How Insurance Companies Add Admin Burdens to Deny Coverage

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How Insurance Companies Add Admin Burdens to Deny Coverage

By Gabriela Khazanov, Ph.D.

Much has been written about insurance companies refusing to cover mental healthcare, especially over the last few months. Insurers cut off therapy, cap the length of sessions, discourage providers from joining their networks, underpay providers, seem to purposefully make reimbursement challenging, maintain outdated lists of in-network providers, and use evidence of patient progress to end treatment.

Many of these actions are in violation of federal law (the Mental Health Parity and Addiction Equity Act), but federal regulators do not have the resources to enforce compliance. At the same time, health insurance costs have far outpaced inflation, making coverage both increasingly more expensive and worse.

As has previously been reported, it’s very challenging to find good in-network care given the paucity of most insurance companies’ in-network mental healthcare providers. If you don’t find in-network care, another option is to pay for services and have your insurance company reimburse some of the cost of treatment at their out-of-network rates.

I have personally been wrangling with insurance companies for many years to get the out-of-network reimbursement they claim to offer. As a provider, I encourage my patients to do the same. For as long as I can remember, this was a difficult but not impossible process; claims were often initially denied but you could typically call the insurance company once or twice and correct the error.

My experience over the last year has been very different, which reflects a trend noticed by others as well. The process for applying for coverage has gotten more complicated, the “system errors” reported by companies seem endless, and the barriers to accessing payment feel insurmountable, even to someone well-versed in these processes. Here is one example that reflects how insurance companies may purposefully impose administrative burdens to deny mental healthcare coverage.

In July 2024, I submitted an out-of-network reimbursement claim for mental healthcare to one of the large, established insurance companies. I was told that my provider needed to “register” with the insurance so that they could prove he was “a real provider”—a process that was initiated in January of 2024, presumably (and as confirmed by the agent over the phone) to make the process of seeking reimbursement more challenging. This registration process required the provider to submit personal information, a W-9, and a copy of their license; the time it takes them to do this is not compensated.

The phone number the provider was supposed to use to find out how to submit this information did not work. When I called to follow up, I was told that the insurance company could not provide me with instructions because they were only available on the “provider line.” The “provider line” is only for providers—providers who often do not have the time or motivation to spend hours on the phone with the insurance company finding out how to submit registration forms or understand the reasons their forms were rejected.

After a few days, I finally reached a supervisor, who offered to process the provider’s information himself. We then entered a period of “Oops I lost your claim.” During various phone conversations (at least five), I was told that I needed to resend the claim because “our app is down”; if I submitted it on the online portal, that was malfunctioning as well; snail mail didn’t seem to work, and somehow the fax didn’t make it there either. The department could just not hold on to these two very wily pieces of paper. Not only was every method of submitting a claim broken the day I happened to call, but the conundrum was that if you submitted your claim using more than one method at a time, they managed to find both of them simultaneously and denied them because they were duplicates.

After a few months of this, the insurance finally had both my provider’s information and my claim. The next step involved processing the claim incorrectly (treating the provider as in-network instead of out-of-network). Months passed and the phone call tally climbed into the double digits. I stopped counting the hours I was spending on the phone.

Tl;dr: I got a check in the mail in December (six months later, for those counting). Success! My perseverance had paid off.

But of course not. A week after I got the check, I got an official-looking letter in the mail. “We mistakenly sent you a check; if you do not return all money within the next 45 days, we will withhold future claim payments.” Although disappointing, I had to admit that it was a fitting new turn to this never-ending saga.

What does this all mean? First, the American Psychological Association (APA) has reported that convoluted administrative systems that seem purposefully designed to increase friction are driving providers to leave insurance networks and reducing access to mental healthcare. When patients try to apply for reimbursement to cover out-of-network costs, they often have experiences similar to those described above. APA has also pointed out that administrative and financial barriers make it more difficult for providers to actually provide the care their patients need.

APA is advocating for updates to the mental health parity rules that would try to address some of these concerns. Others like the National Alliance on Mental Illness have made similar efforts. There are also non-profit companies that can help push back when insurers deny claims for mental health coverage.

Until structural changes are made to improve insurance coverage of in-network and out-of-network mental healthcare, the best we can do is increase awareness of these tactics, try to hold insurance companies responsible, share strategies, resources, and support, and advocate for change. On my end, I’m going to keep calling—because two can play that game.

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