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Paul Wellstone, Pete Domenici Parity Act Prohibits Discrimination

Friday, January 29, 2010

The Departments of Health and Human Services, Labor and the Treasury today jointly issued new rules providing parity for consumers enrolled in group health plans who need treatment for mental health or substance use disorders.

“The rules we are issuing today will, for the first time, help assure that those diagnosed with these debilitating and sometimes life-threatening disorders will not suffer needless or arbitrary limits on their care,” said Secretary Sebelius. “I applaud the long-standing and bipartisan effort that made these important new protections possible.” “Today’s rules will bring needed relief to families faced with meeting the cost of obtaining mental health and substance abuse services,” said U.S. Secretary of Labor Hilda L. Solis. “The benefits will give these Americans access to greatly needed medical treatment, which will better allow them to participate fully in society. That’s not just sound policy, it’s the right thing to do.”

“Workers covered by group health plans who need mental health and substance abuse care deserve fair treatment,” said Deputy Treasury Secretary Neal Wolin. “These rules expand on existing protections to ensure that people don’t face unnecessary barriers to the treatment they need.”

The new rules prohibit group health insurance plans—typically offered by employers—from restricting access to care by limiting benefits and requiring higher patient costs than those that apply to general medical or surgical benefits. The rules implement the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).

MHPAEA greatly expands on an earlier law, the Mental Health Parity Act of 1996 which required parity only in aggregate lifetime and annual dollar limits between the categories of benefits and did not extend to substance use disorder benefits.

The new law requires that any group health plan that includes mental health and substance use disorder benefits along with standard medical and surgical coverage must treat them equally in terms of out-of-pocket costs, benefit limits and practices such as prior authorization and utilization review. These practices must be based on the same level of scientific evidence used by the insurer for medical and surgical benefits. For example, a plan may not apply separate deductibles for treatment related to mental health or substance use disorders and medical or surgical benefits—they must be calculated as one limit. MHPAEA applies to employers with 50 or more workers whose group health plan chooses to offer mental health or substance use disorder benefits. The new rules are effective for plan years beginning on or after July 1, 2010.

The Wellstone-Domenici Act is named for two dominant figures in the quest for equal treatment of benefits. The late Senator Paul Wellstone (D-MN), who was a vocal advocate for parity throughout his Senate career, sponsored the ultimately successful full parity act. He was joined by former Senator Pete Domenici (R-NM) who first introduced legislation to require parity in 1992. Champions of the legislation also included the bipartisan team of Representative Patrick Kennedy (D-RI) and former Representative Jim Ramstad (R-MN).

The issue of parity dates back over 40 years to President John F. Kennedy, and was also supported by President Clinton and the late Senator Edward Kennedy.

The interim final rules released today were developed based on the departments’ review of more than 400 public comments on how the parity rule should be written. Comments on the interim final rules are still being solicited. Sections where further comments are being specifically sought include so-called “non quantitative” treatment limits such as those that pertain to the scope and duration of covered benefits, how covered drugs are determined (formularies), and the coverage of step-therapies. Comments are also being specifically requested on the regulation’s section on “scope of benefits” or continuum of care. Information above are courtesy of the US Department of Health and Human Services: http://www.hhs.gov/ Note: All HHS press releases, fact sheets and other press materials are available at http://www.hhs.gov/news. Last revised: October 04, 2010

More details on the Mental Health Parity and Addiction Equity Act found below:

MENTAL HEALTH PARITY AND ADDICTION EQUITY ACT

Introduction: The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) is a federal law that provides participants who already have benefits under mental health and substance use disorder (MH/SUD) coverage parity with benefits limitations under their medical/surgical coverage. MHPAEA may apply to two different types of coverage:

1) Large group self-funded group health plans (CMS has jurisdiction over self-funded public sector (non-federal governmental) plans, while the Department of Labor (866-444-3272) has jurisdiction over private sector self-funded group health plans.);

2) Large group fully insured group health plans.

MHPAEA and Health Coverage: Contact your state’s insurance department to find out about whether additional protections apply to your coverage if you are in a fully insured group health plan or have individual market (non-employment based) health coverage.

Medicare and Medicaid are not issuers of health insurance. They are public health plans through which individuals obtain health coverage. Medicaid Managed Care plans, however, are subject to the MHPAEA statute. Contact your specific Medicare or Medicaid contractor to discuss your level of benefits.

Employment-related group health plans that provide benefits through insurance are known as fully insured group health plans. Employment-related group health plans that pay for coverage directly, without purchasing health insurance from an issuer, are called self-funded group health plans. Contact your plan administrator to find out if your group coverage is fully insured or self-funded.

MHPAEA may prevent your large group health plan from imposing financial requirements and treatment limitations on MH/SUD benefits that are more restrictive than financial requirements and treatment limitations on medical/surgical benefits. MHPAEA also may prevent your large group health plan from placing annual or lifetime dollar limits on MH/SUD benefits that are lower – less favorable – than annual or lifetime dollar limits for medical/surgical benefits offered under the plan.

MHPAEA does NOT apply to small group health plans or health insurance coverage in the individual (non-employment based) market, but you should check to see if your state law requires mental health parity in such other cases. (Visit www.ncsl.org, on the right hand side of the page enter “mental health parity” then select “State Laws Mandating or Regulating Mental Health Benefits” in order to view State specific information.) MHPAEA applies to most group health plans with more than 50 workers.

