On February 2, 2010, the Centers for Medicare & Medicaid Services (CMS), in conjunction with the Internal Revenue Service (IRS) and the Employee Benefits Security Administration of the Department of Labor (DOL), (collectively referred to as the Departments), released interim final rules[1] implementing the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). [2]
The interim final regulations go into effect on April 5, 2010 and replace regulations implementing previous law. Health plans and group health insurance plans generally must begin complying with the interim final regulations for health plan years that begin on or after July 1, 2010. The effective date may be later for some collectively-bargained plans. Comments on the interim final regulations may be submitted to CMS, the agency designated to accept them, and must be received no later than May 3, 2010.
What Is MHPAEA?
MHPAEA amends the Mental Health Parity Act of 1996, which requires parity in dollar and treatment limits for mental health and substance use disorder benefits and medical/surgical benefits. MHPAEA provides that a group health plan that offers both medical/surgical benefits and mental health or substance use disorder benefits may not require more restrictive financial or treatment limitations for mental health or substance use disorder benefits than for medical/surgical benefits. MHPAEA defines financial requirements to include deductibles, co-payments, coinsurance, out-of-pocket expenses, and annual limits. Further, MHPAEA defines a treatment limitation to include frequency of treatment, number of visits, days of coverage, and "other similar limits on the scope of duration of treatment." One of the biggest changes made by MHPAEA is to expand the parity requirements to include protections for substance use disorder benefits.
Parity Classifications
MHPAEA requires that plans that offer both medical/surgical benefits and mental health and/or substance use disorder benefits provide parity between both types of benefits with respect to financial requirements and treatment requirements. According to the regulations, a plan may design the classification terms in its plan document, so that the meaning of the terms may differ among plans, but each plan must apply its definitions uniformly to mental health/substance use disorder benefits and medical/surgical benefits. Therefore, a plan cannot apply a financial requirement or a treatment limit to mental health or substance use disorder benefits that is more restrictive than the requirements or limits imposed on medical/surgical benefits. Under the regulations, parity is imposed for each benefit classification (inpatient/outpatient, in-network/out-of-network, emergency or prescription), as well as each type of limit or requirement (ex., number of visits,). Cost-sharing amounts, for example, for an inpatient in-network mental health/substance use disorder treatment must be no more restrictive than cost-sharing for an inpatient in-network medical/surgical treatment. The Departments expect that the largest benefit from MHPAEA will be from applying parity requirements to visit limitations. [3]
The regulations establish standards for measuring plan benefits based on the dollar amount of all plan payments for medical/surgical benefits in a particular classification that are expected to be paid for that plan year. In making a parity determination about a financial or quantitative treatment requirement, the regulations require a determination of whether the requirement applies to substantially all medical/surgical benefits in a classification, such as inpatient in-network services. The substantially all test is met if the requirement applies to at least two-thirds of the benefits in a classification. If the requirement does not apply to substantially all of the medical/surgical benefits that are covered, it cannot be applied to mental health/substance use disorder treatment benefits. Additionally, for a requirement or limit to apply to mental health/substance use disorder benefits, it must be the predominant requirement or limit applied to medical/surgical benefits in that classification. A predominant limitation or requirement applies to more than one-half of the benefits in that classification.
The preamble to the regulations indicates that a health plan may not apply cumulative financial requirements such as deductibles or quantitative treatment limitations to mental health /substance use disorder benefits in a classification that accumulates separately from medical/surgical benefits in the same classification. The Departments rejected, as being inconsistent with MHPAEA, comments they received in support of allowing, for example, separate mental health/substance use disorder hospital deductibles from the hospital deductibles for medical/surgical benefits. The Departments also rejected requests to create separate classifications for primary care physicians and specialists when determining the predominant financial requirement that applies to substantially all medical/surgical benefits. Again, because most plans charge higher co-payments for specialists, the Departments found that such a distinction would "undercut the protections that the statute was intended to provide" [4] and allow for higher cost-sharing for specialists who treat mental health and/or substance use disorders.
