Mental Health Parity Act of 2008


Reference

 

Mental Health Parity and Addiction Equity Act

The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) mandates that Group Health Plans that provide mental health coverage must provide parity between medical/surgical benefits and mental health/substance use disorder benefits.

Please note that this legislation does not require a group health plan to offer mental health or substance use benefits.  It also does not require that plans cover any specific type of mental health disorder or treatment.  However, where mental health or substance use disorder treatments are covered, the parity rules apply.

Covered Plans that do provide mental health or substance abuse benefits must provide parity with the plans’ medical/surgical benefits in three separate areas:

The ACA requires all plans to provide coverage for preventive screening for mental health and substance abuse issues.  Compliance with this provision does not mean that a plan that does not otherwise provide for treatment of mental illness or substance abuse is subject to the parity rules.

Final Regulations

On November 8, 2013, final rules on MHPAEA were issued that contain some clarifications regarding the statute’s protections. The final regulations generally apply to group health plans and health insurance issuers offering group health insurance coverage for plan years beginning on or after July 1, 2014.

Specifically, the final regulations:

Please Note: The DOL, Department of Health and Human Services (HHS), and the Treasury (collectively, the “Departments”) are required to provide additional information on the implementation and compliance with the MHPAEA on a rolling basis, including revised compliance programs, documents, and updated enforcement. Tooltip Click on Guidance under the For Employers and Advisers section on the Mental Health and Substance Use Disorder Parity web page.

On September 5, 2019, the DOL issued responses to FAQs regarding the implementation of the MHPAEA. It is important to note that these FAQs do not contain any new interpretations of MHPAEA; rather the purpose is to provide further guidance in evaluating the factors used to develop and apply certain NQTLs. We have provided samples of these FAQs throughout this Geek Out! page for reference. Tooltip Please note that all 11 FAQs and full DOL responses can be viewed here.

Covered Plans

The MHPAEA applies to plans covered by ERISA, as well as public sector plans and church plans; however, it does not apply to plans that cover only retirees.

In addition, certain plans are exempt from the law.

Please Note: Under HHS final rules governing the Affordable Care Act requirement to provide essential health benefits (EHBs), non-grandfathered health insurance coverage in the individual and small group markets must provide all categories of EHBs, including mental health and substance use disorder benefits. The final EHB rules require that such benefits be provided in compliance with the requirements of the MHPAEA rules.

In the case of non-grandfathered small group market coverage, for plan years beginning on or after January 1, 2014, all non-grandfathered small group market coverage must include coverage for mental health and substance use disorder benefits, and that coverage must comply with the Federal parity requirements set forth in the interim final regulations issued in February 2010. The final regulations apply for plan years beginning on or after July 1, 2014.

Cost Exemption

A group health plan that can demonstrate that its actual costs of coverage for the mental health/substance use disorder benefits exceed 2% of the plan’s total costs in the first plan year that the requirement applies (and 1% in subsequent years) may qualify for a one year exemption the following year.

To demonstrate the costs, the plan must obtain an actuarial certification, using the data from the first actual six months of the plan year.  The final rules contain detailed instructions on how to determine the costs that are attributable to MHPAEA. Plans qualifying for and electing the cost exemption must notify the appropriate federal agencies (Departments of Labor, Health and Human Services, and Treasury), the appropriate state agencies, and plan participants and beneficiaries of the election.

In an FAQ published December 22, 2010, the DOL clarified that for plans that make changes to comply with the law and incur an increased cost of at least two percent in the first year that MHPAEA applies to the plan (the first plan year beginning after October 3, 2009) or at least one percent in any subsequent plan year (generally, plan years beginning after October 3, 2010), the plan is exempt for the plan year following the year the cost was incurred. Thus, the exemption lasts one year. After that, the plan is required to comply again; however, if the plan incurs an increased cost of at least one percent in that plan year, the plan could claim the exemption for the following plan year.

The Departments’ interim final regulations implementing MHPAEA did not provide guidance for implementing the increased cost exemption. Accordingly, during an interim enforcement safe harbor until future regulatory guidance is effective, a plan that has incurred an increased cost of two percent during its first year of compliance can obtain an exemption for the second plan year by following the exemption procedures described in the Departments’ 1997 MHPA regulations* except that, as required under MHPAEA, for the first year of compliance the applicable percentage of increased cost is two percent and the exemption lasts only one year. Calculations of increased costs due to MHPAEA should include increases in a plan’s share of cost sharing. Moreover, any non-recurring administrative costs (such as adjustments to computer software) attributable to complying with MHPAEA must be appropriately amortized. Plans applying for an exemption must demonstrate that increases in cost are attributable directly to implementation of MHPAEA and not otherwise to occurring trends in utilization and prices, a random claims experience that is unlikely to persist, or seasonal variation typically experienced in claims submission and payment patterns.

* Among other things, the 1997 regulations require a plan or issuer to report to the Federal government and give notice to participants and beneficiaries that the plan or issuer is claiming the exemption.

