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Understanding the Law

The Parity Act, formerly known as the Mental Health Parity and Addiction Equality Act of 2008 was enacted in 2009 and is an extension of the Mental Health Parity Law of 1996. The 1996 law extended coverage by certain health insurance companies to include mental health issues, along with the usual medical issues. The new Parity Act extends coverage even further to include substance use issues.

Summary of the final rule issued on November 8, 2013.

Note:

The provisions of the Statute (MHPAEA) are applicable to group health plans and group health insurance issuers beginning on/after October 3, 2009.

The Interim Final Rules [IFR], issued in February 2010, are applicable beginning on/after July 1, 2010.

Since MHPAEA (the statute) provisions are self-implementing, plans with contract years beginning after October 3, 2009 but before July 1, 2010 were not expected to be in full compliance with the requirements of the IFR until the beginning of their new contract year. 

The Departments have said they will take into account good-faith efforts by group health plans and group health insurance issuers to comply with a reasonable interpretation of the statutory requirements with respect to a violation that occurs before July 1, 2010.

The requirements of the IFR (Regulations) are effective April 5, 2010 and generally become applicable to plans and issuers for plan years beginning on or after July 1, 2010, when they must be in full compliance.

Note that no date has been established for issuance of the Final Rules.

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FAQs about MHPAEA Compliance prepared by the Parity Implementation Coalition.

  • Identifies and summarizes some of the most common health plan MHPAEA noncompliance issues. 
  • Based on real life situations where health plans have refused coverage or have been noncompliant with MHPAEA during 2010.

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What the law [MHPAEA] requires

The law 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 life-time dollar limits) or treatment limitations (i.e., number of visits) than the predominant requirements the plan applies to substantially all medical / surgical benefits.  Note, however, that the law does not require employers to cover mental health or substance use treatments if they are not already offered. 

Health plan implementation

The Parity Act* became effective on October 3, 2009, and for most calendar-year plans began January 1, 2010.  Nevertheless, federal regulations that explain how parity is to be implemented had not been published by the time group health plans were required to have their new benefits in place.  Without federal guidance plans had to interpret what it means, under the law, to provide mental health and substance use disorder benefits that are no more restrictive than those applied to substantially all medical and surgical benefits they offer.

The Interim Final Rules (IFR) were issued February 2010 and generally apply to group health plans and group health insurance issuers for plan years beginning on or after July 1, 2010.
 

Federal Guidance and Regulations

The secretaries of Labor (DOL) , Health and Human Services (HHS), and the Treasury share joint responsibility for providing guidance about the requirements of the Act to consumers and providers, as well as to state agencies and insurance commissioners. They also share joint responsibility for enforcing compliance with the Act and issuing regulations that determine how the act is to be administered.

Department of Labor Fact Sheet on the Mental Health Parity and Addiction Equity Act (MHPAEA).

Department of Labor FAQs about the Act.  Currently posted: safe harbor for plans and issuers.

Center for Medicare and Medicaid Services (CMS/HHS) guidance on the Act, which includes links to additional CMS resources on parity.

Final Comments to the Interim Final Rules [Regulations]:

Note: Additional comments submitted on specific issues with the IFR are available through a search on the DOL site

 

 

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Summary of The The Wellstone-Domenici Mental Health Parity and Addiction Equity Act of 2008

 

The Wellstone-Domenici Parity Act, which became law on October 3, 2008, and went into effect for most calendar-year plans on January 1, 2010, is really an extension of the Mental Health Parity Act of 1996, which eliminated discriminatory lifetime and annual dollar limits for employers who offered mental health benefits.  While there is still no requirement that a mental health or substance use benefit be provided, when these benefits are offered as part of a group health plan they must be offered with no greater financial requirements or treatment limitations than those applied to substantially all of the medical/surgical benefits that are also included in the plan.  Unlike the 1996 law, the new law also applies parity to health plans’ out-of-network benefits.

Parity Requirements

For all group health plans, including governmental plans, coverage for mental health or substance use disorders can have no greater financial requirements (i.e., deductibles, copays, out-of-pocket expenses, annual or lifetime dollar limits) or treatment limitations (i.e., number of visits, days of coverage) than the predominant requirements applied to substantially all medical/surgical benefits.

And if the plan has out-of-network coverage for medical and surgical benefits, it must also have out-of-network coverage for its mental health and substance abuse disorder benefits.

 Exemptions

  • Small Employers: The new law only applies to health plans that cover more than fifty employees.
  • Cost Exemption: An exemption can be obtained by larger plans if they can show that providing mental health benefits equal to medical/surgical benefits increases their costs by more than 2% the first year of the law, and 1% for any year following.  The cost exemption is only granted for one year on the basis of the previous year’s expenses.  Following the year the exemption was granted for, the plan would have to resume providing equal benefits if they wanted to continue to provide a mental health benefit.
  • Self-Insured State and Local Government Employee Plans: These plans may opt out of the Parity Act requirements.

 

Benefit Management

Plans are permitted to manage benefits based on their terms and conditions and “nothing in the Act may be construed as affecting the terms and conditions of the plan or coverage related to the benefits under the plan or coverage.”

 Medical Necessity

Plans are required to make their medical necessity requirements for mental health and substance use treatment available upon request.  Reasons for any payment denials must be made available as well.

 Preemption of Less Stringent State Laws

If state or local laws require more complete coverage for mental health and substance use disorders than the Wellstone-Domenici Parity Act does, then the state or local laws will not be preempted by the federal law.  In states that have weaker parity laws (or none at all), the federal law will prevail. The same standards used to determine preemption for  HIPAA (the Health Insurance Portability and Accountability Act of 1996) apply to the new parity law.

 Government Accountability Office Analysis

The Government Accountability Office (GAO) is required to conduct an audit that will provide an analysis of the impact of the Parity Act on patterns and trends in coverage and any exclusions of specific mental health and substance use disorders.  A report is to be presented to Congress in 2013 with the results of this audit, and another is required five years later.

 Federal Guidance and Regulations

  • The secretaries of Labor , Health and Human Services (HHS), and the Treasury share joint responsibility for providing guidance about the requirements of the Act to consumers and providers, as well as to state agencies and insurance commissioners. They also share joint responsibility for enforcing compliance with the Act and issuing regulations that determine how the act is to be administered. 
  • Starting in 2012 and every two years thereafter, the Labor Secretary must submit a report to Congress on group health plans’ compliance with the Parity Act.

 

This summary was prepared by the APA’s Office of Healthcare Systems & Financing.

To download a pdf version of the above Summary, click here.

 

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