Substance Abuse Benefit Caps: Apples and Oranges

[Guest Damien]

I would be interested in any opinions on the following problem:

A self-funded health plan decides to change the cap on inpatient substance abuse benefits halfway through the plan year. They start with a $10,000 Calendar Year benefit, then switch to 15 days a year.

If you have a member incurring these types of charges in both the first and second half of the year, how do you apply the maximums? I've seen this done a number of ways, but know of no legal guideline.

[KIP KRAUS]

Damien:

Since self-funded medical plans typically do not have to comply with state mandated benefits, substance abuse and psych. benefits can differ tremendously from plan to plan. If the plan you refer to wants to change benefit maximums in the middle of the plan year it seems perfectly permissible to me.

However, if a person is undergoing inpatient care prior to the mid-year change I believe that patient should continue to receive benefits under the old $10,000 maximum if the new 15-day limit goes into effect during his/her treatment. Once this person returns to active work, for any further treatment for the remainder of the plan year I would apply the greater of $10,000 or 15 days.

On the other hand, for a person who may have had inpatient coverage under the older $10,000 limit, and returned to work prior to the change to the 15-day limit, I would apply the lessor of $10,000 or 15 days for any further treatment for the remainder of the plan year.

I'm not sure that there are any legal guidelines covering this situation. However, this type of situations under an insured medical plan are typically mandated by the insurer and possibly state insurance regulations.

[jeanine]

As per my usual cautious self, I would make sure that enrollees had plenty of notice of this change before we even applied. I am of the opinion that you treat the pre-change charges according to the language in effect at the time and the new charges under the new language. In that case, we would start the time limit rolling with the first date of admission and allow the full 15 days that now controls. I understand that this change is probably meant to save money (does it?) but with all our "money saving" changes, the client usually is amenable to absorbing any small costs as a price for shifting benefits long term. Why am I so cautious all the time? Even though it is difficult to sustain a lawsuit against a self-funded it is always time consumming and expensive to get rid of plaintiff's attorneys.