Remember new mental health parity requirements
For the last nine or 10 months, we’ve all been trying to figure out the health care reform legislation. Much time, energy, and expense has been spent studying what the legislation means, the details of compliance, how much it’s going to cost, and who is going to pay for it. But we can’t forget about the new mental health parity regulations that for most group health plans take effect January 1, 2011.
History of mental health parity
In 1996, the Mental Health Parity Act (MHPA) was enacted to provide parity between mental health benefits and medical and surgical benefits. The MHPA provides that a group health plan may not impose annual or lifetime dollar limits on mental health benefits that are less favorable than limits imposed on other medical and surgical benefits. The MHPA’s provisions were first effective for plan years beginning on or after January 1, 1998.
Ten years later, in 2008, the Mental Health Parity and Addiction Equity Act (MHPAEA) was enacted. The MHPAEA preserved the MHPA’s protections and added significant new protections relating to substance use disorders, plan financial requirements, and treatment limitations. While the MHPAEA requires parity, it doesn’t require group health plans or their insurers to include mental health and/or substance use benefits in their benefits package. Its requirements apply only to large group health plans that already include such benefits. Further, it applies only to companies employing more than 50 employees. Some of the key changes made by the MHPAEA include the following:
- Regarding annual and lifetime dollar limits, the MHPA parity requirements continue and are extended to substance use disorder benefits. However, if a plan chooses to cover tobacco addiction, limits on treatment for such conditions (such as a dollar cap on smoking- cessation benefits) must meet the MHPAEA’s parity requirements for benefits in the same classification on the medical and surgical benefits side.
- The financial requirements (e.g., deductibles and copayments) that apply to mental health and/or substance use benefits must be no more restrictive than the predominant financial requirements applicable to substantially all medical and surgical benefits.
- The treatment limitations (e.g., number of visits or days of coverage) that apply to mental health and/or substance use benefits must be no more restrictive than the treatment limitations applicable to substantially all medical and surgical benefits.
- Mental health and/or substance use benefits may not be subject to separate cost-sharing requirements or treatment limitations applicable only to those benefits.
- If the plan provides for out-of-network medical and surgical benefits, it must provide for out-of-network mental health and, if applicable, substance use benefits.
- Standards for medical necessity determinations and reasons for denial of benefits relating to mental health and substance use disorders must be disclosed upon request.
For most group health plans and group health insurers, the MHPAEA took effect January 1, 2010. For more information on the Act, visit here.
For most employers, new regulations take effect January 1, 2011
On February 2, 2010, interim final regulations implementing the MHPAEA were released. The regulations apply to most group health plans and group health insurers beginning January 1, 2011. Like the MHPAEA, the regulations do not require group health plans to provide mental health or substance use benefits. However, when an employer provides those benefits, parity is required. Also like the MHPAEA, the regulations apply to group health plans (both fully insured and self-insured plans) covering more than 50 employees.
The regulations are fairly complex. Generally, they define six classifications of benefits:
- inpatient in-network;
- inpatient out-of-network;
- outpatient in-network;
- outpatient out-of-network;
- emergency care; and
- prescription drugs.
If coverage for mental health and substance use disorders is provided in any one classification, it must be provided in each of the six benefits classifications in which medical and surgical coverage is provided. Also, within each benefits classification, the following must be tested for parity:
- financial requirements ? deductibles, copayments, coinsurance, and out-of-pocket maximums;
- quantitative treatment limitations ? limits on the frequency of treatment (e.g., 50 outpatient visits per year), number of visits, days of coverage, days in a waiting period, or other similar limits on the scope or duration of treatment; and
- nonquantitative treatment limitations ? limits not expressed numerically but that otherwise limit the scope or duration of benefits (e.g., medical management standards limiting or excluding benefits based on medical necessity).
The health care reform legislation has eliminated aggregate lifetime limits and is phasing out annual dollar limits for medical and surgical benefits. For that reason, the parity regulations prohibit a group health plan that provides mental health or substance use benefits from imposing an aggregate lifetime or annual dollar limit on mental health and substance use benefits.
Many employers are still trying to understand their obligations under the new health care reform legislation. With that said, you should carefully review the mental health and substance use benefits provided in your group health plan (if any) to ensure compliance with the parity regulations by January 1, 2011. It’s important to make sure your plan’s financial requirements, treatment limitations, and plan documents are in compliance with these complicated rules.