Final Regulations Issued for Mental Health Parity Act (Benefit Minute)

Posted in: Benefit Minute, Employee Benefits

Mental health graphic on PSA Insurance and Financial Services' website

The Departments of Labor, Treasury, and Health and Human Services have issued final regulations implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA). MHPAEA requires parity in mental health/substance use benefits as compared to medical/surgical benefits. Interim final regulations were issued in 2010. The recent final regulations provide clarification on several issues and also discuss interaction with PPACA.

Nonquantitative Treatment Limitations
Nonquantitative treatment limitations are restrictions on the scope or duration of treatment that are not express numerically. The interim final regulations included an exception to the parity requirements, if clinically appropriate. Due to concerns about confusion and possible abuse, the specific exception is not in the final regulations. The final regulations continue to give plans flexibility to take into account clinically appropriate standards of care. Processes and strategies used in applying the nonquantitative treatment limitations to mental health/substance use disorder benefits must be comparable to and no more stringent than for medical/surgical benefits.

The final regulations also include additional examples of nonquantitative treatment limitations: network tier design and restrictions based on geographic location, facility type, provider specialty and other criteria that limit the scope or duration of benefits. However, the list is illustrative and all nonquantitative treatment limitations imposed on mental health/substance use disorder benefits are subject to the parity requirements.

Classifications and Sub-classifications
The parity analysis must be determined on a classification by classification basis and the six classifications are: inpatient in-network; inpatient out-of-network; outpatient in-network; outpatient out-of-network; emergency; and prescription drugs. The final regulations clarify that outpatient benefits can be further divided into two sub-classifications of office visits (such as physician visits) and all other outpatient items and services (such as outpatient surgery, facility charges for day treatment centers, laboratory charges and other medical items). This sub-classification is important to the quantitative parity analysis because outpatient office visits are often subject to a copayment while other outpatient services are often subject to coinsurance.

Sub-classifications may also be used for tiered networks when a plan provides in-network benefits through multiple tiers of in-network providers, as long as tiers are based on reasonable factors and without regard to whether the services provided are mental health/substance use disorder or medical/surgical.

The first regulations clarify how MHPAEA affects coverage for intermediate services (intensive outpatient treatment, residential treatment, and partial hospitalization). Since there is no separate classification for intermediate servics, plans must assign intermediate mental health/substance use disorder benefits to the existing six classifications in the same way intermediate medical/surgical benefits are assigned to these classifications.

Cost-Based ExemptionPlans are permitted to claim an exemption to MHPAEA if it results in a cost increase of 2% in the first year of application and 1% thereafter. The final regulations include a formula that may be used to determine the cost impact of MHPAEA and require an actuarial certification. The exemption only applies for one plan year. Notice of the exemption must be provided to plan participants and to applicable federal agencies. A summary of the information on which the exemption was based must also be made available to participants.

Interaction with PPACA
Small employers (50 or fewer employees) are exempt from MHPAEA; however, PPACA requires small group fully-insured plans to offer all of the essential health benefits, including medical/surgical and mental health/substance use disorder benefits. Therefore, it is PPACA’s essential health benefit rules that require these plans to comply with MHPAEA.

PPACA does not require large group fully-insured plans or self-insured plans to cover the essential health benefits, nor does MHPAEA require group health plans to provide mental health/substance use disorder benefits (it only requires parity to the extent such benefits are covered). However, PPACA does prohibit lifetime and annual dollar limits on any essential  health benefits that are offered. Therefore, although MHPAEA does not prohibit lifetime or annual dollar limits on either mental health/substance use disorder benefits or on medical/surgical benefits, PPACA generally does.

Preventive services under PPACA include alcohol misuse screening and counseling, depression screening, and tobacco use screening. The final regulations clarify that non-grandfathered group health plans covering the preventive services under PPACA are not required to comply with MHPAEA if the plan does not otherwise offer mental health/substance use disorder benefits.

Effective Date
The final regulations apply for plan years beginning on or after July 1, 2014.

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