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Market Update
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U.S. Benefits - Health & Welfare - Mental Health Parity
Printable Version
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New Mental Health Parity Regulations May Require Some Number
Crunching for Employer Health Plans
Federal agencies have issued interim final regulations implementing the 2008 amendments to the Mental Health Parity Act. Those amendments prohibit insurers and self-funded health plans from providing less-generous benefits for mental, nervous, and substance abuse treatments when compared to medical/surgical benefits.
To effectuate true parity in benefits, the regulations will require many health plans offering mental health and/or substance abuse benefits to make a series of calculations to ensure that financial requirements and other limitations that apply to such benefits are no more restrictive than similar conditions and limits on medical/surgical benefits.
The regulations impose a multi-step process for determining parity. Specifically, a plan cannot apply any financial requirement or treatment limitation to mental health and substance abuse benefits that are more restrictive than the predominant financial requirement or treatment limit that applies to substantially all medical/surgical benefits.
This test is applied to each of six classifications of benefits noted below.
- Inpatient, in-network
- Inpatient, out-of-network
- Outpatient, in-network
- Outpatient, out-of-network
- Emergency care
- Prescription drugs
A financial requirement or treatment limitation applies to “substantially all” medical/surgical benefits in a classification if it applies to at least two-thirds of the medical/surgical benefits in the class. If there are different levels of financial requirements or treatment limits in a class, the “predominant” financial requirement or treatment limit is the condition or limit that applies to more than half the medical/surgical benefits (in the classification) that are subject to the same sort of condition or limit.
The regulations require that plan sponsors “spreadsheet” the financial requirements and treatment limits that apply to each of the six classifications of benefits (as applicable) to determine if the “substantially all” and “predominant” tests are satisfied for plan benefits.
The regulations include other requirements that may require plan design changes, such as:
- No "Separate But Equal" Deductible for Mental Health and Substance Abuse Benefits. A separate deductible for
mental health and substance abuse benefits is not allowed, even if the deductible is equivalent to the deductible that applies to
medical/surgical benefits. In other words, plans must have a combined deductible that applies to medical/surgical and mental
health and substance abuse benefits.
- Mental Health Providers are Comparable to Primary Care Physicians. The preamble to the regulations, but not the
text of the literal regulations, prohibits health plans from considering mental health or substance use disorder providers as
"specialists" in determining the plan's treatment or financial limitations. In other words, a mental health or substance use
disorder provider must be considered the equivalent of a primary care physician when determining parity. This appears to be
the case for all mental health and substance use disorder providers, including psychiatrists.
- Procedural Parity Required. The regulations require "nonquantitative treatment limits" for mental health and substance
abuse benefits to be comparable to medical/surgical benefits. The regulations list examples that include medical management
standards, reimbursement rates for providers, and exclusions based on failure to complete a course of treatment. Employee
assistance plans (EAPs) are allowed under the regulations, but an EAP cannot be used as a gatekeeper for an enrollee to access
comprehensive mental health or substance abuse benefits unless the plan has a comparable requirement for medical/surgical
benefits.
The new interim final regulations will apply for plan years beginning on or after July 1, 2010 (e.g., January 1, 2011, for calendar year
plans). Plan sponsors will need to evaluate their current plan design and communicate any changes prior to the regulation's effective
date.
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| Please contact your Lockton Representative
for further information regarding any information
contained in this market update. |
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Mark Holloway
Senior Vice President
Co-Director of Compliance
Kansas City, MO
Tel: 816.960.9567
E-mail: mholloway@lockton.com |
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