After the state's largest health insurer cut her pay nearly in half, mental health therapist Kristy Brecke reluctantly stopped taking new clients who are covered by Blue Cross and Blue Shield of Minnesota.

The Eagan-based insurer cut mental health therapy reimbursement rates to control what it said were "unusually high claims trends," a move that has left thousands of mental health clinics scrambling to pay salaries and overhead costs with lower revenue.

Blue Cross said it cut the reimbursement rate for the traditional hourlong therapy session by 18 percent, but added that, on average, clinics would see a 7 to 9 percent reimbursement reduction "for their overall business with Blue Cross."

But some therapists, like Brecke, saw bigger cuts because the insurer realized last year it had mistakenly been paying them too much. So in addition to resetting the payment rates, Blue Cross is asking about 2,000 therapists to pay back about $4 million. Some clinics are being asked to repay as much as $30,000.

Brecke, who got a bill from Blue Cross for over $3,000 in overpayments, said the insurer cut her reimbursement rates by 46 percent because of all of the changes.

"That is not easy to do when you have your own little business and have to pay expenses," she said.

The impacts are felt mostly by small mental health clinics without the market power to negotiate payment rates and other contract terms. Some are concerned that clinics will shut their doors or stop taking insurance altogether, making it harder or more costly for those needing help for trauma, depression, anxiety, substance abuse and other issues.

"What is probably going to happen is providers will leave the network because they cannot make a living," said Steve Melek, principal and consulting actuary at Milliman, a consulting firm in Denver. "They will hang out the shingle and only take private pay patients."

Melek said he is not seeing mental health rate cuts in other states.

"If anything, on a national level I think there is more of a focus on paying behavioral health providers comparably to physical health providers," he said.

A study last fall by Melek and others at Milliman found that insured Minnesotans went out of network for mental health care five times more often compared to out-of-network use of specialty physicians. Because going outside a plan's network often means higher co-payments or coinsurance, the data suggest that the state's mental health insurance networks don't have the capacity to meet service needs.

"Most therapists go into the field because they want to serve all populations," said Brecke. "It shouldn't just be the rich that should have access to good care."

Brecke, whose office is in Eagan, will continue to see existing Blue Cross patients, but felt it was too financially risky to take on new ones.

"I don't feel like I have any other choice," she said. "I really struggled with trying to decide to keep Blue Cross."

Brecke's rates fell so dramatically partly because Blue Cross made two different mistakes that resulted in overpayments.

The Art of Counseling clinic in St. Paul, where about half of its 250 clients are covered by Blue Cross, has seen a 33 percent rate cut. Blue Cross is asking it to repay $14,000.

"We are living paycheck to paycheck," said owner Heather Matson. "The last thing we want to do is close our doors."

The clinic uses art therapy to help its clients — many with serious and persistent mental illnesses — process emotions or deal with trauma.

"This is double whammy. We have been hit both ways," said Kristin Kane, a therapist at the clinic. If the clinic were to close many people will be without mental health services, she said.

"This could result in higher costs for the state of Minnesota due to a higher level of care needed related to mental health," said Kane.

Disputes over payments

Nearly 50 clinics have turned to Minneapolis attorney Kit Friedemann for help, especially with Blue Cross' attempts to claw back money.

"It is devastating for these small providers," he said. "This is money that has long been spent on overhead and other costs of the practice."

But legally there are few options. The Blue Cross contract with providers stipulates that disputes go through arbitration, with costs shared by both sides. That prevents him from pursuing a class action against the insurer.

Some of Friedemann's clients say they are being asked to pay back too much money.

"A lot of providers say the math is wrong," said Friedemann. He is considering taking at least one case to arbitration, but unlike a court case, an arbitrator's decision does not set precedents for other cases.

In a statement Wednesday, Blue Cross said "the overall number of behavioral health providers in our network has not changed."

"The majority of providers affected by this issue have either already submitted payments in full or have agreed to a payment installment plan," the company said.

Complaints have been made to the Minnesota Health Department, which regulates HMOs, because many of the overpayments were made by Blue Plus, a unit of Blue Cross.

But the Health Department appears to consider the matter closed.

"Blue Plus is allowed to recoup overpayments to its providers," the agency said in a statement.

The Minnesota Commerce Department, which regulates traditional insurance companies, has also received complaints that Blue Cross' rate cuts violate federal and state parity laws.

"The Commerce Department is continuing to review health insurance industry practices for compliance and potential violations of mental health parity requirements," the agency said in a statement. State agencies are barred from releasing details of investigations while they are ongoing.

Glenn Howatt • 612-673-7192