Health Law Advocates, Inc.
One Federal Street
Boston, MA 02110

Ph: 617-338-5241
Fax: 617-338-5242

HLA in the News

Press Releases

HLA's Laura Goodman Article Featured in Massachusetts Lawyers Journal

Final Parity Rule Strengthens Protections for Mental Health and Addiction Benefits

By: Laura Goodman, Esq.

*Published in The Massachusetts Bar Association’s Massachusetts Lawyers Journal (March 2014) Volume 21, Number 7

On November 8, 2013, mental health stakeholders across the nation applauded the release of a “Final Rule” implementing the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). The long-awaited regulations arrived more than five years after the MHPAEA was signed into law. Although interim regulations were issued in 2010, the Final Rule offers much needed clarification and more definitive guidance on a complex area of health care law.

Background on MHPAEA

The MHPAEA is a federal law that requires many health benefit plans to cover mental health and substance use disorder (MH/SUD) services to the same extent the plans cover medical and surgical services. For example, health plans cannot apply greater financial requirements (e.g., co-payments) or impose more restrictive non-financial treatment limits (e.g., prior authorization policies) to behavioral health care. The MHPAEA is not a mandated benefit law in that it does not require a health plan to offer mental health or substance use disorder benefits. However, if a health plan offers these benefits, it must do so in compliance with the MHPAEA.

Health plans subject to MHPAEA requirements include large group employer-sponsored health plans (both fully insured and self-funded), Medicaid plans administered by a Managed Care Organization (MCO), and large non-federal government employee plans that have not “opted out” of the law. The Patient Protection and Affordable Care Act (ACA) extends federal parity protections to even more health plans: as of January 1, 2014, all individual health plans and most small group plans must comply with the MHPAEA as a result of the ACA’s “essential health benefits” requirement.

Health plans have some time to come into full compliance with the MHPAEA’s final regulations; new provisions in the Final Rule do not take effect until plan years beginning on or after July 1, 2014. Because most health plans operate on a calendar year basis, they will have until January 1, 2015 to become fully compliant.

Final Rule Highlights

While the MHPAEA provides significant consumer protections for health plan members requiring mental health or substance use disorder treatment, the lack of final regulations led to uncertainty surrounding application of the law. State and federal agencies charged with enforcing the MHPAEA were unsure how to effectively implement the law’s requirements, resulting in relatively weak enforcement efforts. The final regulations provide more clarity and give more clout to the agencies, which will ultimately improve access to needed treatment of mental health and substance use disorders.                     

The key provisions of the final regulations include:  

 

  • Clarification that parity requirements apply to the full “ scope of services” offered by a health plan, including  “intermediate” services such as residential treatment, partial hospitalization and intensive outpatient programs;
  • Prohibition of discriminatory limitations on coverage based on provider geographic location, facility type, or specialty;
  • A requirement that insurers disclose more comprehensive information about how they make coverage decisions; and
  • Clarification that states have primary enforcement authority when it comes to parity.

 

 

Parity across a broader scope of services             

            Prior to the Final Rule, a major unresolved issue was whether the MHPAEA’s requirements apply to the full “scope of services” available to treat mental health and substance use disorders. While the MHPAEA and its 2010 interim regulations discussed inpatient and outpatient benefits, they were silent on “intermediate” services such as residential treatment, partial hospitalization, and intensive outpatient programs. Significantly, the Final Rule clarifies that intermediate MH/SUD services are subject to federal parity requirements. While health plans do not have to offer benefits for any particular intermediate MH/SUD service, a plan must cover any intermediate MH/SUD services that are comparable  to intermediate services covered for medical/surgical conditions.

 

Non-Quantitative Treatment Limitations

            The MHPAEA and its interim regulations prohibited plans from imposing disparate financial requirements (e.g., copayments) for MH/SUD treatment, and barred plans from covering fewer office visits or hospital days for such care. The interim rule also interpreted the law to prohibit “non-quantitative treatment limitations” (NQTLs), which cannot be measured in numbers or dollar amounts. Two examples of NQTLs are prior authorization procedures and “fail first” policies, where patients must first try and fail at a lower level of care (e.g., outpatient therapy) before a higher level of care (e.g., residential treatment) will be approved. Under the law as interpreted in the interim rule, a health plan may not impose any NQTL on mental health or substance use disorder benefits unless a comparable NQTL is imposed on medical/surgical benefits.

            The interim regulations included a partial list of NQTL practices and policies covered by the MHPAEA. The list includes, among other examples, medical necessity guidelines, prescription drug formularies, and standards used to develop networks of health care providers. The Final Rule adds two new examples of NQTLs: 1) the design of provider network “tiers” and 2) coverage limits based on geographic location, facility type, provider specialty and/or other criteria that limit the scope or duration of coverage.

            The Final Rule affirms several important provisions of the interim regulations, including the understanding that the list of NQTLs is illustrative, not exhaustive. The Final Rule also discusses provider reimbursement rates as a form of NQTL and explains that any factors a plan uses in setting provider reimbursement rates (e.g., geographic market, supply and demand, training and licensure of providers) must not be used more stringently for MH/SUD services than for medical/surgical services.

            The requirement that NQTLs be applied comparably across MH/SUD benefits and medical/surgical benefits does not bar all variation in the application of NQTLs. The Final Rule recognizes that health plans may take into account “clinically appropriate standards of care” in establishing medical coverage policies; however, the rule eliminates clinical appropriateness as an express exemption from compliance with the parity law.

 

Increased health plan transparency and disclosure    

            The Final Rule requires increased transparency and disclosure about how health plans make decisions on what they cover. According to the rule, health plans must disclose to members and providers the medical necessity criteria applied to a particular MH/SUD service or treatment, as well as the reasons for any denial of coverage. Health plans must meet the requirements of the MHPAEA Final Rule in addition to any disclosure requirements under other state or federal laws, such as the Employee Retirement Income Security Act (ERISA) and the ACA.  For example, ERISA requires large group health plans to provide consumers with copies of the “instruments” under which the plan operates. The MHPAEA Final Rule defines “instruments” to include medical necessity criteria and policies establishing NQTLs for both medical/surgical and MH/SUD benefits. For plans not subject to ERISA, the ACA similarly affords consumers the right to receive copies of documents relevant to a benefits claim. Access to more complete



Pub. L. No. 110-343, Div. C §§ 511-512, 122 Stat. 3881 (codified in scattered sections of 26, 29, and 42 U.S.C.).

78 Fed. Reg. 68,239 (codified at 26 C.F.R. pt. 54; 29 C.F.R. pt. 2590; 45 C.F.R. pts. 146, 147).

Pub. L. No. 111-148, 124 Stat. 119.

Recent News