The Departments of Labor, Health and Human Services (HHS) and the Treasury (Departments) have jointly issued a final rule increasing parity between mental health/substance use disorder benefits and medical/surgical benefits in group and individual health plans.
The final rule implements the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA), and ensures that health plan features like copays, deductibles and visits limits are generally not more restrictive for mental health/substance abuse disorders benefits than they are for medical/surgical benefits.
The rule incorporates clarifications issued by the Departments through Frequently Asked Questions since the issuance of the interim final regulations on February 2, 2010, and provides new clarification on issues such as nonquantitative treatment limitations (NQTL) and the increased cost exemption.
The rule generally applies to group health plans and health insurance issuers offering group health insurance coverage for plan years beginning on or after July 1, 2014. Until the applicability date of the final rules, plans and issuers subject to MHPAEA must continue to comply with the interim final rules.
Consumer protections. The rule includes specific additional consumer protections, such as:
- Ensuring that parity applies to intermediate levels of care received in residential treatment or intensive outpatient settings;
- Clarifying the scope of the transparency required by health plans, including the disclosure rights of plan participants, to ensure compliance with the law;
- Clarifying that parity applies to all plan standards, including geographic limits, facility-type limits and network adequacy; and
- Eliminating an exception to the existing parity rule that was determined to be confusing, unnecessary and open to abuse.
Classification of benefits. The final regulations retain the six classifications of benefits enumerated in the interim final regulations, specify the permissible sub-classifications, and provide that the parity analysis be performed within each classification and sub-classification. The six classifications of benefits are:
- inpatient, in-network;
- inpatient, out-of-network;
- outpatient, in-network;
- outpatient, out-of-network;
- emergency care; and
- prescription drugs.
A plan or issuer may divide its benefits furnished on an outpatient basis into two sub-classifications: (1) office visits and (2) all other outpatient items and services (such as outpatient surgery, facility charges for day treatment centers, laboratory charges, or other medical items). Sub-classifications other than these, such as separate sub-classifications for generalists and specialists, are not permitted.
Increased cost exemption. The final regulations set forth standards and procedures for claiming an increased cost exemption under the MHPAEA. The test for an exemption must be based on the estimated increase in actual costs incurred by the plan or issuer that is directly attributable to expansion of coverage due to the parity requirements and not otherwise due to occurring trends in utilization and prices, a random change in claims experience that is unlikely to persist, or seasonal variation commonly experienced in claims submission and payment patterns.
Before a group health plan may claim the increased cost exemption, it must furnish a notice of the plan’s exemption from the parity requirements to participants and beneficiaries covered under the plan, the Departments, and appropriate state agencies.
The increased cost exemption provision is effective for plan or policy years beginning on or after July 1, 2014, which for calendar year plans means the provisions apply on January 1, 2015. Accordingly, plans and issuers must use the formula specified in the final regulations to determine whether they qualify for the increased cost exemption in plan or policy years beginning on or after July 1, 2014. For claiming the increased cost exemption in plan or policy years beginning before July 1, 2014, plans and issuers should follow the interim enforcement safe harbor outlined in previously issued FAQs (FAQs about Affordable Care Act Implementation (Part V) and Mental Health Parity Implementation, question 11).
Affordable Care Act. The Affordable Care Act (ACA) builds on the MHPAEA and requires coverage of mental health and substance use disorder services as one of ten essential health benefits (EHB) categories. Under the EHB rule, individual and small group health plans are required to comply with the parity regulations.
In conjunction with the final regulations, the EBSA issued Frequently Asked Questions (FAQ) about the ACA and mental health parity implementation. The FAQs address, among other issues, plans that are exempt from the MHPAEA. MHPAEA applies to most employment-based group health coverage, but there are a few exceptions. MHPAEA contains an exemption for a group health plan of a small employer (50 or fewer employees). Nevertheless, under HHS final rules governing the ACA requirement to provide EHBs, non-grandfathered health insurance coverage in the individual and small group markets must provide all categories of EHBs, including mental health and substance use disorder benefits. The final EHB rules require that such benefits be provided in compliance with the requirements of the MHPAEA rules.
Medical necessity disclosure. The FAQs also explain that the MHPAEA provides that the criteria for medical necessity determinations with respect to mental health or substance use disorder benefits must be made available by the plan administrator or the health insurance issuer to any current or potential participant, beneficiary, or contracting provider upon request. In addition, under MHPAEA, the reason for any denial of reimbursement or payment for services with respect to mental health or substance use disorder benefits must be made available to participants and beneficiaries.
In addition, under the internal appeals and external review requirements added by the ACA, non-grandfathered group health plans and health insurance issuers must provide to an individual (or a provider or other individual acting as a patient's authorized representative), upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant to the individual's claim for benefits consistent with the Department of Labor claims procedure regulation. This includes:
- documents of a comparable nature with information on medical necessity criteria for both medical/surgical benefits and mental health and substance use disorder benefits;
- the processes, strategies, evidentiary standards, and other factors used to apply a NQTL with respect to medical/surgical benefits and mental health or substance use disorder benefits under the plan; and
- any new or additional evidence considered, relied upon, or generated by the plan or issuer (or at the direction of the plan or issuer) in connection with a claim. If the plan or issuer is issuing an adverse benefit determination on review based on a new or additional rationale, the claimant must be provided, free of charge, with the rationale.
Additionally, under ERISA, documents with information on medical necessity criteria for both medical/surgical and mental health or substance use disorder benefits, as well as the processes, strategies, evidentiary standards, and other factors used to apply a NQTL, are instruments under which the plan is established or operated, and copies must be furnished to a participant within 30 days of request.