March 15, 2023

Why Private Insurance Often Refuses to Cover Life-Changing Treatments for Mental Illness

Reading Time: 15 minutes

In many cases, the government is better than private insurers at providing cutting-edge treatment for schizophrenia. Researchers say this ‘reverse disparity’ hurts care for everyone., Early psychosis clinics: Why private insurers won’t pay for treatment.

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This story was originally published by KQED. KQED is part of the Mental Health Parity Collaborative, a group of newsrooms that are covering the challenges and solutions to accessing mental health care in the U.S., in partnership with the Center for Public Integrity and the Carter Center.

When Yvonne was walking across campus and heard someone calling her name, she stopped and looked around, but the other students flowed around her, oblivious. She continued on, then heard it again.

Yvonne?

Stop. Look. Nothing.

She was confused, but like anyone else would, Yvonne brushed it off. She sat down in her anatomy class, in the middle of a big lecture hall, and when the professor began his lesson on the renal system, Yvonne started to feel funny, like he was talking about her body.

‘I was like, ‘Why is he talking about my kidneys? How dare he,’ ‘ she remembered. ‘I got really scared and I ran out of class.’ She shook this off, too. As she crunched through the rust-colored leaves of an East Coast autumn, she started to hear chattering, like a radio was on in the background of her life. She ignored it for as long as she could—until the voices started speaking to her in full sentences, telling her what to do: ‘You should jump off a bridge. Take that knife and cut yourself,’ they said. ‘You’re worthless.’

Her doctor prescribed some medications, but Yvonne, 22 at the time, continued to lose perspective. Maybe the voices weren’t just her mind playing tricks on her? Maybe they were real? That’s when the aliens arrived. She heard the loud, screeching sound of their ship hovering outside her window at night. ‘We need to remove you from this planet,’ the aliens told Yvonne. Then they spoke to one another in their own gargled alien language that she couldn’t understand.

Yvonne had no doubt this was real. And when God started talking to her a few weeks later, that was real, too. He told her she was going to be the next Jesus and he was going to give her instructions on how to save the world. At first, this made Yvonne feel great. God had chosen her. But then she got scared, overwhelmed by the responsibility. What if she couldn’t fulfill what God wanted for her? ‘He’s going to send me to hell, and I’m a terrible person,’ Yvonne said.

Yvonne’s mom convinced her to check herself into the hospital. But it was almost six months after she left the hospital that she got an accurate diagnosis: schizoaffective disorder—roughly, schizophrenia with bouts of mania or depression. And for another six months after that, she sat on her parents’ couch, unable to read, unable to go to school, waiting for a spot to open up in a treatment program. ‘My life wasn’t my own,’ said Yvonne, who asked that we use a family name to protect her mental health history. ‘It was up to these voices because they told me what to do. They wouldn’t go away, and I couldn’t do anything with them. So they ruled my life.’

Yvonne is one of 100,000 young adults or adolescents who have a psychotic episode every year in the U.S. For most of them, it takes a year and a half to get into meaningful treatment, if they ever do at all. Treatment programs recommended by the National Institute of Mental Health as the gold standard of care for early psychosis rarely have enough slots available for the people who need them, and health insurance companies typically refuse to cover the full cost of these programs, even when they are available.

Instead, many young people like Yvonne inch through the country’s fragmented mental health care system, struggling to find a clinician with adequate training in psychosis. Yvonne waited up to six weeks between therapy appointments at Kaiser Permanente, and said she made little progress with a clinician who always seemed to change the subject when Yvonne wanted to talk about her voices. ‘She would skip over it and talk about my anxiety instead,’ Yvonne said.

Eventually, Kaiser agreed to pay for Yvonne to go to the University of California San Francisco’s Path Program for Early Psychosis, a two-year outpatient treatment program designed specifically for young people in the earliest stages of psychotic illness. The clinic is 1 of about 50 in California and 340 across the country that began operating in the mid-2000s. Right away, Yvonne knew that this would be different. In her first session, Yvonne’s therapist had her set goals for what she wanted to achieve. ‘No one had ever asked me what my goals for treatment were,’ Yvonne said of early psychosis treatment.

