HB 3725 is a Trojan Horse Designed with Loopholes That Support the Unethical and Unlawful Corporate Takeover of Independent Private and Group Practice.

Either HB 3725 must be fundamentally rewritten to incorporate the necessary protections and to close important loopholes. Or it must be rejected outright. Legislators have a choice: Protect mental and behavioral health or hand it over to corporate corrupt corporate control that is currently not accountable.

To fully protect mental and behavioral health providers, HB 3725 must be rewritten to include strict audit regulations, reimbursement oversight, and enforcement mechanisms aligned with HB 2029. Legislators must ensure that these bills work together to create a fair and transparent system that prevents insurers from exploiting mental and behavioral health providers who treat patients in the Oregon Healthplan and Oregon commercial sectors. If HB 3725 is not amended, the very protections established by HB 2029 will be rendered ineffective in the commercial sector, allowing insurers to continue unethical, unlawful, fraudulent, anticompetitive and monopolistic practices unchecked. The Oregon legislature must act now to align these bills to prevent further harm to independent behavioral health providers and the communities they serve.

Given their substantial differences, HB 3725 must be amended to incorporate the audit protections outlined in HB 2029 and guidance provided by Mentor Research Institute (MRI).

Preventing Crucial Legislative Voids and Regulatory Gaps in Oregon House Bill 3725
https://www.mentorresearch.org/closing-critical-legislative-voids-and-regulatory-gaps-in-oregon-house-bill-3725

Exposing the Loopholes! How Moda Health and Other Health Plans Exploit Regulatory Gaps
https://www.mentorresearch.org/exposing-loopholes-how-health-plans-can-exploit-regulatory-gaps-1

Moda Health's Termination of Contract Negotiations After Moda Negotiators Agreed to Ensure they Had a Certified Internal Auditor and an Ethics Point Portal
https://www.mentorresearch.org/moda-health-termination-of-contract-negotiations-with-mentor-research-institute

Healthy Contracts Legislation Proposal
https://www.mentorresearch.org/healthy-contracts-legislation-proposal

Without those recommendations and changes, insurers will retain the ability to dimmish independent providers through unlawful contracting practices, and unfair contracts, policies, audits, and unjustified recoupments. The passage of HB 2029 alone is not enough. Without aligned modifications to HB 3725, insurers can ignore HB 2029, and will use the existing loopholes to manipulate reimbursement structures, create unfair contracts, negotiate in bad faith, commit fraud, violate antitrust laws, and consolidate their power over mental and behavioral health networks.

Introduction to the Fatal Flaws of House Bill 3725

House Bill 3725 presents itself as a solution to mental health parity and behavioral health reimbursement reform, but it is, in reality, a legislative Trojan horse. Beneath the façade of progress, this bill cements insurance industry dominance, forces independent providers into corporate employment, and enables unchecked monopolization of mental and behavioral health services. If left unchanged, HB 3725 will deal a devastating blow to independent private and group practices, placing them at the mercy of powerful health plans that have historically manipulated reimbursement, contract and policy structures to their advantage, and they have denied care using hidden criteria..

At its core, HB 3725 fails to protect against fraudulent insurance practices, lacks enforcement mechanisms, and allows insurers to dictate reimbursement rates without oversight. Unlike HB 4130 and SB 0951, which focus on restricting corporate control of medical practices, HB 3725 tilts the balance further in favor of health insurers like Moda and United Healthcare. It creates the illusion of reform while embedding loopholes that allow insurers and management service organizations (MSOs) to consolidate power over mental and behavioral healthcare.

The Dangers of HB 3725

One glaring weakness of HB 3725 is its failure to prevent insurers from setting arbitrary reimbursement rates that disadvantage independent private and group practitioners. Without reimbursement parity measures, insurers can systematically suppress provider payments, making it financially untenable for independent practices to operate or to challenge health plan negligence and corruption. As a result, providers are left with two choices: exit the field or work for large corporate health entities that dictate service terms. This dynamic both erodes competition and reduces patient access to high-quality, independent mental and behavioral services.

