Guest Blog: How Mental Healthcare Coverage Is Evolving with the Help of LOCUS

*This piece is edited from an original article published in the Spring 2021 Community Psychiatrist newsletter.

As part of our ongoing commitment to mental health, PRMS invited Michael Flaum, MD, President of the American Association for Community Psychiatry, to guest post about the state of mental healthcare coverage. Dr. Flaum discusses the Wit v. United Behavioral Health UBH case, which brings this issue to the forefront, and how AACP’s Level of Care for Utilization of Psychiatric and Addiction Services (LOCUS) contributed to the case’s outcome as a model for developing the newly defined “generally accepted” standards of care.

For more than a year now, while so much of our attention has been understandably focused on navigating the inter-related effects of the COVID-19 pandemic, our national reckoning with structural racism, the existential threat of climate change, and a new election cycle, other things have been quietly going on in the background that, had they occurred during “normal times” times, I believe would have been really big news. 

One of those that has particular relevance for the American Association for Community Psychiatry (AACP), psychiatrists, and, more importantly, for all those we serve, involves changes in the way decisions are being made about what kinds of behavioral health services are covered by insurance companies and other payers. 

I’m old enough to remember the pre-managed care days, when those kinds of decisions across all of health care were largely in the hands of the providers of those services, usually physicians. As healthcare costs began spiraling upwards in the 1980’s, the prevailing paradigm shifted dramatically, such that decisions about what kinds of services would be covered were primarily made by payers: if the providers disagreed, the onus was now on them to demonstrate the need.

But how have those decisions been made by payers?  Based on what? Driven by what goals?  Specifically, to what extent were the processes and protocols driven by financial interests for the payers, rather than by the goal of optimizing the health outcomes of those being served, while making the most efficient and effective use of finite resources?  Those questions were at the heart of a pivotal law suit, known as Wit v. United Behavioral Health UBH1, the findings of which may well result in the next major paradigm shift, laying the groundwork for standards and processes that will drive such decisions across a wide variety of systems moving forward. 

Briefly, Wit was a class-action law suit alleging that guidelines used by United Behavioral Health (one of the largest behavioral health managed-care organizations in the country) to make coverage determinations for access to outpatient, intensive outpatient, and residential treatment were more restrictive than “generally accepted standards of care.” The court, in its 2019 decision for the plaintiffs1, articulated what those “generally accepted standards of care” are – really for the first time in a clear and coherent manner. 

Table 1: The “generally accepted standards of care” delineated in the Wit case1

1.       Effective treatment requires treatment of the individual’s underlying condition and is not limited to alleviation of the individual’s current symptoms.

2.       Effective treatment requires treatment of co-occurring mental health and substance use disorders and/or medical conditions in a coordinated manner that considers the interactions of the disorders when determining the appropriate level of care.

3.       Patients should receive treatment for mental health and substance use disorders at the least intensive and restrictive level of care that is safe and effective.

4.       When there is ambiguity as to the appropriate level of care, the practitioner should err on the side of caution by placing the patient in a higher level of care.

5.       Effective treatment of mental health and substance use disorders includes services needed to maintain functioning or prevent deterioration.

6.       The appropriate duration of treatment for mental health and substance use disorders is based on the individual needs of the patient; there is no specific limit on the duration of such treatment.

7.       The unique needs of children and adolescents must be taken into account when making decisions regarding the level of care involving their treatment for mental health or substance use disorders.

8.       The determination of the appropriate level of care for patients with mental health and/or substance use disorders should be made on the basis of a multidimensional assessment that takes into account a wide variety of information about the patient.

I urge you to take a careful look at these standards and then imagine what it would mean if those principles actually guided decision-making about what services and supports would be covered, and over what periods of time.  Imagine what it would mean even if our systems were faithful to just the first of the eight principles, i.e., if we really stopped focusing on acute symptomatology and funded services and supports that targeted the underlying condition.  How different would that be from how things are today? 

For example, we’ve become accustomed to seeing people hospitalized after presenting with suicidal ideation, followed by the usual flurry of activity and medication changes that occur over the next few days, but as soon as the person no longer endorses suicidality, they no longer meet criteria for hospitalization, and ongoing care at that level is denied. While it certainly makes sense to strive to serve people within the least restrictive setting that is safe and effective (as articulated in principle # 3), many of us work within systems in which these decisions are seen as discrete, dichotomous choices: “Does the patient currently meet criteria for this service? Yes or no? If no, it is time for discharge.” How the plan of treatment and support that will follow will be financed is often not even a substantive part of the conversation or decision.   

