Mental Health Parity: DOL issues Clarifying Guidance
While the government agencies (DOL/IRS/CMS) have been busy implementing the health care reform law, a recent set of FAQs reminds us that they have not forgotten about other laws under their jurisdiction, specifically the mental health parity laws.
As background, the Mental Health Parity law, passed in 1996, requires that if mental health coverage is provided in a group health plan, sponsored by an employer employing 50 or more employees, such coverage must be comparable to medical/surgical benefits as to annual and lifetime limits. Three years ago, the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) was passed requiring not only parity in annual and lifetime limits, but also that there be parity in all quantitative limits, such as financial limits (deductibles, co-payments, coinsurance, and out-of-pocket maximums) and treatment limits (frequency of treatments, number of visits, days of coverage, days in a waiting period), as well as non-quantitative limits. Examples of non-quantitative limits include:
- Limitations or exclusion of benefits based on medical necessity or appropriateness, or based upon whether the treatment is experimental or investigative.
- Prescription drug formulary limits.
- Standards for provider admission to participate in a network, including reimbursement rates.
- Plan methods for determining usual, customary, and reasonable charges.
- Requirements to use lower cost therapies in a progression approach, commonly referred to as, “step therapy”.
- Conditioning the availability of a benefit upon completion of a course of treatment. Specifically, a plan cannot require an individual to exhaust employee assistance program (EAP) counseling, i.e., making the EAP a “gatekeeper”, before benefits are available under the plan, unless the same is required for medical/surgical services.
The recently issued FAQs specifically address the non-quantitative limits, underscoring that non-quantitative limits must be comparable, and cannot be imposed more stringently than for medical/surgical benefits. The FAQs give a couple examples, such as pre-authorization, medical management techniques, and evidentiary standards.
The FAQs illustrate that the non-quantitative standards must be implemented uniformly. For example, requiring preauthorization for medical/surgical services and mental health services, but automatically granting a 7-day hospital stay for medical/surgical, and only a one-day stay for mental health services would violate the comparability rule.
Finally, the FAQs address the question of what constitutes comparable financial standards. The law requires that the financial standards for mental health services be comparable to the predominate standard for medical/surgical services. This FAQ affirms that predominate does not necessarily mean ‘exact’.
These FAQs provide important guidance for plans struggling to comply with the MHPAEA; they provide both a good tutorial on the standards of the law itself, as well as some useful examples of practical application.
The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations.
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