Summary of MHPAEA Protections: The Mental Health Parity Act of 1996 (MHPA) states that a group health plan may not impose annual or lifetime dollar limits on mental health benefits that are less favorable than any such limits imposed on medical surgical benefits.

MHPAEA preserves the MHPA protections, and adds significant new protections. Although the law requires “parity”, or equivalence, with regard to annual and lifetime dollar limits, financial requirements and treatment limitations, MHPAEA does NOT require large group health plans and their health insurance issuers to include MH/SUD benefits in their benefits package. The law’s requirements apply only to large group health plans and their health insurance issuers that already include MH/SUD benefits in their benefit packages.

Key changes made by MHPAEA, which is generally effective for plan years beginning after October 3, 2009, include the following:

  • If a group health plan includes medical/surgical benefits and mental health benefits, the financial requirements (e.g., deductibles and co-payments) and treatment limitations (e.g., number of visits or days of coverage) that apply to mental health benefits must be no more restrictive than the predominant financial requirements or treatment limitations that apply to substantially all medical/surgical benefits;
  • If a group health plan includes medical/surgical benefits and substance use disorder benefits, the financial requirements and treatment limitations that apply to substance use disorder benefits must be no more restrictive than the predominant financial requirements or treatment limitations that apply to substantially all medical/surgical benefits;
  • MH/SUD benefits may not be subject to any separate cost sharing requirements or treatment limitations that only apply to such benefits;
  • If a group health plan includes medical/surgical benefits and mental health benefits, and the plan provides for out of network medical/surgical benefits, it must provide for out of network mental health benefits;
  • If a group health plan includes medical/surgical benefits and substance use disorder benefits, and the plan provides for out of network medical/surgical benefits, it must provide for out of network substance use disorder benefits;
  • Standards for medical necessity determinations and reasons for any denial of benefits relating to MH/SUD must be disclosed upon request;
  • The MHPA parity requirements under existing law (regarding annual and lifetime dollar limits) continue and are extended to substance use disorder benefits.

Exceptions: There are three exceptions to the MHPAEA requirements:

  • MHPAEA requirements do not apply to small employers who have between 2 and 50 employees;
  • Large group health plan sponsors that meet the requirements stated in the MHPAEA download below (Section 512(a)(2) Cost Exemption) and demonstrate that compliance with MHPAEA increases their claims by at least two percent in the first year (one percent in subsequent years) may request exemption from the MHPAEA based on their cost exemption. Subsequently, the plan sponsors may notify the plan beneficiaries that MHPAEA does not apply to their coverage; and
  • A nonfederal governmental employer that provides self-funded group health plan coverage to its employees (coverage that is not provided through an insurer) may elect to exempt its plan (opt-out) from the requirements of MHPAEA by following the Procedures & Requirements posted on the Self-Funded Nonfederal Governmental Plans webpage (see Related Links Inside CMS), then issuing a notice of opt-out to enrollees at the time of enrollment and on an annual basis. Thereafter, the employer must also file the opt-out notification with CMS.

A regulation implementing MHPAEA was published in the Federal Register on February 2, 2010. The regulation, which is an interim final rule, is effective April 5, 2010 and applies to plan years beginning on or after July 1, 2010. There is a comment period which closes on May 3, 2010. A link to the full text of the regulation is below.

The regulation applies to group health plans of employers with more than 50 employees. It does not apply to group health plans of smaller employers nor does it apply to individual health insurance plans. It, like the statute, does not require group health plans to provide mental health or substance use disorder benefits. But if they do, the financial requirements and treatment limitations that apply to MH/SUD benefits cannot be more restrictive than the predominant restrictions and requirements that apply to substantially all the medical/surgical benefits.

The provisions of the regulation include the following:

1. The parity requirements must be applied separately to six classifications of benefits: inpatient in-network; outpatient in-network; inpatient out-of-network; outpatient out-of-network; emergency; and prescription drug. In other words, the substantially all/predominant test must be applied separately to restrictions and requirements in each classification. The regulation includes examples that explain how the substantially all/predominant test is applied in each classification. Additionally, although the regulation does not require plans to cover MH/SUD benefits, if they do, they must provide MH/SUD benefits in all classifications in which medical/surgical benefits are provided.

2. The regulation requires that all cumulative financial requirements, including deductibles and out-of-pocket limits, must integrate both medical/surgical and MH/SUD benefits.

3. The regulation distinguishes between quantitative treatment limitations and non-quantitative treatment limitations. Quantitative treatment limitations are numerical such as visit limits and day limits. Nonquantitative treatment limitations include medical management, step therapy and pre-authorization. There is an illustrative list of nonquantitative treatment limitations in the regulation. A group health plan cannot impose a nonquantitative treatment limitation with respect to MH/SUD benefits in any classification unless, under the terms of the plan as written or in operation, any processes, strategies, evidentiary standard, or other factors used in applying the nonquantitative treatment limitations to MH/SUD benefits to MH/SUD in a classification are comparable to and applied no more stringently than what is applied to medical/surgical benefits except to the extent that recognized clinically appropriate standards of care may permit a difference.