Reminder: Final Mental Health Parity Rules Become Effective July 1
Last November, the Departments of Treasury, Labor and Health and Human Services issued final regulations relating to the federal mental health parity laws (see At Issue, December 2013 for a summary of these rules). Changes made by these rules become effective on July 1, 2014.
As background, the Mental Health Parity Act (MHPA) enacted in 1996 required annual and lifetime dollar limitations for mental health care services under a group health plan sponsored by employers employing 50 or more employees to be comparable to those applicable to medical and surgical benefits. At that time, the law did not require plans to provide mental health coverage, but insured group health plans were obligated to provide such benefits if required by state insurance laws.
Then in 2008, the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) expanded the mental health parity provisions such that mental health services were to be treated in a substantially similar manner to all covered medical and surgical services, including:
- Cost-sharing requirements, such as deductibles, co-payments, coinsurance, and out-of-pocket expenses; and,
- Treatment limitations, such as frequency of treatments, number of visits, days of coverage, or similar plan limits.
In addition, the MHPAEA expanded the definition of mental health services to include substance use disorders, and required parity in all payment and treatment terms.
Classification of Benefits. The mental health parity rules allow six classifications for comparing benefits: inpatient services (both in- and out-of-network), outpatient services (both in- and out-of-network), emergency care and prescription drugs. Because parity must exist both in regard to financial limits and treatment limits, plans cannot impose separate deductibles, co-pays, co-insurance or out-of-pocket maximums to accumulate separately for medical/surgical benefits and mental health/substance abuse disorder benefits. For purposes of applying these rules to outpatient services, plans may establish two sub-classifications; one for office visits (such as physician visits), and one for all other outpatient items and services (such as outpatient surgery, facility charges for day treatment centers, laboratory charges, or other medical items).
Further, if a plan 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 can divide its benefits furnished on an in-network basis into sub-classifications that reflect those network tiers. Such tiering must be 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.
Coordination with the Affordable Care Act
- Annual and lifetime limits. The Affordable Care Act (ACA) requires plans to cover a certain level of benefit standards, known as “essential health benefits” (EHB) for which no lifetime or annual limit can be imposed. The final regulations and related FAQ affirm that to the extent a health plan includes coverage for EHBs, these mental health-related benefits cannot be subject to annual and lifetime limits.
- Preventive Health Services. ACA requires individual and non-grandfathered group health plans to provide certain coverage for preventive services without cost-sharing, including alcohol misuse screening and counseling, depression counseling and tobacco-use screening. The final regulations affirm that if a plan covers certain mental health or substance abuse services in order to comply with the ACA preventive care mandate, this, in and of itself, will not cause a plan to be subject to the mental health parity laws.
Non-quantitative Treatment Limitations - Exceptions for Clinically Appropriate Standards of Care. The mental health parity rules not only apply to quantitative limits, such as financial and treatment limits, but also to non-quantitative treatment limits (NQTL). The final rules remove an exception to the NQTL that permitted some variance of the limitations based on clinically appropriate standards of care. While plans are not required to use the same NQTLs for both medical/surgical and mental health and substance use disorder benefits, the processes or standards of care must still be comparable and applied uniformly.
Affected Plans. Generally, these mental health parity rules apply to:
- Group health plans sponsored by employers employing 50 more employees;
- Grandfathered and non-grandfathered individual policies; and
- Small non-grandfathered insured plans subject to ACA’s essential health benefit provisions.
The mental health parity rules do not apply to:
- Retiree-only plans;
- Small self-funded plans covering fewer than 50 employees;
- Non-Federal governmental plans covering 100 or fewer employees;
- Self-funded non-Federal governmental employers that opt-out of the requirements of MHPAEA; or
- Large group health plans that are exempt based on increased cost. A plan can exempt itself from the mental health parity laws if it can show that, for six consecutive months of compliance with the mandate, the cost of the plan has increased by at least 2%, or at least one percent in any subsequent plan year, due to compliance with the parity mandate.