The Mental Health Parity Act (MHPA) requires that group health plans offer equal lifetime and annual payment limits for mental and physical illnesses, if those plans provide any mental health benefits.
The MHPA prohibits health plan discrimination for coverage of treatment of mental illnesses. Although the MHPA does not require mental health coverage, it does require that if mental health coverage is provided, annual and lifetime maximum dollar limits be equal to those for medical or surgical benefits. If a group health plan has no dollar limits to plan payments for medical or surgical services, limits are not permitted for mental health services.
The MHPA requires that annual or lifetime dollar limits on mental health benefits be no lower than any such dollar limits for medical and or surgical benefits offered by a group health plan or health insurance issuer offering coverage in connection with a group health plan.
The MHPA was substantially expanded in 2008 by the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) as part of the Emergency Economic Stabilization Act. The MHPAEA not only made the MHPA permanent effective January 1, 2009, it also requires group health plans to cover substance use disorders, and to mandate that plans place mental health/substance use disorder benefits on a more even par with medical/surgical benefits. The law became effective for plan years beginning October 3, 2009. Interim final regulations were issued February 2, 2010 and become effective for plan years beginning July 1, 2010.
The overall thrust of the regulations is to ameliorate prior practices, which allowed group health plans to set different co-payments and stricter limits on mental health benefits than they did for medical/surgical benefits. The requirements require enhanced parity in the following areas.
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Deductibles, co-insurance, co-pays, and other out-of-pocket expenses must be the same for medical/surgical benefits and mental health/substance use disorder benefits. All group health plans must be combined, with one annual deductible applied to medical/surgical benefits and mental health/substance use disorder benefits.
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Treatment limitations (e.g., limits on the frequency of treatment, the number of visits, days of coverage, or other limits on the scope or duration of treatment) that apply to mental health/substance use disorder benefits generally can’t be more restrictive than medical/surgical benefits. Combining group health plans applies here, as well.
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If medical/surgical benefits are provided in any of the following categories of coverage, mental health/substance use disorder benefits must be provided in the same category of coverage: inpatient, in-network; inpatient, out-of-network; outpatient, in-network; outpatient, out-of-network; emergency care; and prescription drugs.
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Mental health/substance use disorder benefits can be subject to the following limitations only if medical/surgical benefits are subject to the same limitations: medical management standards; formulary design for prescription drugs; standards for admitting providers into a network; methods for determining usual, customary, and reasonable charges; refusals to pay for higher-cost therapies until it’s shown that a lower-cost therapy isn’t effective; and exclusions based on failing to complete a course of treatment.
The regulations also impose two new notice requirements on group health plans. Upon an employee or beneficiary’s request, plan administrators must provide:
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the criteria the plan uses to make medical necessity determinations related to mental health/substance use disorder benefits; and
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the reasons the plan denied reimbursement or payment for services related to mental health/substance use disorder benefits.
The regulations clarify that these disclosures must comport with the general disclosure rules of the Employee Retirement Income Security Act (ERISA) — primarily that disclosures are provided automatically and free of charge.
Coverage
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Employers with 50 or more workers whose group health plan chooses to offer mental health or substance use disorder benefits.
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Large businesses which self insure under ERISA.
Exemptions
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Employers with fewer than 50 employees are exempt.
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If application of the MHPA results in a cost increase of at least 1% (2% for the first plan year), the parity requirements won’t apply to the group health plan during the following year. Certification by a member of the American Academy of Actuaries is required to qualify for this exemption.
Key Definitions
Parity requires that mental health benefits be provided under the same terms and conditions that apply to treatment of physical illnesses.
Aggregate lifetime limits represents a dollar limitation on the total amount that may be paid with respect to benefits under a group health plan or health insurance coverage. If the plan or coverage does not include an annual limit on substantially all medical and surgical benefits, the plan or coverage may not impose any annual limit on mental health benefits. If the plan or coverage includes an annual limit on substantially all medical and surgical benefits, the plan or coverage may not include any annual limit on mental health benefits that is less than the applicable annual limit for medical and surgical benefits. If the plan doesn’t fall into either of those categories, the Secretary of Health and Human Services will dictate how such plans must comply.
Medical or surgical benefits applies only to medical or surgical benefits and does not include mental health benefits.
Mental health benefits means benefits with respect to mental health services, including benefits for substance abuse related disorders.
The Act does not require coverage of long-term, chronic, or convalescent care. Care for chronic conditions, such as mental retardation, may still be excluded.
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