Employers that offer mental health/substance use benefits should evaluate the design of their group health plans to ensure that they comply with the requirements of the interim final regulations.
On February 2, 2010, the U.S. Department of Labor, the U.S. Department of Health and Human Services and the U.S. Department of the Treasury jointly issued interim final regulations implementing the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).
The MHPAEA, which expanded the Mental Health Parity Act of 1996 (MHPA), requires parity in the provision of mental health and/or substance use disorder benefits and medical and surgical benefits. Specifically, group health plans must ensure that the financial requirements (such as copayments and deductibles) and treatment limitations (such as a limit on covered office visits) applicable to mental health and/or substance use disorder benefits are no more restrictive than the predominant requirements and limitations applied to substantially all medical and surgical benefits. The interim final regulations clarify that substantially all means at least two-thirds and predominant means more than one-half. While plans are not required to provide coverage for mental health or substance use disorders, plans that offer this coverage must comply with the MHPAEA and its implementing interim final regulations.
Broader Range of Health Plans Subject to Parity Requirements
The MHPAEA left unchanged the rule under the MHPA and prior regulations that the parity requirements would be applied separately to each benefit package maintained by an employer. This created a potential loophole for employers to avoid being subject to the requirements of the MHPAEA by covering mental health and/or substance use disorders under a separate carve-out benefits package. The interim final regulations eliminate this possible loophole by specifying that all medical care benefits constitute a single group health plan, and that the parity requirements are applied to any group health plan that offers both mental health and/or substance use disorder benefits and medical and surgical benefits.
Addition of Non-Quantitative Treatment Limitations
Under the MHPAEA, treatment limitations were defined as limits on the scope and duration of treatment. The interim final regulations elaborate that this includes both quantitative limitations (limitations that can be expressed numerically, such as an annual limit on office visits) and non-quantitative limitations (limitations that cannot be expressed numerically, such as standards for provider admission to the network). The regulations state that any process, standard or other factor used in applying the non-quantitative limitation must be applied similarly to mental health and/or substance use disorder benefits as to medical and surgical benefits. The regulations also provide a non-exhaustive list of what constitutes non-quantitative treatment limitations.
Single Deductible Required
The MHPAEA did not directly address how the parity requirements apply to deductibles, and the statutory language was susceptible to two alternative interpretations (that plans could have separate but equal deductibles for mental health and/or substance use disorder benefits and medical and surgical benefits, or that plans needed to have a single deductible for both types of benefits). The interim final regulations clarify that plans must use a single deductible for both mental health and/or substance use disorder benefits and medical and surgical benefits.
Classification of Benefits Based on Generally Accepted Standards
For purposes of determining whether benefits qualify as mental health and/or substance use disorder benefits, the interim final regulations require plans to use definitions consistent with generally recognized independent standards of current medical practice. These standards may derive from a number of different sources as long as the source is generally accepted in the medical community, such the Diagnostic and Statistical Manual of Mental Disorders or a state guideline.
Parity Requirements Applied Across Categories
The interim final regulations provide guidance on how compliance with the parity requirements will be evaluated. Recognizing that plans differentiate requirements and limitations based on the type of coverage and the parties covered, the regulations state that the parity requirements will not be measured by comparing each mental health and/or substance use disorder benefit to each medical and surgical benefit, but rather, will be measured across categories of each benefit type.
The regulations set forth six classifications of benefits based on these variations: inpatient/in-network, inpatient/out-of-network, outpatient/in-network, outpatient/out-of-network, emergency care and prescription drugs. The parity requirements will be applied to each classification in which mental health and/or substance use disorder benefits are provided.
In addition, within the prescription drug category, the interim final regulations permit plans to place drugs into tiers and apply the requirements within each tier. This approach is contingent upon the employer placing drugs into tiers based on reasonable factors (such as cost, efficacy and generic versus brand name) and without regard to whether the drug is generally prescribed for mental health and/or substance use disorder purposes.
The regulations also distinguish between benefits provided to different coverage categories (single participant, participant plus a spouse, or family), stating that the parity requirements will be applied separately across each type of party covered.
Disclosure Consistent with ERISA Claims Procedures
Under the MHPAEA, plans must disclose the reason for any denial of reimbursement or payment for services with regard to mental health and/or substance use disorder benefits. The interim final regulations clarify that to satisfy this requirement, plans subject to ERISA must make disclosures in a form and manner consistent with the ERISA claims procedures for group health plans (including that these disclosures be provided automatically and free of charge).
Cost Exemption Available for Alternating Plan Years
The MHPAEA retained a MHPA provision under which, if certain conditions are met, plans that incur increased costs above a certain threshold due to the application of the parity requirements may be exempt from the requirements. The interim final regulations explain that because plans must comply with the requirements for one plan year to qualify for the exemption, and the exemption lasts for one year, the exemption may only be claimed for alternating plan years.
What This Means for Your Health Plan
The interim final regulations generally become effective for plan years beginning on or after July 1, 2010 (January 1, 2011, for calendar year plans). Special effective dates apply to collectively bargained plans. The statutory provisions of the MHPAEA became effective for plan years beginning on and after October 3, 2009. However, the regulations state that the Departments will take into account good-faith efforts to comply with a reasonable interpretation of the statutory MHPAEA requirements with respect to a violation that occurs before the effective date of the regulations.
Employers that offer mental health/substance use benefits should evaluate the design of their group health plans to ensure that they comply with the requirements of the interim final regulations. Specifically, an employer will need to evaluate financial requirements, treatment limitations, deductibles and non-quantitative treatment limitations measured across all classifications of benefit options.