Another critical flaw is the absence of strong oversight reporting, investigation and enforcement mechanisms. HB 3725 introduces a Mental Health Parity Ombudsman, that office lacks regulatory power to investigate and penalize health plans for violations. It serves as a symbolic gesture rather than a functional safeguard. Without robust investigation and enforcement authority, behavioral health providers have no meaningful recourse against unlawful contacts, wrongful claim denials, delayed payments, fraudulent or unfair audits by insurers. Providers’ only recourse is to file lawsuits they cannot afford, that might take years to be adjudicated.

Further, HB 3725 fails to address the growing influence of Managed Service Organizations (MSOs) in mental and behavioral health. These entities, often act as intermediaries for health insurers. MSOs exert control over hiring, billing, and clinical policies, effectively transforming independent providers into corporate employees. Unlike HB 4130 and SB 0951, which impose strict limitations on MSO ownership and management of medical practices, HB 3725 ignores the MSO issue entirely. That oversight allows insurers and MSOs in the commercial sector to continue developing monopolistic practices, forcing independent providers to conform to corporate mandates or be pushed out of the market altogether.

HB 3725 comparison with HB 4130 and SB 0951

In contrast to the shortcomings of HB 3725, the bills HB 4130 and SB 0951 provide essential protections for independent healthcare providers. HB 4130 prevents corporate interference in medical decision-making, ensuring that clinical policies remain under the control of licensed professionals rather than corporate executives. HB 4130 also bans non-compete and gag agreements, which are used to silence providers from exposing insurers fraudulent practices.

SB 0951 strengthens these protections further by explicitly barring MSOs from owning or managing medical entities, by enhancing whistleblower protections, and by classifying violations as unlawful trade practices. HB 3725 lacks such measures, allowing insurers and corporation-backed mental and behavioral health networks to consolidate power with impunity.

HB 3725’s failure to integrate these safeguards makes the bill an outlier, granting unchecked authority to insurers under the guise of mental and behavioral health reform. If left unchanged, HB 3725 will further entrench the monopolization of behavioral healthcare, and disproportionately harm minority and underserved communities which rely on independent, culturally competent providers.

A Trojan Horse for Corporate Control

The deceptive nature of HB 3725 makes it dangerous. While it masquerades as a mental health parity bill, HB 3725 actively undermines independent practice by failing to regulate insurers and MSOs. By not setting reimbursement standards, not limiting corporate ownership of mental and behavioral health services, not creating meaningful reporting and enforcement mechanisms HB 3725 provides insurers unrestricted control with little risk of detection of antitrust violations and fraud in the mental and behavioral health market.

If HB 3725 is enacted in its present form, independent providers will find themselves increasingly at the mercy of health plans, unable to negotiate fair rates or to challenge unethical or unlawful contracting practices. Over time, this will lead to a landscape where mental and behavioral health services are delivered primarily through corporate-owned networks that prioritize cost-cutting over patient care and the needs of minority and underserved populations. Such a shift will reduce the availability of personalized, high-quality care, leaving patients with fewer options and providers with fewer rights.

Why HB 3725 Must Be Changed or Rejected

HB 3725 is not just a flawed bill—it is a direct threat to the integrity and future of independent mental and behavioral healthcare. The legislature must act now to either amend the bill significantly or reject it altogether. At a minimum, the following changes are necessary:

Mandate reimbursement parity to ensure fair compensation for independent behavioral health providers.
Establish an independent regulatory body with the authority to investigate, enforce and penalize insurers for fraudulent practices including violations for antitrust laws.
Ban MSO control over mental and behavioral health practices, aligning HB 3725 with HB 4130 and SB 0951.
Strengthen whistleblower protections for behavioral health providers reporting fraud and abuse.
Eliminate restrictive contracts, such as non-compete and gag clauses, that suppress provider advocacy and limit patient choice
Independent internal health plan oversight (internal or external oversight boards).
Whistleblower protections.
Contract transparency and plain language mandates.
Secure online confidential reporting.
Stronger fraud and antitrust enforcement scrutiny.

Insert reference to Loopholes paper and its 5 recommendations here

If these recommended changes are not made, HB 3725 must be stopped before it cements insurer dominance over mental and behavioral health, eliminates independent private and group providers, and severely restricts patient access to diverse and competent mental health services.

