(Published in the Healthcare Review, July 2010)
Beginning with plan years starting on or after July 1, 2010, many health insurance policies will provide equal financial and treatment benefits for mental illness/substance abuse disorders and physical illness. This new requirement – which stems from the Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”) and related regulations – was designed to end what Health and Human Services Secretary Kathleen Sebelius called “needless and arbitrary limits on care” for mental health and substance use disorders. Though overshadowed by media and political focus on the comprehensive health care reform embodied in the Affordable Care Act signed into law by President Obama in March, the MHPAEA is no small measure and provides promise for those in need of treatment for mental illness and substance use.
The MHPAEA supplements the Mental Health Parity Act of 1996, which required parity only with respect to aggregate lifetime and annual dollar limits and only for mental health benefits, not substance abuse treatment. The impetus for the MHPAEA is aptly summarized by Representative Patrick Kennedy (D-RI), one of the law’s chief sponsors, who said “`a`ccess to mental health services is one of the most important and most neglected civil rights issues facing the Nation. For too long, persons living with mental disorders have suffered discriminatory treatment at all levels of society.” This article provides an overview of the MHPAEA’s statutory approach to eliminating this discrimination and its potential impact on health care payors, providers, and consumers.
If applicable (the law contains limited exemptions and may be overridden by stricter state parity laws), the MHPAEA requires plans to ensure that financial requirements (co-pays, deductibles) and treatment limitations (limits on frequency or number of visits, days of inpatient coverage) applicable to mental health/substance abuse disorders are no more restrictive than the “predominant” requirements or limitations applied to “substantially all” medical/surgical benefits. Consequently, plans must assess their compliance with MHPAEA’s aforementioned “predominant/substantially all” requirement and adjust their coverage and benefit offerings accordingly.
Specifically, first, if a plan provides a mental health or substance use disorder benefit in any of the following six classifications of treatment, it must provide mental health/substance abuse benefits in every classification in which medical/surgical benefits are provided: 1) inpatient, in-network; 2) inpatient, out-of-network; 3) outpatient, in-network; 4) outpatient, out-of-network; 5) emergency care; and 6) prescription drugs. Secondly, within each classification, the plan must determine whether there is a “predominant” financial requirement or treatment limit that applies to “all or substantially all” medical/surgical benefits in that classification. Lastly, the plan may not impose a more restrictive financial requirement or treatment limit on mental health/substance abuse disorder benefits than is predominant among the medical/surgical benefits in the same classification.
To illustrate, if pre-MHPAEA a plan charges a $15 copay per office visit with an internist for a medical problem and a $25 copay per outpatient mental health therapy session with a social worker, post- MHPAEA the plan must charge the same copay whether the visit is with the social worker or the internist. Similarly, post- MHPAEA a plan can no longer allow unlimited days of inpatient treatment for medical/surgical issues, while imposing, for example, a 30 day annual limit on inpatient treatment for a mental illness or substance abuse disorder.
Recognizing that plans also use medical necessity determination procedures (e.g. pre-authorization and utilization review) to limit the duration or scope of mental health and substance abuse treatment they will pay for, the MHPAEA provides a separate parity requirement for these sorts of mechanisms, or what it terms “non-quantitative treatment limitations.” Under this provision of the law plans may only employ these mechanisms with respect to mental health and substance abuse benefits comparably and not more stringently than when used in connection with medical/surgical benefits. Differences are permitted if they are recognized as clinically appropriate.
Given MHPAEA’s recent implementation, employers, plan sponsors, and health insurance issuers should be concerned with compliance. Though the law allows for a good faith period to comply with its provisions, it permits the assessment of civil penalties per day of noncompliance. Legal counsel should be consulted if a timeframe or action plan for compliance has not been carefully considered. Moreover, legal counsel can determine how state parity law may affect the extent to which MHPAEA must be followed.
Business and insurance industry leaders predict their costs of complying with MHPAEA may force an increase in premiums, deductibles and co-pays. In addition to managing potential plan re-designs and reworking their practices relating to non-quantitative treatment limitations, they note that MHPAEA requires plans to provide participants and providers written medical necessity criteria and reasons for benefit denials.
MHPAEA’s supporters anticipate the law will free those in need of mental health and substance abuse treatment from unfair financial burden and barriers to effective care. Nay-sayers counter that plans will compensate by raising the cost of medical/surgical benefits, imposing greater limitations on all types of care, or nixing mental health/substance abuse disorder benefits altogether.
Assuming the MPHAEA has the effect that Rep. Kennedy’s supporters fought for, whether providers of mental health and substance abuse treatment can shoulder heightened demand for services is another issue. Inadequacies in access to mental health and substance use care which are evidenced by localized shortages of inpatient treatment beds and outpatient psychiatrists will pose barriers to treatment notwithstanding whether or to what extent needed care may be covered by health insurance. Removing financial requirements and treatment limitations from these services will conceivably only place more stress on an already stressed system.
In conclusion, changes in health insurance benefits for mental health and substance abuse treatment can be expected. Time will tell whether these changes are for the better or worse, or whether they may have a corresponding effect on medical/surgical benefits. Further, whether the system of delivery of mental health and substance abuse care can meet any increased demand for such services is yet to be seen.
Hannah is a member of the Corporate Department of the McLane Law Firm, one of New England’s premier full-service law firms with more than 90 attorneys in four offices spread throughout Massachusetts and New Hampshire. She can be reached at 603-628-1473 or at Hannah.zaitlin@mclane.com.