New York Attorney General Letitia James has reached two settlements with Carelon Behavioral Health, after investigations found that Carelon misled consumers looking for mental health care by directing them to providers who were unavailable and improperly denied coverage for substance use disorder treatment.
Under the settlements, Carelon will pay $2.35 million in penalties, fees, and costs, provide up to $8 million in restitution to eligible members who paid out of pocket for out-of-network mental health care, repay other eligible members for out-of-pocket payments for bills denied by Carelon, and overhaul its provider directories and substance use disorder coverage reviews.
Carelon administers all behavioral health benefits for several popular health plans, including EmblemHealth, Anthem Blue Cross Blue Shield, Independent Health, and the Empire Plan, the health plan for state and local government employees. It is responsible for the mental health and substance use disorder coverage of more than four million New Yorkers across a variety of health plans.
“When someone is ready to seek help for a mental health condition or addiction, every day matters,” said James in a news release. “Carelon left New Yorkers calling provider after provider who could not see them and made it harder for people to get the treatment to which they were entitled.”
Through two investigations, OAG found that Carelon violated a 2015 agreement that required it to, among other things, maintain an accurate provider directory, ensure an adequate provider network, and only use approved criteria when reviewing requests for substance use disorder treatment.
Mental Health Ghost Network Investigation
The OAG’s first investigation found, through a secret shopper study, that Carelon’s online provider directories contained many errors, including listings for providers who were unreachable, no longer practicing, not accepting new patients, or not actually in-network.
It found that 82 percent of surveyed Emblem behavioral health providers that Carelon listed as accepting new patients were effectively unavailable, creating a “ghost networks” of providers. The OAG found that the company internally acknowledged that it had a ghost network, but did not share that information with Emblem, and that Carelon regularly dismissed members’ complaints about their inability to find care.
The consequences for New Yorkers were significant, James said. In one case, a member searching for a psychiatrist for their spouse called at least eight providers listed in Carelon’s directory, but none could help.
Carelon gave the couple approximately 25 additional names, all without success, and then contacted 38 more providers itself and still could not secure an appointment. Despite these efforts, Carelon rejected the member’s complaint as “unsubstantiated” because the member had not provided the names of the providers they called within 10 days.
Moving forward, Carelon must overhaul its provider directories by correcting inaccurate listings within two business days, verifying provider information every 90 days, and confirming that providers are accepting new patients before referring members. It must also allow members and providers to report inaccuracies, remove providers who have not submitted claims in 90 days unless they confirm they are still participating, and conduct quarterly secret shopper surveys.
James is also requiring Carelon to ensure members can get urgent care appointments within 24 hours and initial outpatient appointments within 10 business days. If members say they cannot secure an appointment with an in-network provider, and Carelon cannot find an appropriate provider within three business days, members must be allowed to see an out-of-network provider and pay their usual in-network costs.
Substance Use Coverage Denial Investigation
The OAG’s second investigation examined how Carelon decides whether to cover addiction treatment.
The OAG found that Carelon improperly denied members’ substance use disorder treatment requests using unapproved medical necessity criteria in at least 41 instances. The OAG also reviewed dozens of cases in which independent reviewers overturned Carelon’s coverage denials and found that Carelon failed to adequately consider patients’ substance use histories, co-occurring mental health conditions, and withdrawal symptoms.
As a result of the investigation, Carelon must repay eligible members who paid out of pocket or have unpaid bills for addiction treatment following an improper denial dating back to January 1, 2020. The company must proactively identify eligible members and issue refunds within 180 days of the settlement’s effective date, and pay $350,000 in penalties, fees, and costs.