Conclusion

The passage of HB 3725 in its current form would be a significant mistake. HB 3725 is a Trojan horse that presents itself as a solution but serves corporate interests at the expense of patients and providers. By failing to impose accountability on insurers, regulate MSOs, or enforce fair provider reimbursement, HB 3725 would accelerate the consolidation of mental and behavioral healthcare into large corporate entities, forcing independent providers into employment or out of business.

Lawmakers must recognize HB 3725 for what it truly is: a veiled attempt to shift power away from independent practitioners and into the hands of insurers. The time to act is now—before this bill inflicts irreversible damage on the mental and behavioral health system. Either HB 3725 must be fundamentally rewritten to incorporate the necessary protections, or be rejected outright. The future of independent mental behavioral healthcare depends on it.

Discussion Outline

House Bill 3725 is not just insufficient—it is dangerous in its current form. If passed without these critical amendments, it will:

Cement insurance control over mental and behavioral health by allowing insurers to continue manipulating reimbursement rates.
Eliminate independent mental and behavioral health providers by driving them into corporation-controlled networks.
Increase the corporate monopoly over mental and behavioral health by permitting MSOs to dictate practice operations.
Silence mental and behavioral health providers with gag clauses and non-competes.
Worsen mental health access for minority and underserved communities by prioritizing profit-driven networks over patient needs.
Allow insurers to continue engaging in fraud and antitrust violations with no independent oversight.
Mislead the public through solutionism, creating an illusion of reform while leaving fundamental issues intact.

By relying on solutionism, HB 3725 misleads the public into believing it is fixing mental health access while leaving systemic power imbalances intact. Mentor Research Institute’s recommendations are not optional—they are essential to ensure that HB 3725 truly protects patients and providers, rather than serving as an industry-backed weapon against independent mental and behavioral health care.

Introduction: The Fatal Flaws in HB 3725

House Bill 3725 presents itself as a solution to mental health parity and behavioral health reimbursement reform. However, in its current form, HB 3725 is fundamentally flawed. The bill fails to close legislative gaps that allow insurers and corporate-controlled entities to manipulate reimbursement structures, restrict independent behavioral health providers, and erode patient access to quality care.

Without incorporating the 10 crucial protections identified by Mentor Research Institute, HB 3725 will serve as a Trojan horse for insurance industry dominance rather than a safeguard for mental and behavioral health care.

HB 3725 is an example of solutionism, where a complex, systemic problem is framed as needing a simple “policy fix” while there is failure to address the root causes. The bill assumes that modifying reporting and claims processes alone will improve mental and behavioral health parity without imposing real accountability on insurers or ensuring fair provider reimbursement. By presenting an incomplete solution, HB 3725 offers an illusion of progress while entrenching existing power imbalances between insurers and mental and behavioral health providers.

Moreover, HB 3725 fails to protect against abusive contracting behavior, fraud, and antitrust violations by health plans. Whistleblower complaints reveal that insurers engage in systematic underpayment, wrongful denial of claims, and retaliation against providers who report misconduct. HB 3725 also lacks enforcement mechanisms that allow independent providers to report complaints to a regulatory body with enforceable investigative power. By favoring insurers over independent practitioners, HB 3725 creates an asymmetric power dynamic that will further undermine public access to quality mental and behavioral health care.

Mentor Research Institute has outlined specific legislative gaps that, if left unaddressed, will exacerbate the crisis in mental and behavioral health services. These gaps must be addressed in any revised HB 3725 to prevent the bill from cementing irreparable harm to independent private and group practices. If not changed, HB 3725 deserves to die before the legislature takes action.

The Legislative Gaps in HB 3725: How It Weakens, Rather than Strengthens, Mental and Behavioral Health Protections

1. HB 3725 Enables Insurance Companies to Dictate Mental and Behavioral Health Standards With No Oversight

The bill modifies utilization review requirements but fails to prevent insurers from setting reimbursement rates that force independent providers out of business.
Without firm legal requirements for reimbursement parity, insurers can artificially suppress rates for independent practitioners, forcing them into corporate employment or out of the field altogether.

