O. Rose Broderick , 2025-05-13 19:44:00
For a recent therapy session, Andria Donaghy’s insurance plan paid her psychiatric nurse practitioner only $11 on a $125 service.
“To even put that on paper is insulting,” she said. “These people give their lives [to help others] and that’s what you pay them?”
Andria Donaghy knows firsthand the value of good mental illness treatment. Her father died of suicide, her cousin’s struggles with bipolar disorder contributed to his drug overdose, and she herself spent decades mired in addiction and depression. A recent complication of her treatment has been her insurance plan’s low coverage rates for mental health services, especially compared to its coverage for medical and surgical services.
When Congress passed the Mental Health Parity and Addiction Equity Act of 2008, the law was supposed to prevent private insurance companies from instituting unequal coverage for mental health and physical health services. It fell short, as multiple federal reports indicated that insurance companies routinely exploited loopholes to avoid paying rates for mental health services that were commensurate with those for other health care. This can lead providers to drop clients and can saddle people with debt. A 2024 survey found that 1 in 4 Americans in frequent mental distress could not see a doctor due to cost.
The Department of Health and Human Services and two other federal agencies attempted to sew up these loopholes in 2024. But it appears that the agencies’ new leadership will walk back these regulatory updates after a lawsuit challenged them. On May 9, three federal agencies, including HHS, notified the judge that they will not force companies to comply with the current regulations, including potentially modifying or rescinding the regulation.
“I’m not surprised, but I’m disheartened,” said Deborah Steinberg, a senior health policy attorney at the Legal Action Center. “This administration renewed the opioid public health emergency and proclaimed this May 2025 as National Mental Health Awareness month, and yet they’re simultaneously taking steps to make it harder for people to access the substance use disorder and mental health care they need.”
Though loopholes have limited the law’s reach, MHPAEA ushered in a new era of mental health treatment. While it does not force companies to cover mental health and addiction services, it requires that they treat copays, prior authorization, and other matters equally. When combined with the Affordable Care Act, which mandated mental health coverage, the pair have formed a legislative scaffold that expanded access to vital mental health and addiction needs.
In 2021 and 2022, MHPAEA enforcement removed treatment limitations and expanded access to mental health and substance use disorder benefits for over 4 million participants, beneficiaries, and enrollees across more than 39,000 plans. But these and other hard-fought gains are now threatened by the federal policy reversal.
“This is why mental health providers and people searching for providers need to start coming forward with the obstacles they face when dealing with health insurance companies,” said Donaghy, who lives just outside New York City. “Otherwise these companies will keep trying to profit more at the expense of other people’s mental health.”
The 2024 regulatory update took effect on Jan. 1, but was quickly followed by the lawsuit filed by ERISA Industry Committee, a nonprofit organization representing the country’s largest private employers. The companies believed that federal agencies had “exceeded their authority” by enacting the rules, said Tom Christina, executive director of ERIC Legal Center, which represented the group. The regulatory compliance was “so difficult” and the increased expenses associated with compliance so onerous that “companies that would have to rethink their current commitment to mental health benefits.”
Earlier updates to the parity law had forced insurers to document how benefits they paid out for mental health and substance use disorder care compared to what they reimbursed for medical and surgical benefits. The 2024 update went further, stressing that plans should provide “meaningful benefits,” and adding numerous disclosure requirements around issues such as prior authorization or questions about medical necessity.
The update attempted to fix a persistent problem: Insurance plans often come up with their own formula for covering mental health conditions. Institutionally accepted standards of care help medical professionals determine what treatments are needed for a given condition, whether a pill or a hospital visit or surgery might be medically necessary. But people get booted out of inpatient services for serious depression more quickly than people who have heart disease or need surgical care, said Meiram Bendat, an attorney specializing in mental health parity law. “There’s no symmetry, there’s no comparability,” he said.
The latest federal report found further evidence that health insurance plans are not meeting the mandate for patients. When the Department of Labor’s Employee Benefits Security Administration took a “secret shopper” approach to determining coverage options, officials found that there were far fewer in-network providers available for appointments for mental health services versus medical services. Plans and insurers also struggled to explain the ongoing disparity, justifying their higher prices by citing “market dynamics,” “supply and demand,” and “bargaining power.”
It is no surprise to Jenn, a physician based in New York City, that insurers are struggling to close the gap for mental health and substance use disorder care. In 2021, she spent weeks finding a provider who took Aetna insurance for her 3-year-old son, who has autism spectrum disorder. Aetna promised to reimburse Jenn and her husband at a certain rate for the applied behavior analysis, but three months into the treatment, Aetna drastically dropped that rate, she said.
“They just changed their minds and said, ‘Nope, we’re actually gonna reimburse you at a significantly lower rate without any prior notification,’” said the physician, who provided STAT with documents showing the rate change. “We made appeals, they were denied. They reimbursed us for another provider at that same rate just like three months prior and [then] nothing.”
After months of confusing letters with Aetna representatives in which she asked for justification for the new rates, Jenn eventually filed a complaint with the New York attorney general. While she was frustrated with Aetna, she was quick to point out that the opacity and care disparity is typical of insurance plans.
“I’m someone who is educated, who’s knowledgeable in the health care field,” said Jenn, who asked to be identified only by her first name for fear of repercussions from her insurance company. “Despite all of those things and my best efforts, best arguments, and appeals, insurance plans will still ultimately do what they want to do. It’s egregious, and it’s not fair.”
