The Mental Health Parity and Addiction Equity Act (MHPAEA), passed by Congress in 2008, significantly altered the rules for group health plans (GHPs) providing mental health or substance abuse disorder benefits (the Covered Benefits). The general effective date for the statutory provisions under MHPAEA began with plan years starting on or after Oct. 3, 2009. Earlier this month, the Department of Labor (DOL), the Department of Health and Human Services (HHS) and the Department of the Treasury (Treasury) jointly issued interim final regulations (the Regulations) implementing MHPAEA, effective for Plan Years beginning on or after July 1, 2010 (Jan. 1, 2011 for calendar year plans and special effective dates for bargained plans).
The purpose of MHPAEA is to require parity between the provision of Covered Benefits and medical and surgical benefits offered under GHPs. The MHPAEA does not require GHPs (including group health insurance contracts) to provide mental health or substance abuse disorder coverage, but if Covered Benefits are provided, they must be made available in the same general manner (including financial and quantitative and non-quantitative treatment aspects) as are non-Covered Benefits.
It is clear that the DOL, HHS and Treasury thought carefully about addressing the potential for a myriad of issues to arise under the MHPAEA and the Regulations are complex in their scope and application. Several areas of compliance concerns, however, are addressed specifically under the Regulations. These include, but are not limited to, the following:
- “Group Health Plan” Defined
The Regulations provide that all plans or programs sponsored by an employer that provide medical/surgical care benefits constitute a single GHP, thus eliminating the ability of an employer to offer mental health/substance abuse disorder benefits under a carve-out program separate from a GHP providing medical and surgical benefits. The Regulations require parity between all GHPs sponsored by an employer that offer both Covered Benefits and non-Covered Benefits.
- Quantitative and Non-Quantitative Parity
The statutory provisions of MHPAEA generally define treatment limitations in the context of scope and duration of treatment. These limitations are clarified under the Regulations to include both quantitative limitations (which are capable of expression numerically, such as limits on frequency or duration of treatment) and non-quantitative terms (such as standards for admission to a network and which are not capable of numerical definition). Both types of limitations must be provided on a comparable basis to Covered Benefits and medical and surgical benefits. The Regulations also require such parity with respect to financial requirements, which include deductibles, copayments, coinsurance and out-of-pocket maximums.
The Regulations provide that the limitations applied to Covered Benefits can be no more restrictive than those applied to the predominant (defined as more than one-half) requirements applied to all medical and surgical benefits under a GHP. Additionally, parity must exist between the Covered Benefits and medical and surgical benefits by not applying more restrictive rules to Covered Benefits than those applied to substantially all (defined as two-thirds) medical/surgical benefits measured across various categories of benefit designs and components. The Regulations provide insight as to the manner in which parity will be measured, requiring parity across, for example, the following categories of benefit design or component:
- Emergency Case
- Prescription Drugs
- Benefit Classification
To determine whether benefits qualify as “Covered Benefits,” the Regulations permit use of generally recognized independent standards used in current medical practice. These standards may include state guidelines, the Diagnostic and Statistical Manual of Mental Disorders or other generally accepted standards used by the medical community.
- ERISA Claim Disclosures
The Regulations clarify that MHPAEA’s requirement that rules governing the denial of reimbursement or payment of Covered Benefits must be disclosed in a manner consistent with ERISA’s claims procedures for GHPs.
Plan Sponsors will soon be beginning the process of evaluating and determining GHP coverage and cost for the next year. As this Client Alert points out, the issues and costs associated with implementation and compliance with the MHPAEA may be complex and high.