➤ Revision Required: HB 3725 must mandate reimbursement parity for behavioral health providers at rates equivalent to those of medical/surgical services.

2. HB 3725 Fails to Close the Management Services Organization (MSO) Loophole

Insurers and corporate mental and behavioral health entities use MSOs to control independent behavioral health practices while avoiding regulatory scrutiny.
HB 3725 does not prevent MSOs from exerting financial and administrative control over independent mental health professionals, despite HB 4130 and SB 0951 ban of similar corporate control in physician-led practices.

➤ Revision Required: HB 3725 must extend HB 4130 and SB 0951 protections to prevent MSOs and insurers from owning, controlling, or dictating operations in behavioral health practices.

3. HB 3725 Lacks Protections Against Insurer and MSO Retaliation

Whistleblower reports reveal that health plans and MSOs retaliate against providers who expose fraud or refuse to accept unfair reimbursement rates.
HB 3725 does not protect behavioral health providers from retaliation if they challenge unfair contract terms, illegal underpayment, or network exclusions.

➤ Revision Required: HB 3725 must explicitly prohibit insurers and MSOs from retaliating against behavioral health providers through network exclusions, contract terminations, or reimbursement suppression.

4. HB 3725 Fails to Close the Non-Compete and Gag Order Loophole

Corporate-controlled behavioral health groups impose non-compete and non-disparagement clauses on providers, preventing them from exposing unethical insurance practices.
SB 0951 voids these restrictions for medical doctors, but HB 3725 does not extend these protections to behavioral health providers.

➤ Revision Required: HB 3725 must explicitly ban non-compete and gag clauses in behavioral health employment and contracting agreements.

5. HB 3725 Ignores Disproportionate Harm to Minority and Underserved Communities

Corporate-controlled behavioral health services disproportionately impact minorities and underserved populations by eliminating independent, community-based providers.
Insurance-driven mental health networks exclude culturally competent, independent providers in favor of large corporate practices that fail to meet the specific needs of these communities.

➤ Revision Required: HB 3725 must mandate network adequacy standards that include culturally competent, independent behavioral health providers.

How HB 4130, HB 3725 and SB 0951 Support Corporate Control and Force Providers to Work for Large Entities

HB 4130 (2024) – Protecting Medical Autonomy or Cementing Corporate Structures?

While intended to prevent MSOs from controlling medical practices, it still allows corporations to consolidate power by pushing independent providers into corporate employment structures.
The bill does not address the financial dependency on insurers, meaning health plans continue to exert influence over independent practices.
Creates regulatory loopholes where large corporate-affiliated provider networks can sidestep restrictions by structuring ownership to meet compliance while still exercising control.

SB 0951 (2025) – Strengthening Physician Protections or a Step Toward Mandatory Employment?

While prohibiting MSO influence, the bill does not restrict insurers from controlling reimbursement policies, allowing them to economically coerce independent providers into employment.
Whistleblower protections exist, but no enforcement mechanisms compel insurers to fairly reimburse independent providers, indirectly forcing them into corporate settings.
Enhances penalties for trade practice violations, but large corporate entities can absorb fines as a cost of doing business while independent providers cannot sustain prolonged legal battles.

HB 3725 (2025) – The Trojan Horse That Hands Behavioral Health to Corporations

Masks itself as a reform bill while failing to implement accountability measures for insurers.
Forces private practices into dependence on corporate-controlled reimbursement models by failing to set fair and mandatory reimbursement rates.
Establishes an ombudsman with no enforcement power, ensuring that grievances from independent providers go unheard while insurers continue predatory practices.
Does not protect behavioral health from monopolization, allowing corporate-run behavioral health networks to dominate the market by eliminating smaller competitors.

Why HB 3725 is a Trojan Horse

Presents itself as a mental health parity bill but does not include reimbursement safeguards.
Gives the illusion of oversight but lacks enforcement, allowing insurers to control behavioral health markets.
Fails to close loopholes that allow health plans to manipulate contracts, push out independent providers, and consolidate power.
Does not create meaningful protections against insurer fraud, ensuring that corporate control remains intact.