Back in the ’80s and ’90s, doctors didn’t really know what to do with schizophrenia, and they didn’t have many options. They prescribed high doses of antipsychotic medications that sedated people into zombie-like depths. They advised patients to give up on any career ambitions and sign up for disability payments instead. Even today, some doctors still see schizophrenia as a lost cause. ‘There’s a real failure to appreciate how much potential there is to manage the illness and symptoms,’ said Daniel Mathalon, a psychiatrist at UCSF’s early psychosis program.

Around the turn of the century, a new generation of doctors started thinking, What if we ask patients what they want and actually work with them toward full recovery? ‘It’s not just about stabilizing you clinically. It’s about making sure we don’t lose track of your future,’ said Tara Niendam, a child psychologist who runs the early psychosis clinic at the University of California, Davis. ‘You should be in college. You should be living on your own.’

With other conditions like diabetes or cancer, the sooner people get into care, the better they do. The same is true of psychotic illness. Upwards of 80 studies from early psychosis clinics show that patients see a greater reduction of symptoms, like voices or delusions, and a greater improvement in functioning at school, at work, and in their social lives, compared with people who get treatment as usual.

There are a few reasons why earlier treatment is more effective, Niendam said. People respond more quickly to medication and at a lower dose, so they have fewer side effects that make them want to stop taking them. Families are more involved and more supportive, and patients themselves are more curious about their psychotic experiences. ‘They come out of it and they’re like, ‘Whoa! What was that?’ ‘ Niendam said. ‘Folks are still in that questioning phase.’

When someone is deep in psychosis, their beliefs are rigid, intractable. They might not see themselves as being sick. But if they get help earlier, Niendam said, they’re more likely to engage in treatment.

For Yvonne, even though she believed the alien ship outside her window was real, her doctors at UCSF started her on a new medication that shook that belief loose. Her new therapist then used targeted cognitive behavioral techniques that helped Yvonne challenge those beliefs further. ‘So, for example, I’d have a thought: ‘Aliens are going to abduct me,’ ‘ she said. ‘So then we do ‘evidence for’ that thought and ‘evidence against’ that thought.’

First, she made a list of all the evidence she had that the alien abduction plan was real: I hear the aliens. They’re talking to me. I hear their ship. Then, she had to list the evidence that they weren’t real. For this, the therapist had Yvonne set up a jar in her bedroom. Every morning that she woke up and had not been abducted, she would put a blue marble in the jar. If she had been abducted, she was supposed to put a white marble in the jar. ‘And I had all blue marbles,’ Yvonne said. ‘So that’s evidence against ‘they’re going to get me,’ because they haven’t yet.’

To get control over the voices in her head, Yvonne learned to talk back to them. She would sit in the therapist’s office, in the chair on the right side of the room, and pretend to be her voices, telling her to go back to bed or not to go outside. ‘It’s dangerous,’ she’d say.

Then, Yvonne would go sit in the chair on the left side of the room and practice her response. ‘Thank you, voices, for wanting to protect me and watch out for me,’ she’d say back. ‘But I’m going to get up and be brave and go out into the world today.’

It took a while to get the hang of it, maybe a year, but when she did, Yvonne was able to go back to school. When the voices would start yelling at her while she was in class, calling her dumb, she was ready. ‘I’d be like, ‘You know what? I really don’t appreciate the way you talk to me. Let’s talk after class, let’s talk at 2 p.m.,’ ‘ she told them.

The voices wouldn’t go away completely, but they would fade into the background, enough where Yvonne could finish class or read a book or do her homework. ‘I just started to feel more in control,’ said Yvonne, now 27.

She graduated college last spring, summa cum laude, and she’s now working a full-time job. She’s about to move into her own place. She keeps up with her broad circle of friends, going to shows in the city or having bonfires on the beach. If she thinks she hears a voice or an alien, she does a literal reality check. ‘Oh, did you hear that?’ she’ll ask a friend or her mom. And if they don’t, she tells herself, ‘OK, that’s just a voice.’

But mostly, Yvonne doesn’t like talking about her illness with her friends. She’d rather talk about the Kardashians instead. ‘I just like to be normal when I’m with them,’ she said.

Even though the skills Yvonne learned from therapy at UCSF were a revelation, there was actually a whole other dimension of care that she never got. That’s because UCSF’s program accepts only private insurance, and private health insurers cover only about half of the services of early psychosis treatment.