Provisions

Annual and Lifetime Limits

While the MHPAEA prescribed an elaborate set of rules for requiring parity with respect to annual and lifetime limits, those rules have largely been rendered unnecessary  by the ACA.  The latter prohibits lifetime and annual limits on the dollar value of essential health benefits.  The latter includes benefits for treatment of mental illness and substance abuse.

Financial Requirements

Plans that offer both medical/surgical benefits and mental health/substance use disorder benefits within a given classification of benefits must ensure that the financial requirements that apply to mental health or substance use disorder benefits are no more restrictive than the most common or frequent (“predominant”) financial requirements that apply to “substantially all” medical/surgical in that same classification covered under the plan.

These requirements apply to dollar limitations as well as quantitative treatment limitations.

Dollar limitations include:

Quantitative treatment limitations include numerical limits on:

Classification of Benefits

Plans must provide parity within each of the following classifications:

No other classifications are permitted.  However the government has indicated that it will not take enforcement action against a plan that divides outpatient benefits into two sub-classifications (1) office visits and (2) all other outpatient items and services for purposes of applying the financial and treatment limitation rules under MHPAEA.

This means that plans can apply the “substantially all” test separately for provider office visit benefits that have copayments and for outpatient benefits that may be subject to other financial requirements, as long as these sub-classifications are applied in the same manner for mental health and substance use disorder treatment as they are for medical/surgical treatment under the plan. This does not permit other distinctions, such as between generalists and specialists.If a plan (or health insurance coverage) provides in-network benefits through multiple tiers of in-network providers (such as an in-network tier of preferred providers with more generous cost sharing to participants than a separate in-network tier of participating providers), the plan may divide its benefits furnished on an in-network basis into sub-classifications that reflect those network tiers, if the tiering is based on reasonable factors and without regard to whether a provider is a mental health or substance use disorder provider or a medical/surgical provider.

Substantially All Test

A type of financial requirement or quantitative treatment limitation is considered to apply to substantially all medical/surgical benefits in a classification of benefits if it applies to at least two-thirds of all medical/surgical benefits in that classification.

Predominant Test

If a type of financial requirement or quantitative treatment limitation applies to at least two-thirds of all medical/surgical benefits in a classification, the level of the financial requirement or quantitative treatment limitation that is considered the predominant level of that type in a classification of benefits is the level that applies to more than one-half of medical/surgical benefits in that classification subject to the financial requirement or quantitative treatment limitation.

If there is no single level that applies to more than one-half of medical/surgical benefits in the classification in question, the plan (or health insurance issuer) may combine levels (beginning with most restrictive level) until the combination of levels applies to more than one-half of medical/surgical benefits subject to the financial requirement or quantitative treatment limitation in the classification.

Parity Determination

Once a plan has determined that it meets parity requirements, it is not obliged to reanalyze the plan each year unless there is a change in plan benefit design, cost-sharing structure, or utilization that would affect a financial requirement or treatment limitation within a classification

Scope of Benefits

The terms “mental health benefits” and “substance use disorder benefits” mean benefits with respect to services for mental health conditions or substance use disorders, respectively, as defined under the terms of the plan and in accordance with applicable Federal and State law.Generally this will mean that a self-insured plan can establish its own definitions (under ERISA), while an insured plan must look to any applicable state laws.  However, a plan’s definition of what constitutes a mental health or substance abuse disorder must be consistent with generally acceptable medical standards; for example, conditions listed in the current version of Diagnostic and Statistical Manual of Mental Disorders (DSM) should not be classified as a medical condition (and thus not subject to parity.)

Non-Quantitative Treatment Limitations (NQTLs)

NQTLs are treatment limitations that are not expressed numerically.  These include features such as:

A plan or issuer may not impose an NQTL with respect to mental health or substance use disorder benefits in any classification unless, under the terms of the plan as written and in operation, any processes, strategies, evidentiary standards, or other factors used

in applying the NQTL to mental health or substance use disorder benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation with respect to medical/surgical benefits in the same classification.

The key to understanding this provision is that it is the “processes, strategies,[and] evidentiary standards” that must be comparable.  If they are, then the NQTL is permissible, even if their application produces disparate results.

Warning Signs

Language contained in the following provisions (absent similar restrictions on medical/surgical (“med/surg”) benefits) can serve as a red flag that a plan or issuer may be imposing an impermissible NQTL. Further review of the processes, strategies, evidentiary standards, or other factors used in applying the NQTL to both Mental Health/Substance Use Disorder (“MH/SUD”) and med/surg benefits will be required to determine parity compliance.

Q1. My health plan document states that it excludes coverage for treatment that is experimental or investigative for both medical/surgical benefits and for MH/SUD benefits. For both medical/surgical benefits and MH/SUD benefits, the plan generally follows current medical evidence and professionally recognized guidelines on the efficacy of treatment. With respect to both medical/surgical benefits and MH/SUD benefits, the plan’s documents state that the plan excludes coverage for treatment as experimental for a given condition when no professionally recognized treatment guidelines define clinically appropriate standards of care for the condition, and fewer than two randomized controlled trials are available to support the treatment’s use with respect to the condition.

No. The plan’s application of the NQTL to MH/SUD benefits is not permissible because, in operation, the plan applies the NQTL more stringently to certain MH/SUD benefits than to medical/surgical benefits.