HB 3725 must be fundamentally rewritten or abandoned before it cements corporate control over behavioral health and permanently eliminates independent providers from the market.

HB 2029 Compared to HB 3725: Ensuring Fair Practices in Mental and Behavioral Health Audits

House Bill 2029 introduces vital protections for behavioral health providers by placing limits on how insurers, the Oregon Health Authority (OHA), and Coordinated Care Organizations (CCOs) conduct audits. It seeks to establish transparency, ensure fairness in reimbursement reviews, and prevent insurers from exploiting audits as a means of financial control over independent behavioral health providers. By contrast, House Bill 3725 lacks these protections, leaving insurers with broad discretion to manipulate claims processing, enforce recoupments arbitrarily, and financially coerce providers into corporate employment.

One critical difference between the two bills is that HB 2029 directly limits how insurers conduct audits, while HB 3725 remains silent on that issue. HB 2029 requires insurers to provide clear documentation of audit requirements, preventing retroactive denials and imposing a strict timeline on when claims can be reviewed. These measures ensure that providers are not subjected to surprise recoupment demands years after services have been rendered. HB 3725 does not include any such protections, leaving independent practitioners vulnerable to financial instability caused by unpredictable insurer audits.

HB 2029 also introduces an essential regulatory framework for mental and behavioral health audits, mandating involvement of the Oregon Health Authority in developing fair audit processes in collaboration with providers and community groups. This structure helps to prevent arbitrary enforcement and ensures that audits are conducted in a way that prioritizes patient care rather than insurer profit. HB 3725 does not establish any independent oversight body to hold insurers accountable. Without such a mechanism, insurers retain unchecked power over reimbursement processes, reinforcing their dominance in the mental and behavioral health market.

Another significant aspect of HB 2029 is that it prevents insurers from conducting post-payment audits beyond a 12-month window unless fraud is suspected. This provision protects providers from retroactive claim denials and prolonged financial uncertainty. HB 3725, imposes no restrictions on how far back insurers can demand repayment, allowing them to exploit loopholes to issue retroactive recoupments that destabilize providers operations. Without similar protections in HB 3725, insurers can continue to use audits as a weapon against independent mental and behavioral health professionals.

Additionally, HB 2029 ensures that mental behavioral health claims audits are reviewed by qualified professionals rather than auditors who lack expertise in mental and behavioral health services. This provision is crucial to ensure that claims are evaluated with understanding of clinical necessity rather than through rigid administrative standards that which to account for patients history or situational complexities. HB 3725 does not contain a similar requirement, meaning that mental and behavioral health claims could still be denied by auditors unfamiliar with mental health care, leading to wrongful claim rejections and financial losses for providers.

Another key distinction is that HB 2029 prohibits compensation structures that create financial incentives for auditors to deny claims. This prevents insurers from structuring audits in a way that prioritizes cost-cutting over patient care. By contrast, HB 3725 lacks any provisions regulating financial incentives tied to audits, meaning insurers and third-party auditors can continue to profit from denying legitimate claims. This creates a dangerous precedent that undermines the integrity of behavioral health reimbursement systems and forces providers into compliance with insurer-dominated policies.

Given these substantial differences, HB 3725 must be amended to incorporate the audit protections outlined in HB 2029. Without these changes, insurers will retain the ability to suppress independent providers through unfair audits and unjustified recoupments. The passage of HB 2029 alone is not enough—without modifications to HB 3725, insurers will still have avenues to manipulate reimbursement structures and consolidate power over behavioral health networks.

To fully protect behavioral health providers, HB 3725 must be rewritten to include strict audit regulations, reimbursement oversight, and enforcement mechanisms aligned with HB 2029. Legislators must ensure that these two bills work together to create a fair and transparent system that prevents insurers from exploiting mental and behavioral health providers. If HB 3725 is not amended, the protections established by HB 2029 could be rendered ineffective, allowing insurers to continue unchecked in their monopolistic practices. The Oregon legislature must act to align these bills and prevent further harm to independent mental and behavioral health providers and the communities they serve.

