On October 3, 2008, President George W. Bush signed into law H.R. 1424, which was known as the Emergency Economic Stabilization Act of 2008. The law was more commonly referred to by the system it created, the Troubled Asset Relief Program or TARP, which was used to stabilize the economy during the financial market collapse. However, what may have gone unnoticed to most of the public was H.R. 1424’s original title and purpose, which was “The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).” The passage of MHPAEA in 2008 was the culmination of over a decade’s worth of effort by mental health professional associations, consumer groups and other advocates to finally ensure that there would be comprehensive parity for mental health and substance use disorder treatment.
While there had been prior mental health parity legislation passed in 1996, the new parity law was much broader in scope and coverage than the earlier law. MHPAEA requires that any group health plan that covers more than 50 employees and offers mental health and/or substance use disorders coverage must provide that coverage with no greater financial requirements (i.e., co-pays, deductibles, annual or lifetime dollar limits) or treatment limitations (i.e., number of visits) than the predominant requirements that it applies to substantially all medical/surgical benefits. Previous federal legislation in 1996 provided limited parity on lifetime and annual dollar limits and did not extend to substance use disorders. The law is estimated to provide parity of coverage for 113 million people, including 82 million enrolled in self-insured plans. MHPAEA became effective for plan years beginning on or after October 3, 2009, meaning that for calendar year plans, the law took effect January 1, 2010.
While enactment of MHPAEA was a big step forward, the law does have some ambiguities left to be clarified. In order to better define certain legislative terms and provide more guidance, the law directed the three federal agencies in charge of implementation – Departments of Health and Human Services (HHS), Labor (DoL) and the Treasury – to issue regulations one year after enactment. Unfortunately, it took a little longer than expected, but on January 29, 2010, the Departments issued an Interim Final Rule (IFR) implementing MHPAEA. The IFR was developed with formal input from advocacy groups, physician and provider organizations, insurers and employers all of whom submitted extensive comments.
The IFR provides further details about how the law should be implemented and what insurers and employers must do to comply with the law. According to the rule, if a plan covers a mental health/substance use disorder, it must provide benefits in each classification for which any medical or surgical benefits are offered. The six benefit classifications defined in the rule are: inpatient, in-network; outpatient, in-network; emergency care; inpatient, out-of-network; outpatient, out-of-network; and prescription drugs. Further, the plan must determine what the predominant limitation is on the medical/surgical benefit and then set a comparable limit on the mental health benefit. For the purposes of determining the predominant limitations, the IFR states that plans must compare limitations within a given benefit classification and may not compare mental health/substance use disorders to specialist limitations, which typically have higher co-pays and other out-of-pocket costs for consumers.
MHPAEA required parity in both financial requirements and treatment limitations. Some of the most common financial requirements include copayments, coinsurance, and out-of-pocket maximums, which plans must be at parity with comparable limits on the medical/surgical benefit. The regulations clarified that plans must maintain a single combined deductible for MH/SUD and medical/surgical benefits. Plans are not permitted to have separate deductibles for treatment related to mental health or substance use disorders and medical or surgical benefits, even if they are equal.
With respect to treatment limitations, the regulations state that there is a distinction between quantitative and non-quantitative limitations, but that both are covered by the law. Quantitative limitations are limitation which can be expressed numerically, such as an annual 20 outpatient visit limit. In addition to the requirements for out-of-pocket costs and benefit limits, the rules require parity in the areas of prior authorization and utilization review. According to Departments issuing the rule, “these practices must be based on the same level of scientific evidence used by the insurer for medical and surgical benefits.”
Non-quantitative limitations are those which cannot be expressed numerically, but which otherwise limits the scope and duration of benefits for treatment. Examples of these limitations include: certain medical management standards; formulary design for prescription medication; standards for provider participation in network, including reimbursement rates; methods for determining usual, customary and reasonable (UCR) rates; fail-first or step-therapy protocols; or exclusions based on failure to complete a course of treatment. The Departments also stated that they are seeking more input from the public on how these non-quantitative treatment limitations are currently used and what the limits are on the medical/surgical side.
While the IFR covered a number of topics from the law which needed clarification, there were still areas left open. For example, the Departments stated that they are seeking comments on the “scope of services” which should be covered under the law. There have also been questions raised about how the law and the rules apply to Medicaid managed plans. The Departments have stated that MHPAEA covers these plans, but that the IFR does not. Advocacy groups are currently looking for more guidance in this area and hope to have official word soon. Finally, there are concerns about enforcement, since cases arising out of violations of the rules will be extremely fact intensive and will require a great deal of effort from the Departments overseeing implementation.
Overall, MHPAEA was a watershed achievement for patients with mental illness and those that care for them, but it was not the end of the advancements in the field. With the recent healthcare reform legislation, mental health parity was an important part of the debate. The Patient Protection and Affordable Care Act and accompanying reconciliation bill included provisions that specifically preserved the advances of MHPAEA. The legislation also required that mental health and substance use disorder coverage be included as a part of the minimum benefit package in any insurance plan offered in the state exchanges and that those benefits be at parity with medical/surgical coverage. This shows that parity for mental health and substance use disorder coverage will continue to be a part of health care improvements and, while there is still work to be done, this ensures mental health is a part of the conversation to come.