PERSPECTIVE: Self-Funded Group Health Plans: A Public Mental Health Threat to Employees?

With nearly one in four Americans estimated to have a mental illness and only half of them receiving treatment in a given year, access to affordable, quality mental health care remains out of reach for many. Although health insurance is intended to promote access to mental health care, approximately 35 million Americans covered by self-funded group health plans sponsored by private employers may be unaware that their health plans are not subject to federal standards for medical necessity and network adequacy, key terms that determine the availability of coverage and can significantly limit their access to essential treatment. The Employee Retirement and Security Act of 1974 ("ERISA") governing self-funded group health plans does not require them to base their definitions of medical necessity for covered services on generally accepted standards of care. Nor does ERISA require them to follow or disclose network adequacy standards. To the extent network adequacy standards are often undisclosed, if they exist at all, plan participants can be exposed to significant out-of-network financial liabilities when in-network mental health services are unavailable. ERISA's judicial review provisions further disadvantage plan participants by requiring courts to defer to employer benefit interpretations and by severely restricting available relief. To improve access to affordable, high quality mental healthcare for participants in self-funded health plans, the following reforms are crucial: a federal definition of medical necessity, time and distance standards for network adequacy, hold harmless provisions for out-of-network costs due to network inadequacy, and removal of restrictions on judicial review and available remedies.