A Discussion Outline

The Impact of HB 2029 on HB 3725

House Bill 2029 introduces critical audit protections for behavioral health providers, placing restrictions on how insurers and coordinated care organizations (CCOs) conduct audits. It mandates clear audit criteria, transparency in documentation requirements, and limits on recoupment practices. These provisions are directly relevant to HB 3725, which fails to address the growing problem of insurer-dominated audits and claim denials.

Key Ways HB 2029 Affects HB 3725

1. HB 2029 Limits Insurer Audit Abuses, While HB 3725 Ignores the Problem

HB 2029 places strict guidelines on insurer audits, preventing health plans from arbitrarily demanding recoupments or using audits to harass independent behavioral health providers.
HB 3725 does not regulate insurer audits at all, allowing insurers to continue using audits as a mechanism for financial retaliation against providers who challenge reimbursement policies.
Impact: If HB 2029 passes without amendments to HB 3725, insurers may still exploit HB 3725’s weaknesses to continue denying or manipulating behavioral health claims outside of direct audits.

2. HB 2029 Introduces a Regulatory Structure for Behavioral Health Audits, While HB 3725 Lacks Enforcement Mechanisms

HB 2029 directs the Oregon Health Authority (OHA) to collaborate with providers, CCOs, and advocacy groups to develop fair and transparent audit standards.
HB 3725 does not create an independent oversight body with enforcement power over insurer reimbursement practices.
Impact: HB 2029 provides a potential enforcement model that could be incorporated into HB 3725 to address the lack of accountability in reimbursement processes.

3. HB 2029 Prevents Retroactive Claim Denials, While HB 3725 Leaves Insurers in Control

HB 2029 establishes a 12-month limit on post-payment audits, preventing insurers from clawing back payments indefinitely, except in cases of suspected fraud.
HB 3725 does not include any timeline restrictions, meaning insurers can continue to demand retroactive repayment years later, even for minor documentation errors.
Impact: Without audit protections in HB 3725, insurers could still exploit broad contractual clauses to retroactively deny payments even if HB 2029 is passed.

4. HB 2029 Requires Behavioral Health-Specific Reviewers for Audits, While HB 3725 Does Not

HB 2029 mandates that behavioral health professionals—not just any auditor—review behavioral health claims to ensure fair and clinically appropriate assessments.
HB 3725 does not include any provider-specific review requirements, allowing insurers to conduct behavioral health claim reviews without proper expertise.
Impact: HB 3725 must incorporate this protection to prevent insurers from wrongfully denying claims due to lack of proper review by qualified behavioral health professionals.

5. HB 2029 Prevents Financial Incentives for Denying Claims, While HB 3725 Allows Insurers to Retain Financial Control

HB 2029 prohibits compensation structures for auditors that create financial incentives to deny claims.
HB 3725 does not regulate financial incentives, meaning insurers and their audit teams can continue to profit from excessive denials and recoupments.
Impact: If HB 3725 is not amended, insurers could still leverage its loopholes to continue harmful financial practices despite the limits set by HB 2029.

What Must Happen Next

HB 2029 provides important protections for behavioral health providers, but if HB 3725 remains unchanged, it will continue to expose providers to financial exploitation by insurers.
HB 3725 must be amended to integrate HB 2029’s audit protections and expand oversight to cover all forms of reimbursement manipulation—not just formal audits.
Without this, insurers could still use HB 3725’s loopholes to deny payments, force provider employment in corporate networks, and monopolize behavioral healthcare.

Final Assessment: HB 2029 Undermines HB 3725’s Insurer-Friendly Loopholes

If HB 2029 passes, it will counteract some of HB 3725’s most dangerous flaws.
However, HB 3725 must still be rewritten to address enforcement gaps and prevent insurers from using non-audit-based financial tactics to suppress independent providers.
The two bills must be reconciled to ensure strong oversight, reimbursement fairness, and protection against insurer abuses in behavioral health.

DISCLAIMER and PURPOSE: This discussion document is intended for training, education, legislation, and or research purposes. The information contained herein is based on the data and perspectives available at the time of writing. It is subject to revision as new information and viewpoints emerge.

For more information see: https://www.mentorresearch.org/disclaimer-and-purpose