People who get care under government health coverage, like Medi-Cal, can enroll in programs like the Felton Institute’s, which offer not just specialized therapy, like Yvonne got, but a full array of social support as well. At Felton’s five clinic locations, they believe it takes a full team of specialists who all talk to one another, who are all looking out for every aspect of a young person’s life.

That includes specialists like Monet Burpee, an education and employment coach. On a typical workday, she’ll drive her clients to the local mall or downtown shopping district, charting their path according to the ‘Help Wanted’ signs. Together, they’ll chat with store managers about open positions, then sit down and fill out the applications.

Burpee said helping her clients who have psychosis find work is about more than landing a job; it’s about helping them see themselves differently, as independent, career-oriented people, rather than permanent patients receiving government wage assistance. ‘If you work, you’re going to notice a huge improvement in your self-esteem,’ she tells them. ‘It has better long-term, positive results versus you just sitting around on [supplemental security income].’

This is what Burpee said to one of her clients, Sandy, after she had her first psychotic episode. Sandy was taking new medications that made her really sleepy, and she was struggling to get motivated. ‘Since I didn’t really have anything to do, I would just take super long naps during the day,’ said Sandy, now 20, who requested that we call her by a family name so her health history doesn’t disrupt her career path.

For Sandy, psychosis hit when she was working her first job after high school, at a fast-food restaurant making burgers. Her co-workers were chatting over the fryer one day when Sandy got a weird feeling that somehow they knew what she was thinking. It was as if her co-workers could read her mind and were discussing her thoughts with one another. ‘I was like, Are they talking about burgers or are they talking about me?‘ Sandy said.

There was one co-worker in particular, a guy she had a crush on, who she was pretty sure was watching her—even following her around. If she was walking down the street, or hanging out in the park, she saw him. Her mom remembers that Sandy wanted to sleep with the lights on, repeatedly asking her, ‘Mom, is someone here?’ One day, her mom said, Sandy got so scared she locked herself in the bathroom and just screamed and screamed and screamed.

Her mom wanted to call for help. But she didn’t have a job at the time. This was about a year into the pandemic, and the hotel where Sandy’s mom worked had been closed since the first government lockdown. When she lost her job, her union helped her hold on to her health benefits for a while, but that extension was about to run out. ‘My husband was like, ‘What is that going to cost?’ ‘ her mom remembers.

Sandy’s mom called 911 anyway. In the hospital, Sandy was diagnosed with schizophrenia. From there, she was enrolled in the Felton Institute’s outpatient early psychosis treatment program. At this point, she and her family were covered by Medi-Cal, the state’s public insurance. They wouldn’t have to pay a dime.

Right away, Sandy was introduced to a team of providers who would be by her side for the next two years: a physician, a psychotherapist, an occupational therapist, an education and employment specialist, a peer specialist, and a family support specialist for her mom.

Sandy’s mom found she needed almost as much support as her daughter did after the diagnosis. She blamed herself. She started meeting once a week with Mike Krechevsky, Felton’s family specialist. He walked her through what schizophrenia was, explained that it was no one’s fault, and helped her manage her own feelings about it so that she didn’t pass them on to Sandy. ‘When you express anxiety to your child, they don’t feel as though they have any capability of going out in the world, stumbling, falling, picking themselves up, learning from their mistakes, and moving forward. You infantilize them,’ Krechevsky said. ‘If you continue to do that, they’re never going to recover.’

When Sandy was ready to look for work, she and Burpee went to the mall on a job-scouting expedition. They filled out the applications together. ‘Next thing I know, I was being interviewed, and I got hired,’ Sandy said.

She started out as a cashier at a new fast-food restaurant, and within three months she got promoted to a manager role. Now Burpee is coaching her on how to ask for a raise. ‘She has a brand-new car,’ Burpee said, beaming with pride. ‘She’s meeting new friends.’

For Sandy, it was just one step in her long-term recovery plan. ‘I want to focus on getting a degree, to get a better career,’ she said.

In an unusual twist of the U.S.’ separate and unequal health system favoring the wealthy, the reason Sandy was able to get the best care after her psychotic episode was primarily because her mom had lost her job and her insurance.

