Departments Release Final Rules for Mental Health Parity
On November 8, 2013, the Departments of Treasury, Labor, and Health and Human Services announced the publication of the final rules under the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). The final rules include requirements to ensure parity between mental health or substance use disorder benefits and medical/surgical benefits in group health plans and group and individual health insurance coverage. The final rules are effective for plan and policy years beginning on and after July 1, 2014, which will impact calendar year plan or policies starting January 1, 2015.
The final rules provide that parity must be applied between mental health or substance use disorder benefits and medical/surgical benefits on a classification by classification basis. The six applicable classifications are inpatient in-network, inpatient out-of-network, outpatient in-network, outpatient out-of-network, emergency care, and prescription drugs. The final rules stipulate that no financial requirement or quantitative treatment limitation on mental health or substance use disorder benefits in any classification may be more restrictive than the predominant financial or quantitative treatment limitation that applies to substantially all medical/surgical benefits in the same classification. Further, plans and issuers cannot apply separate cumulative financial requirements and cumulative quantitative treatment limitations to mental health or substance use disorder benefits and medical/surgical benefits in the same classification.
For clarification, “financial requirements” include copays, coinsurance, and deductibles, while “quantitative treatment limitations” encompass numerical limits on the scope or duration of treatment, such as frequency of treatment, number of visits, days of coverage, or days in a waiting period. For parity purposes, “predominant” means more than one-half of medical/surgical benefits in the classification are subject to the financial requirement or quantitative treatment limitation in the applicable classification; “substantially all” is a two-thirds numerical standard. Using these parameters, the Departments established a mathematical test to determine the most restrictive financial requirement or quantitative treatment limitation which can be applied to mental health or substance use disorders within a classification.
The final rules address several issues regarding the classification of benefits. For purposes of applying financial requirements and quantitative treatment limitations, plans and issuers are allowed to divide benefits provided on an outpatient basis into two sub-classifications: office visits and all other outpatient items and services. However, no financial requirement or quantitative treatment limitation on mental health or substance use disorder benefits in any sub-classification may be more restrictive than the predominant requirements or limitations on medical/surgical benefits in the same sub-classification. Plans and issuers may also divide benefits into sub-classifications based on network tiers, if tiering is based on reasonable factors not related to whether the provider of benefits is a mental health or substance use disorder or medical/surgical practitioner. The classification and sub-classification structure is intended to encompass all benefits and mental health or substance use disorder benefits or medical/surgical benefits cannot be categorized outside of the classifications to escape parity analysis. Further, both types of benefits must be assigned to classifications in a consistent manner.
The final rules also discuss nonquantitative treatment limitations (NQTLs), which are non-numerical limits on the scope or duration of treatment, such as medical management techniques including prior authorization. Plans and issuers cannot apply NQTLs for mental health or substance use disorder benefits unless comparable NQTLs attach to medical/surgical benefits in the same classification. The regulations do not require plans and issuers to use the same NQTL for mental health or substance use disorder benefits and medical/surgical benefits, and further state that disparate results alone do not determine a lack of compliance in applying NQTLs. In addition, plan or coverage restrictions based on geographic location, facility type, provider specialty, and other limits on the scope and durations of benefits must comply with the NQTL parity standard.
The final rules provide that criteria for medical necessity determinations and the reasons for denial or reimbursement of mental health or substance use disorder benefits must be made available in certain circumstances. Compliance with these disclosure requirements does not, however, indicate compliance with other applicable state and federal laws.
Applicability and Exemptions/Exclusions
As indicated above, the MHPAEA applies to employment-related group health plans and health insurance coverage offered in connection with a group health plan. The Affordable Care Act extended the MHPAEA to make it applicable to the individual health insurance market. Thus, for plan or policy years beginning on or after January 1, 2014, the same requirements for group health plans will apply to health insurance coverage offered by a health insurance issuer in the individual market.
The final rules provide for various exemptions. The Departments of Labor and Treasury will exempt group health plans and group health insurance coverage of employers with 50 or fewer employers from the MHPAEA. The HHS regulations, which apply to non-Federal governmental plans, exempt group health plans and group health insurance coverage of employers with 100 or fewer employees. Importantly, however, all insured, non-grandfathered, small group plans must cover essential health benefits (EHB), regardless of the small employer exemption. EHB covers mental health and substance use disorder benefits, and the EHB regulations provide that those benefits must be provided in compliance with the MHPAEA requirements.
The MHPAEA also includes an increased cost exemption. This applies to plans or issuers that comply with parity requirements for one full plan year, and have an increased cost of at least two percent in the first year the MHPAEA applies or a one percent increase in subsequent years. Plans or issuers experiencing increased costs may apply for exemption for the following plan or policy year, and the exemption lasts one year. The estimated cost increase must be tied to actual costs directly attributable to expanded coverage, and before claiming the exemption, the plan or issuer must provide notice to beneficiaries, the Departments, and state agencies. Beneficiaries are permitted to access the information that served as the basis for the exemption.
Retiree-only plans are exempt from the MHPAEA requirement. Other benefits, including Employee Assistance Program benefits, if the program does not provide significant medical care or treatment benefits, are likewise not subject to the MHPAEA requirements. Sponsors of self-funded, non-federal governmental plans may continue to opt out of the MHPAEA requirements, but must follow specific procedures including notification to CMS. The final rules do not apply to Medicaid managed care organizations, alternative benefit plans, or the children’s health insurance program, although the MHPAEA requirements are incorporated by reference into certain statutory provisions that apply to such plans.
Most states have the authority to enforce the MHPAEA. In states that lack authority or fail to act, CMS will directly enforce the MHPAEA or will work with state departments of insurance to do so. Liability for violations of the MHPAEA rest with group health plans and health insurance issuers, so employers and issuers who contract with an entity to provide or administer mental health or substance use disorder benefits must remember that they are still subject to the obligations set forth under the MHPAEA.
The final rules do not require plans to offer mental health or substance use disorder benefits (although other federal or state laws may stipulate such requirements). The MHPAEA simply requires parity between mental health or substance use disorder benefits and similarly situated medical/surgical benefits. While plans and issuers are not required to conduct the parity analysis each year, this evaluation should occur when changes in plan benefit design, cost-sharing structure, or utilization would affect financial requirements or treatment limitations in a classification. Plans and issuers should be prepared when the regulations to go into effect for plan and policy years beginning on and after July 1, 2014.