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US court rules insurers must cover residential treatment for eating disorders

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Summary of story from The New York Times, October 14, 2011

In the last few years US insurance providers have been increasingly refusing to cover residential treatment for eating disorder and mental illness sufferers, claiming that it is costly and success rates are not medically proven.

At the beginning of this year the Blue Cross Blue Shield Plan for federal employees and many of the plans offered to state employees in California all added language to their policies specifying  that residential treatment for any condition would not be covered.

But in August the United States Court of Appeals for the Ninth Circuit ruled that insurers in California must pay for the treatment under the state’s mental health parity law.

The law generally requires coverage for mental and behavioral disorders should be equivalent to that for physical ailments like diabetes or broken bones.

The case has hinged on the difficult to define concept of “equivalence”, with insurers arguing that there is no treatment for physical illnesses that is comparable to residential treatment for mental illnesses, therefore residential treatment does not have to be covered under parity laws.

Lisa S. Kantor,  lawyer for anorexia sufferer Jeanene Harlick who was plaintiff in the recent case in California, claimed that residential centres were the equivalent to skilled nursing homes, which Blue Shield does cover.

However, Adam Pines, a lawyer for Blue Shield, countered that residential treatment is more akin to assisted living, which Blue Shield do not cover.

The Ninth Circuit Appeal judges ruled that residential treatment is medically necessary for eating disorder sufferers, and therefore has to be covered under the state’s parity law, even if no exact equivalent existed on the physical side.

Blue Shield have appealed the ruling arguing that it would require insurers to pay for treatment of mental conditions “without substantive limits”.

This could mean better coverage for mental illnesses than for physical illnesses, which would itself be inconsistent with the parity law.

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