Q4: My large group health plan or large group insurance coverage provides benefits for prescription drugs to treat both medical/surgical and MH/SUD conditions but contains a general exclusion for items and services to treat a specific mental health condition, including prescription drugs to treat that condition. Is this permissible under MHPAEA?

Yes. Generally, MHPAEA requires that treatment limitations imposed on MH/SUD benefits cannot be more restrictive than treatment limitations that apply to medical/surgical benefits. An exclusion of all benefits for a particular condition or disorder, however, is not a treatment limitation for purposes of the definition of “treatment limitations” as set forth in the MHPAEA regulations. The MHPAEA regulations also provide that if a plan or issuer provides benefits for a mental health condition or substance use disorder, benefits for that condition or disorder must be provided in every classification in which medical/surgical benefits are provided. Because the plan or coverage does not provide any MH/SUD benefits for that specific mental health condition in any classification, this exclusion is permissible under MHPAEA

Q8: My health plan generally covers medically appropriate treatments. The plan covers inpatient, out-of-network treatment outside of a hospital setting for medical/surgical conditions if the prescribing physician obtains prior authorization from the plan, the facility meets the licensing and certification requirements set by the plan, and the treatment is medically appropriate for the individual, based on clinically appropriate standards of care. The plan provides benefits for the treatment of eating disorders but excludes all inpatient, out-of-network treatment outside a hospital setting for eating disorders, including non-hospital residential treatment (which it regards as an inpatient benefit). Is this permissible under MHPAEA?

No. The Departments’ regulations implementing MHPAEA define “mental health benefits” as benefits with respect to items or services for mental health conditions, as defined under the terms of the plan or health insurance coverage and in accordance with applicable Federal and State law.

 

EXAMPLE PROVISIONS

If you see these types of plan or policy provisions,
investigate if these types of limits are also applied to med/surg benefits
and if so, if they are being applied to MH/SUD and med/surg benefits in a
manner that complies with MHPAEA.

Note that these plan/policy terms do not automatically violate the law, but the plan or issuer will need to provide evidence to substantiate compliance. The categories and examples below are not exhaustive and are not a substitute for any regulations or other interpretive guidance issued by the Departments.

I. Preauthorization & Pre-service Notification Requirements

II. Fail-first Protocols

 For any inpatient MH/SUD services, the plan/insurer requires that an individual first complete a partial hospitalization treatment program.

III. Probability of Improvement

 Plan/policy only covers services that result in measurable and substantial improvement in mental health status within 90 days.

IV. Written Treatment Plan Required

V. Other

Treatment of EAPs

Until further guidance is provided, an EAP will be deemed to constitute excepted benefits (and therefore not subject to the MHPAEA) only if the EAP does not provide significant benefits in the nature of medical care or treatment.  For this purpose, employers may use a reasonable, good faith interpretation of whether an EAP provides significant benefits in the nature of medical care or treatment.

Disclosures

Plans must make the criteria for medical necessity determinations for mental health or substance use disorder benefits available to current or potential participants, beneficiaries and contracting providers upon request. In addition, plans must provide the reason for any benefit denial to participants and beneficiaries upon request or as otherwise required. The Departments have developed a model form individuals may use to request information that may affect their MH/SUD benefits and can be found at the end of these DOL FAQs.

Employers who sponsor self-insured health plans, need to make sure that any vendor who administers their mental health and/or substance abuse benefits is also abiding by these regulations.  It is recommended that this be addressed in any service agreement(s) to ensure they are following all applicable regulations.

The following FAQs provide examples of how certain provisions of Federal law may require disclosures relevant to MH/SUD benefits.

Q9: I wish to request information from my ERISA-covered group health plan regarding limitations that may affect my access to MH/SUD benefits. Do the Departments have any materials that may assist me?

Under ERISA, plans are required to provide summary plan descriptions (SPDs) that describe, in terms understandable to the average plan participant, the rights, benefits, and responsibilities of participants and beneficiaries. In addition, plans must provide the reason for any benefit denial to participants and beneficiaries upon request or as otherwise required.

Q11: Are ERISA-covered plans and issuers that utilize provider networks permitted to provide a hyperlink or URL address in enrollment and plan summary materials for a provider directory where information related to network providers, including MH/SUD providers, can be found?

Yes. ERISA-covered plans must provide an SPD that describes provisions related to the use of network providers, and the composition of the provider network, under ERISA section 102 and DOL’s implementing regulations. Such information may be provided as a separate document and, in many circumstances, may be provided electronically (for instance in a hyperlink or URL address).

State Laws

For fully insured plans, the MHPAEA provides that states may impose on insurers additional requirements and consumer remedies relating to coverage of mental health conditions and substance use disorders.

Additional Resources

Mental Health Parity Fact Sheet

Department of Labor Web Site

Mental Health Parity Act of 1996

FAQs for Employees (pdf)

Self Compliance Tool for Part 7 of ERISA: Health Care-Related Provisions — Mental Health Parity begins on page 77

Questions and Answers — Mental Health Parity Provisions in the Compliance Assistance Guide