Both the House (H.R. 3962) and the Senate (H.R. 3590) version of the now-stalled health reform bills use the existing provisions of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 to define how mental health plans must provide benefits.
Employers and plan sponsors now have extensive rules to follow in that part of health reform. Detailed guidance for determining parity between mental health benefits and health care benefits, in particular for financial requirements and treatment limitations, is included in interim final rules published in the Feb. 2, 2010, Federal Register
The rules, which apply to group health plans and group health insurance issuers for plan years beginning on or after July 1, 2010, go into great detail about the design and implementation of mental health benefits, and all plan sponsors should start preparing now for compliance. Calendar year benefit plans have until the beginning of 2011 to implement these rules.
The regulations amend the meanings of medical/surgical benefits and mental health benefits and add a definition for substance use disorder benefits. Medical/surgical benefits are benefits for medical or surgical services, as defined under the terms of the plan or health insurance coverage, but do not include mental health or substance use disorder benefits. Mental health benefits and substance use disorder benefits are benefits with respect to services for mental health conditions and substance use disorders, as defined under the terms of the plan and in accordance with applicable federal and state law.
These regulations also provide that plan terms defining whether the benefits are mental health or substance use disorder benefits must be consistent with generally recognized independent standards of current medical practice. This requirement is included to ensure that a plan does not misclassify a benefit in order to avoid complying with the parity requirements.
General requirements
The core of the regulations explain the general parity requirement, which prohibits a plan (or health insurance coverage) from applying any financial requirement or treatment limitation to mental health or substance use disorder benefits in any classification that is more restrictive than the “predominant” financial requirement or treatment limitation applied to “substantially all” medical/surgical benefits in the same classification.
The general parity requirement applies separately for each type of financial requirement or treatment limitation (that is, for example, copayments are compared to copayments, and deductibles to deductibles.
The parity requirements for financial requirements and treatment limitations are applied on a classification-by-classification basis. There are six exclusive classifications used for purposes of satisfying the parity requirements:
- inpatient, in-network;
- inpatient, out-of-network;
- outpatient, in-network;
- outpatient, out-of-network;
- emergency care; and
- prescription drugs.
If a plan provides any benefits for a mental health condition or substance use disorder, benefits must be provided in each classification for which any medical/surgical benefits are provided. This is because any treatment limitations applied to mental health or substance use disorder benefits may be no more restrictive than the predominant treatment limitations applied to substantially all medical/surgical benefits.
The statute describes treatment limitation as including limits on the frequency of treatment, number of visits, days of coverage, or other similar limits on the scope or duration of treatment, but it is not limited to such types of limits.
The regulations make a distinction between quantitative treatment limitations (such as day limits, visit limits, frequency of treatment limits) and non-quantitative treatment limitations (such as medical management, formulary design, step therapy).
For example, if a plan provides benefits for a mental health condition in one or more classifications but excludes benefits for that condition in a classification (such as outpatient, in-network) in which it provides medical/surgical benefits, the exclusion is a treatment limitation and prohibited under the rules. It is a limit, at a minimum, on the type of setting or context in which treatment is offered.
Measuring Benefits
The regulations establish standards for measuring plan benefits. The portion of plan payments subject to a financial requirement or quantitative treatment limitation is based on the dollar amount of all plan payments for medical/surgical benefits in the classification expected to be paid under the plan for the plan year. Any reasonable method may be used to determine the dollar amount expected to be paid under the plan for medical/surgical benefits subject to a financial requirement or quantitative treatment limitation.
The first step in applying the general parity requirement is to determine whether a financial requirement or quantitative treatment limitation applies to “substantially all” medical/surgical benefits in a classification. A financial requirement or quantitative treatment limitation applies to substantially all medical/surgical benefits in a classification if it applies to at least two-thirds of the benefits in that classification.
If a financial requirement or quantitative treatment limitation does not apply to at least two-thirds of the medical surgical benefits, that type of requirement or limitation cannot be applied to mental health or substance use disorder benefits
The statute provides that a financial requirement or treatment limitation is “predominant” if it is the most common or frequent of a type of limit or requirement. Under the 2010 regulations, the predominant level is one that applies to more than one-half of medical/surgical benefits subject to the financial requirement or quantitative treatment limitation in that classification.
Accumulating Deductibles
The statute does not specifically address how to deal with accumulating deductibles for medical and mental health benefits. According to the regulations, there are two opposing views on this issue:
- A plan can have deductibles that accumulate separately for medical/surgical benefits on the one hand, and mental health or substance use disorder benefits on the other, as long as the level of the two deductibles is the same (separately accumulating deductibles).
- E expenses for both mental health or substance use disorder benefits and medical/surgical benefits must accumulate to satisfy a single combined deductible before the plan provides either medical/surgical benefits or mental health or substance use disorder benefits (combined deductible).
According to the regulations, prohibiting separately accumulating financial restrictions and quantitative treatment limitations is more consistent with the policy goals of mental health parity, and thus a plan may not apply cumulative financial requirements or cumulative quantitative treatment limitations to mental health or substance use disorder benefits that accumulate separately from cumulative financial requirements or quantitative treatment limitations established for medical/surgical benefits.
Reporting Requirements
The statute includes two new disclosure provisions for group health plans, which the regulations adopt without substantial change. First, the criteria for medical necessity determinations with respect to mental health or substance use disorder benefits must be made available to any current or potential participant, beneficiary, or contracting provider upon request. Comments are requested on what additional clarifications might be helpful to facilitate compliance with this disclosure requirement for medical necessity criteria.
The statute also provides that the reason for any claims denial must be made available, upon request to the participant or beneficiary. The regulations clarify that, in order for plans subject to ERISA (and health insurance coverage offered in connection with such plans) to satisfy this requirement, disclosures must be made in a form and manner consistent with the rules for group health plans in the ERISA claims procedure regulations, which provide (among other things) that such disclosures must be provided automatically and free of charge.
In the case of non-Federal governmental and church plans (which are not subject to ERISA), the regulations provide that compliance with the form and manner of the ERISA claims procedure regulations for group health plans satisfies this disclosure requirement. Comments also are requested regarding any additional clarifications that would be helpful to facilitate compliance with this disclosure requirement.
Comments, which are due on or before May 3, 2010, may be submitted to the. Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Any comment will be shared with all three Departments. Commenters are asked not submit duplicates.
Spencer’s Benefits Reports, a publication of Wolters Kluwer law and Business, will publish a comprehensive analysis of the new regulations in the near future.
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