If the principles delineated in Wit were to be faithfully applied with their intended spirit, it would require a very different approach to care planning and financing.  Rather than a series of discrete, dichotomous decisions about whether or not someone currently meets a particular payer’s medical necessity criteria for a given type of service, individuals with behavioral health needs would be central to an ongoing, iterative, multi-dimensional assessment process (principle 8), that is transparent to all parties. It would take into consideration the interaction of mental health, substance use, and medical conditions (principle 2); it would err on the side of caution in cases of ambiguity or if services at a lower level were not available or appropriate for the individual (principle 4), and it would clearly focus on services that would help people thrive over the long term rather than addressing acute symptomatology (principles 1 and 5).  It would be fundamentally person-centered and individualized, avoiding a one-size-fits-all approach (principle 6); and while the overall process would ideally be common across the full range of ages, it would be sensitive to the reality that the types of services and supports needed for children are often quite different than those for adults (principle 7).  And ideally, it would somehow do all of this in a manner that was accessible and understandable for all of those involved (including the persons served and their families), while being practically feasible and not burdensome in terms of time so as to be incorporated into a wide variety of settings.      

Is there a solution? This may sound familiar to many AACP members, or others who are familiar with AACP’s “LOCUS” (Level of Care for Utilization of Psychiatric and Addiction Services3).  The LOCUS was cited in the testimony of the Wit case, and likely served as part of a model for what became these eight “generally accepted” standards of care. I wasn’t a part of the AACP task force that created the LOCUS, but I imagine the broad goals in what they hoped to create would have aligned closely with these principles.

What makes this particularly exciting is that these principles are now being increasingly recognized as the “generally accepted standards of care” and are being applied in a growing number of state policies and legislation. In Fall 2019, the New York State Office of Mental Health developed a set of “Guiding Principles” that requires all payers in their Medicaid system to use either the LOCUS (and the corresponding child version, CALOCUS) or a similar process that achieves the same goals as the LOCUS5.  The biggest development thus far has been in California - where it became state law as of January 1, 2021 - requiring all commercial payers to use the LOCUS for coverage determinations concerning service intensity, level of care placement, continued stay, transfer, and discharge for adults with mental health conditions, and the CALOCUS/CASII for children and adolescents6 . There is now similar legislation in various stages of development in other states.

While it is certainly nice for the AACP that a product created by our organization is getting so much credit, attention, and use, the big news is that there appears to be some real movement towards standardizing the processes used for assessing individual service intensity needs, and for matching those to funding decisions for appropriate services in a much more clinically appropriate, equitable, transparent, and recovery-oriented manner. 

There are a few heroes who should be recognized in all this. AACP’s own Dr. Wes Sowers, who was the lead on the LOCUS from its beginnings in the mid-90’s and has steadily overseen its ongoing development ever since. Meiram Bendat, an attorney and PhD level psychotherapist, who started “PsychAppeal,” which was the first law firm in the U.S. devoted entirely to legal issues around payment for behavioral health services. Bendat and his team served as the lead attorneys in the Wit case, along with several other similar ongoing cases, and have been central to the California legislation and similar pending legislation in many other states.  Dr. Eric Plakun, who was one of the key witnesses in the Wit case, provided key testimony regarding the LOCUS as a standard of care appeared to be critical.  And Dr. Ken Minkoff, who, along with Dr. Sowers, worked on the original AACP task force, and has been invaluable in helping to respond to the increasing demands for assistance with system-wide LOCUS implementation as a result of these exciting developments.  

It is hard to say where all of this will go, as there are a lot of very powerful forces that would like to see the current system, which has been in place for the past three decades, continue. Appeals to the Wit decision are expected, as are efforts to reverse policy or legislative mandates that require similar systemic change.  But, personally, I never thought it would get this far, so who knows? If you are interested in learning more, the references below should be helpful, and if you’d like to try using the LOCUS, visit


  1. United States District Court, Northern District of California (2019). David Wit et al., Plaintiffs v. United Behavioral Health, Defendant: Findings of Fact and Conclusions of Law. Retrieved from:
  1. National Council for Behavioral Health Toolkit: A compelling argument for facilitating the equitable use of generally excepted standards of care: strategies for mental health and substance use disorder providers. Retrieve from:
  1. American Association for Community Psychiatry: Level of Care Utilization System for Psychiatric and Addiction Services.  For information about the LOCUS family of tools see:
  1. American Society of Addiction Medicine (2019). The ASAM Criteria. Retrieved from
  1. New York State Office of Mental Health: Guiding Principles for the Review and Approval of Clinical Review Criteria for Mental Health Services: Retrieved from:
  1. California Insurance Commissioner: Notice to All Insurance Companies re: “Enactment of Senate Bill 855 – Submission of Health Insurance Policies for Compliance Review”,  retrieved from:


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Categories: PRMS Blog, Psychiatrist