit v. United Behavioral Health
The 2019 Wit v. United Behavioral Health (UBH) groundbreaking decision has created a new opportunity to achieve parity between mental health and physician health services. The court found UBH used flawed medical necessity criteria and was ordered to reprocess almost 67,000 previously denied claims for mental health and substance use treatment on behalf of 50,000 claimants (half of whom were children and adolescents). The Wit decision represented the first time a health plan was found to deny care by relying on improper clinical guidelines to make claim decisions.

  • Oct. 2017: Wit v. UBH class action case tried on behalf of nearly 50,000 insured who were denied residential mental health or substance use disorder treatment between 2011-2017.
  • Feb. 2019: U.S. District Court for the Northern District of California released a decision finding UBH failed to cover appropriate mental health and substance use disorder care.
  • Nov. 2020: Remedies decision unveiled with a 10-year injunction.

U.S. District Court for the Northern District of California found that UBH’s standards of care applicable to service intensity and patient placement selection for mental health care were flawed. UBH was ordered to adopt nonprofit physician specialty recommendations and service-intensity instruments, such as AACAP’s CASII and ECSII, and apply those to their practices.

New Opportunities to Achieve Mental Health Parity

AACAP is among the many national organizations supporting the Jim Ramstad Model State Legislation to Advance Mental Health and Addiction Parity,  developed by the Kennedy Forum, which is ready for state introduction.

This new model bill would ensure mental health and substance use disorder parity in states across the country, preventing health insurers from denying medically necessary covered services and care. If enacted, the model bill has the potential to reform insurance and health plan coverage for mental health and substance use disorder services, as we know it, at a time when the U.S. is facing record mental health care needs. The model law would establish an enforceable definition of medical necessity based on generally accepted standards of mental health and substance use disorder care. These standards must be differentiated by age, not cover only acute symptoms, and would be required to cover treatment for co-occurring conditions, among other things. Named after the late U.S. Rep. Jim Ramstad (R-MN), a chief sponsor of the federal mental health and addiction parity law, the new model legislation is based on California’s SB 855.
In 2020, California became the first state to adopt a new law, SB 855, directly reforming insurers’ medical necessity criteria based on the Wit decision. AACAP, along with other leading national mental health organizations, supported the California law. California lawmakers, the state insurance commissioner, and Governor Gavin Newsom (D) all recognized the urgency of SB 855 and the groundwork has been set for other states to successfully implement a similar law. The voices of psychiatrists are key to getting lawmakers in other states to act, and AACAP members will play an important role in this work. 

In 2021, Illinois and Oregon joined California in becoming just the second and third states requiring through legislation the use of medical necessity standards that align with established standards of care for mental health and substance use disorders in the post-Wit era.