Blue Cross and Blue Shield of Minnesota has reached an agreement with the state's attorney general to settle a lawsuit that alleged the health insurer denied medically necessary mental health treatments to Minnesota minors.

In the original complaint, Minnesota Attorney General Mike Hatch accused the insurer of a "pattern of misconduct" in delaying or denying mental health, eating disorder, and chemical-dependency treatments to children and young adults — even advocating that some families turn to the juvenile justice system to receive treatment.

In addition to paying the state $8.2 million, Blue Cross must now submit all of its claims procedures to a review committee that will oversee claims and denials, with the goal of speeding the review and appeals process for denials.

Under the terms of the settlement, if Blue Cross denies any claim, or does not respond to one within 24 hours (or two business days for "non-urgent" claims), it must be referred to the review committee that will have the power to overturn or uphold any decisions made by the insurer. If a claim for chemical dependency or an eating disorder is denied for lack of medical necessity, Blue Cross must forward the denial to the committee within six hours.

Blue Cross, which denies the allegations, also agreed to:

• Ensure treatment is available within 10 days.
• Inform patients of alternative treatment options that are covered if any claim is denied as not medically necessary.
• Offer "reasonable access and coverage" for eating disorders and drug addiction, including 28-day inpatient programs for drug addiction.
• Not provide any financial or other incentive to its claim reviewers to deny coverage.
• Provide inpatient and outpatient coverage for mental health on the same level as other medical conditions.

The settlement also allows the Minnesota attorney general to audit the insurer every six months and make recommendations that Blue Cross must either accept or have arbitrated at its own expense, and calls for the resolution of any outstanding complaints against the insurer within 60 days.