Court Slaps Agency Over Autism Regulation

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LOS ANGELES – A Superior Court judge overseeing an unusual consumer lawsuit against state regulators found that a 2009 policy that has allowed health insurance plans to more easily deny coverage for some costly autism therapies constituted an “underground regulation,” but has declined to intervene.

Though Los Angeles Superior Court Judge Robert H. O’Brien found regulators did not take the necessary steps to implement a new government regulation, his Dec. 30 ruling preserves the California Department of Managed Health Care’s authority to oversee coverage disputes related to autism therapies as it sees fit.

That marks an indirect victory for health care insurance plans whose administrators have argued they should not be compelled to pay for expensive autism therapies they consider educational rather than medical.

Patient advocates had challenged regulators’ authority to change policies for dealing with consumer complaints without public vetting.

“The court basically said that [the] state cannot change its policy based on behind-the-scenes negotiation, but has to go through the open, public process that allows advocates, patients and providers to weigh in,” said Brietta Clark, a health law professor at Loyola Law School. But in the same breath, the court undercut itself by not challenging the way the department acted, Clark said.

The Department of Managed Health Care had argued that it instituted a guideline, not a new regulation. “The main message from this ruling in favor of the DMHC is that we are following the correct course to ensure that patients continue to get the services to which they are entitled under their health coverage,” said Cindy Ehnes, the department’s director, in a statement.

The ruling is the latest among several challenges brought by advocates and parents of children with autism against health insurers over whether they must cover a costly behavioral therapy called Applied Behavioral Analysis, or ABA. The treatments, which aim to correct behavior and help children function despite the disorder, have become a sticking point because they routinely cost as much as $70,000 a year. The case was notable because patient advocates led by Santa Monica-based Consumer Watchdog sued, challenging the department’s authority to change internal policies for dealing with consumer complaints.

Previously, patients who were denied ABA could appeal to an independent medical panel under the purview of the state, which would review the patient’s case and decide whether or not the treatment was medically necessary. Parents routinely won against health plans in those proceedings, advocates note.

But the Department of Managed Health care changed that process with a March 2009 memo. Now, when patients dispute health plans’ decision to deny ABA therapy, the DMHC treats the case as a coverage dispute and routes their cases to lawyers, rather than a medical panel, in a process that can take up to a year.

Clark said that this approach is discriminatory, since behavioral therapy is routinely recommended for stroke victims or other patients who need temporary therapy and is never denied for being educational.

The plaintiffs asked the court for an injunction forcing the DMHC to return to its prior procedure of referring complaints to an independent medical panel, but Judge O’Brien ruled that was “not within the scope of this petition.”

Attorneys at Consumer Watchdog said that even though they weren’t happy that the court punted the issue back to the state agency, they’re hopeful that under Gov. Jerry Brown the department will open up the issue to public comment and reinstate the independent medical review.

“Governor Brown has the opportunity and the clear righteous cause to challenge and reverse Schwarzenegger’s loopholes,” said Jerry Flanagan, an attorney for Consumer Watchdog.

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