This is because the state and federal government are the main funders of these early psychosis clinics, investing tens of millions of dollars into them every year. Officials believe it will save money in the long run, because without sufficient treatment, people with schizophrenia can deteriorate so much that they end up on wage assistance, in a group home, on the street, or in jail—all things the government pays for.

But commercial insurance companies, like Anthem or Blue Shield, don’t face those risks. They don’t have the incentive to cover full-scope psychosis treatment. For that reason and others, they don’t.

This means that lower-income families with public insurance like Medi-Cal can get the gold standard of care, while middle-class families with commercial plans cannot. ‘It is a reverse disparity,’ said UC Davis’ Niendam, testifying at a state Senate Committee on Health hearing last year about the impact of this disparity at the early psychosis clinic she runs in Sacramento. ‘I can give the Rolls-Royce of care if you walk in and you have Medi-Cal,’ she said. But ’60 percent of Californians have commercial insurance. That’s 60 percent of kids who can’t get care, 60 percent of kids whose parents call me crying when I tell them they can’t access my clinic.’

At the Felton Institute in the Bay Area, early psychosis director Adriana Furuzawa said the same. For every one person who has Medi-Cal and is eligible for care at her Alameda clinic, there are another two with commercial insurance who are turned away. Last year, they turned about 100 people away. ‘It was very difficult to think that behind each number, there is a young person, there is a family that we’re saying no to, when we have the resources right here,’ Furuzawa said.

So, what happens to these kids? Generally, they’re on their own to find a psychiatrist and therapist who accept their insurance. Health plans will pay for these medical services. But they won’t cover anything else: the job and education support, the peer specialist, the family coach.

This is discrimination, health advocates argue. If someone has cancer, insurers would never just pay for surgery and radiation but not chemotherapy. ‘It’s a package of services,’ said David Lloyd, chief of policy at the Kennedy Forum. ‘So, the idea that you can split apart the package of services and only reimburse for little components of it really destroys the whole evidence base of what the service is.’

This almost happened to Sandy. A few months into her treatment, her mom got her job back at the hotel, and the family was back on her commercial insurance plan. In most counties, this would have meant that Sandy got kicked out of the program. Her mom said there would have been no way she could afford to pay for a job coach, a family coach, and a peer specialist on her own. ‘I couldn’t do it. I would definitely stop all the help,’ she said, even though it was keeping Sandy alive. Maybe she would have turned to Craigslist to find other parents to talk to, she said, or looked up mental health advice on YouTube to pass on to Sandy. ‘I just hope and pray for the best,’ she said.

Last year, state lawmakers wanted to help families like Sandy’s by forcing insurance companies to cover the full spectrum of early psychosis treatment. One state has done this already—Illinois—while Massachusetts and Virginia are working on a similar effort. But the proposal in California, Senate Bill 1337, died under pressure from the insurance lobby.

Historically, insurers have not covered the costs of services provided by nonlicensed staff, like job or family coaches. More importantly, they do not like being cornered into covering specific treatments, according to Nick Louizos, a lobbyist with the California Association of Health Plans, a trade group that represents companies like Anthem, Blue Shield, and Kaiser. ‘Science evolves. Research evolves. There could be evidence-based techniques that are better in the future,’ he testified at the Senate health committee hearing last year.

While scores of studies show that the treatment works in the short term—people are more likely to stay in school, in jobs, in treatment, and out of the hospital—the treatment hasn’t been around long enough for researchers to know how long the positive effects last. ‘There is a lack of evidence of this model’s long-term effectiveness,’ Louizos said.

Kaiser Permanente is currently running a pilot project, sending 30 of its patients to a full-scope early psychosis clinic based in Solano County. Louizos claims that insurers want to see the results from that study—although they are short-term results—before the industry considers investing in the treatment as a whole.

The insurance restrictions create a perverse incentive for middle-income families who need help now. Some parents are so desperate to give their kids the best care, they actually drop them from their health plans and enroll them in Medi-Cal so they can access county-funded clinics like Felton.

Some counties, including Sacramento and San Mateo, have taken an even bolder step. Health officials there said denying young people the full suite of care is unethical, enough so that they decided to use taxpayer dollars from the county’s coffers to pay for the services that private insurers refuse to cover. In the end, this is what allowed Sandy to stay in the Felton program.