The regulations further require that, if a plan provides any mental health/substance use disorder benefits, they must be provided in each classification for which any medical/surgical benefit is provided. The regulations do not require, however, that plans expand the range of the mental health/substance use disorder benefits covered under the plan. If, for example, there is no medical/surgical service covered in an outpatient, out-of-network setting, there is no requirement to provide mental health/substance use disorder benefits in that setting.
The regulations do not, however, address the "scope of services" that may be required. The Departments received comments requesting that the regulations specify that a plan is not required to cover treatment in any particular treatment setting for mental health/substance use disorder benefits if treatment in that setting is not covered for medical/benefits benefits, as well as comments requesting a requirement for coverage of all services which are appropriate for mental health/substance abuse treatment. The Departments have requested further comments regarding whether MHPAEA addresses scope of services, and if so, to what extent.
Non-Quantitative Treatment Limits
The interim final regulations prohibit non-quantitative treatment limitations on mental health/substance us disorder benefits that are "more stringent" than those applied to surgical/medical benefits within that classification. There is allowance for variations when it is recognized that clinically appropriate standards of care permit a difference, such as limiting benefits based on medical necessity, or on treatment(s) deemed experimental under a given policy. The regulations aim to ensure that comparable evidentiary standards or processes are applied in the same manner to medical/surgical benefits and to mental health/substance use disorder benefits. The Departments acknowledge that certain differences, such as in the types of illnesses or injuries, whether they are chronic or acute, their complexity, may result in different reviews. However, they state that parity requirements would be violated by a claims process that uses a discretion standard to approve medical/surgical benefits using clinically appropriate standards of care while using the discretion standard to routinely deny mental health substance use disorder benefits that meet their clinically appropriate standards of care. The regulations provide examples of permitted standards in an attempt to clarify when such limitations are appropriate. The Departments have requested comments regarding whether additional examples would he helpful.
Further, the regulations state that plans are not restricted from using drug formularies with tiered co-payment requirements. However, the tier placement of a mental health/substance use disorder medication must be based on "reasonable" factors (cost, efficacy, generic vs. brand, or mail-order vs. in pharmacy). There must, however, be parity of the tiers; the cost-sharing for one tier must be the same for both mental health/substance use disorder medications as for medical/surgical medications.
The regulations also note that it is not acceptable to require members of an employer plan to exhaust the benefits of an employee assistance program for mental health/substance use disorder counseling before obtaining mental health/substance use disorder benefits under the plan, unless there is a similar gate-keeping prerequisite for medical/surgical benefits. In addition, to deter employer plans from creating a completely separate mental health/substance use disorder plan as a way to avoid parity requirements, the regulations now require parity to each combination of medical/surgical and mental health/substance abuse plan which the employee can receive simultaneously.
Disclosure
MHPAEA requires that each plan provide to beneficiaries the criteria for medical necessity determinations with respect to mental health/substance use disorder benefits. Further, the Act requires plans to provide the reason for denial of reimbursement/payment for mental health/substance abuse benefits. The regulations specify that in order for plans subject to the Employee Retirement Income Security Act (ERISA) [5] to satisfy this condition, the notice must be made in a manner consistent with the rules for group health plans in the ERISA claims procedure regulations. The Departments are seeking additional comments on any clarifications which may be helpful regarding the disclosure requirements.
Exemptions
MHPAEA does provide for an exemption for small employer plans (50 employees or less), and a cost exemption every other year if providing parity increases the costs of the plan. The Departments are currently seeking comments about the specifics for the cost exemption.
Conclusion
Mental health parity has been a concern for advocates for years. MHPAEA is a positive step which we applaud. Even so, advocates should be mindful of MHPAEA to assure that parity is implemented appropriately. In addition, advocates may wish to send regulatory comments to CMS, the designated agency. Comments are due May 3, 2010.