From 1994-2000, Minnesota Paid $51M in Mental Health Costs for Patients with Private Insurance

Minnesota received only $21 million in reimbursements from insurers out of the $72 million it spent on mental health and addiction treatments for individuals with private coverage from 1994 to 2000, according to a new analysis from the Minneapolis Star Tribune. Under Minnesota policy, the state's "first priority" is to provide care for mental health patients regardless of their insurance status, and then seek reimbursement from insurers if the patient has private coverage. In the six-year period, the state sent more than 14,500 claims to private insurers, but 71% went unanswered. In many cases, the Star Tribune reports that insurers have "refused to pay" the state when it seeks reimbursements, citing a lack of medical necessity, limitations in coverage established by employers or a failure by policyholders to follow procedures, such as obtaining prior authorization. Blue Cross and Blue Shield of Minnesota "denied the most of any insurer," the paper reports: $16.3 million for claims from covered individuals, as well as $2.3 million for treatment costs from Minnesota's health plan for federal employees and its plan for uninsurable residents, which the insurer manages. Medica denied $5.7 million in claims and HealthPartners denied $5 million. The Star Tribune reports while the claims denials have not "affect[ed] patient care," mental health experts and advocates believe that "insufficient private coverage has contributed to skyrocketing state costs for treating mentally ill and chemically dependent people." State and county expenses for mental health treatments increased from $298 million in 1989 to $475 million in 1999, and a report from the legislative auditor's office concluded that "the state pays for the majority of mental health care."

State Responsibility
The Star Tribune also reports that the state bears some of the responsibility for the low reimbursement rate. The analysis found that 7% of claims were rejected because they were sent after the filing deadline. In addition, an auditor's report in February found that the Minnesota Department of Human Services, the agency responsible for collecting from insurers for mental health treatments, "had only one person making collections for" the state's regional treatment centers. In addition, Blue Cross -- which last year was sued by Attorney General Mike Hatch over allegations of improper denials of mental health care -- says that it never received many claims from the state. Of the 4,181 bills that Blue Cross did receive, 30% were denied because the state did not obtain prior authorization or approval before treatment; that figure was 60% for Medica's 1,125 denials. Discussing these barriers to reimbursements, Blue Cross spokesperson Karl Oestreich said, "It is a complex system. This does demonstrate that there needs to be changes and improvements to the system" (Marcotty/Howatt, Minnesota Star Tribune, 6/17).