But all of these workarounds are problematic, said the Kennedy Forum’s Lloyd. For-profit insurance companies are essentially making more profits by allowing the public to pay their bills. ‘That’s not an appropriate role for taxpayers, to be picking up that burden,’ he said, adding that insurers’ lack of investment is stifling the growth that’s needed in these programs to provide care for all the young people who need it.

Formal consumer protections may ultimately come from a novel 2021 California law designed to expand the kinds of mental health care insurers are required to cover. Under SB 855, health plans must make mental health coverage decisions based on expert-recognized guidelines for treatment, rather than their own internal criteria, which are often arbitrary or cost-driven.

Multiple agencies, including the National Institute of Mental Health, the Centers for Medicare and Medicaid Services, and the American Psychiatric Association, all recommend full-scope early psychosis care for treatment of a first psychotic episode. State regulators are considering inscribing this guidance explicitly into the official rules they will use to enforce SB 855, with regulatory agencies planning to finalize draft rules this year.

Until that happens, psychosis patients with commercial insurance are stuck navigating the status quo of in-network providers. Finding one who understands psychosis, or who can accurately identify it, can be a serious challenge.

‘When I had my first episode of psychosis, my therapist thought I was on drugs. She had absolutely no clue what was going on,’ said Marie, 27, who asked us to refer to her by her middle name because of the stigma she’s experienced around her illness, bipolar disorder with psychotic features.

When Marie was in high school, her bedroom walls started talking to her. She read a book about Buddhism, and it took over her thoughts completely. For three months, she skipped school and went to the beach to meditate instead. ‘Because I thought I was chosen, and I needed to go meditate to attain nirvana,’ she said. The entire time, she was seeing a therapist. ‘Not even close to enough training to be able to say, ‘Oh, I think you’re having psychosis. Let’s go to the hospital,’ ‘ Marie remembered. ‘No. Instead it took months for me to end up in the hospital.’

But the hospital was also horrible. There was no empathy, no respect. Marie later researched this and found that mental health providers hold the same level of stigmatizing beliefs about mental illness as the general population. ‘I think that has a lot to do with why people hate the hospital,’ she said. ‘It’s because the people in the hospital hate them.’

Marie made her own way through college, and when she got a job at a residential treatment program for people with mental illness, she was horrified to discover that this thinking was baked into the way staff got trained: Marie’s supervisors warned her to watch out for clients who lied, and constantly referred to the clients as ‘manipulative.’

Marie quit, and found a different approach at the early psychosis program at UC Davis. She got hired to be their peer specialist, drawing on her own experience to counsel young people after their first psychotic episode, when they’re the most scared and confused. ‘The people around them don’t understand it at all,’ Marie said. ‘But I totally get it. I think that’s the point of my existence—I get it.’

She talks to her clients about symptoms, about how to come out to their friends. She becomes a role model for them, a living example of someone who was able to manage her symptoms and get better. Marie is now in nursing school.

But for her, recovery was a long and very lonely road. She said she can hardly imagine what it would have meant to her, to her self-esteem, if her insurance had covered the kind of peer support that she provides to others. ‘I believed I wouldn’t get better,’ she said. ‘It would have been life-changing to see someone who got better say that I could.’

For Sandy and her family, the full-scope early psychosis care has been life-changing. Sandy has struggled with some of her symptoms recently at her fast-food job. The difference is, now she knows what’s happening. She has skills to quiet the voices. She knows that her mom will understand. She knows that there are half a dozen providers who will pick up if she calls for help.

When her mom thinks about that generosity, she thinks about her own father. He was a doctor in the Philippines, and none of his patients had insurance. If they didn’t have money, he treated them anyway. ‘I remember people paying him with chicken and rice,’ she said.

She thinks maybe all the help Sandy got was because of him. The luck of landing in a county that paid for all her care—maybe it was her dad’s karma paying off.

If you need to talk, or if you or someone you know is experiencing suicidal thoughts, text the Crisis Text Line at 741-741 or call or text 988 to reach the Suicide & Crisis Lifeline.

This story was originally published by KQED. KQED is part of the Mental Health Parity Collaborative, a group of newsrooms that are covering the challenges and solutions to accessing mental health care in the U.S., in partnership with the Center for Public Integrity and the Carter Center.

Reference: https://slate.com/technology/2023/03/early-psychosis-clinic-insurance-california.html

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