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The Mental Health Parity and Addiction Equity Act (MHP) is one of several federal health care reform laws that are creating a significant and immediate impact on employers. The new legislation prohibits group health plans that provide mental health and/or substance use disorder benefits from applying ”
Regulations issued by the federal government
on February 2, 2010, interpret and provide additional guidance on MHP and may result in changes to your health plans. The guidance issued, considered as “interim final rules,” suggests that MHP may result in additional regulations and legislative direction still to come. We will continue to provide you updates as additional information is available. financial requirements” or “treatment limits” that are more restrictive than the “predominant” financial requirement or treatment limit that applies to “substantially all” medical/surgical benefits. We are working to ensure the health plans we offer fully comply with the provisions contained in MHP.
Mental Health Parity Basics
Whom does MHP apply to?
MHP applies to all employer groups with more than 50 total employees. This includes all fully insured and self-funded employer plans, governmental plans, union plans and church plans. Self-funded governmental plans may opt out and should contact their legal counsel if they are interested in investigating this further.
When does MHP take effect?
The new regulations apply to group plan years beginning on or after July 1, 2010. As you may remember from our earlier communications of the statute, we do not track a group’s plan year. Accordingly, we will use the group’s renewal date as the effective date for a group unless we are told otherwise. Employers who renew between November 2009 and June 2010 comply with the regulations based on the original interpretation of the law but may need to make additional changes at their next renewal (or plan year).
What is required for compliance?
MHP specifically requires the following to be in parity between medical and mental health and/or substance abuse disorder services: deductibles, copayments, coinsurance, out-of-pocket expenses and limits on frequency of treatment, number of visits and number of days of coverage.
Key Changes
Benefit Design and Parity Testing
To ensure financial parity between mental health and/or substance abuse disorder, and medical and surgical benefits, we are currently evaluating plan designs using prescribed formulas. Plans are evaluated under a “substantially all” and “predominant” three-step evaluation to determine the availability and level of cost sharing (types of cost sharing include copays, coinsurance, or deductibles).
Step 1
: Benefits are classified into one of six benefit categories: inpatient, in network; inpatient out of network; outpatient in network; outpatient, out of network; emergency care and prescription drugs.
Step 2:
Within each benefit category as specified in Step 1, a two-thirds (“substantially all”) rule is applied for each type of cost share feature employed:
A cost share feature can be applied to mental health and/or substance abuse disorder services
if it applies to at least two-thirds of all medical benefits within that benefit category.
A cost share feature cannot be applied to mental health and/or substance abuse disorder services
if it does not apply to at least two-thirds of all medical benefits. : The evaluation criteria for the tiering of prescription drug benefits differs and is based on reasonableness factors including cost, efficacy, generic versus brand name, and mail order versus pharmacy pick-up. Our current pharmacy practices comply with the new regulations.
Step 3
Following evaluation of our standard plans using the above methodology we can offer the following guidance:
All HSA/HRA plans comply and will not require plan changes.
Non-HSA/HRA plans will likely be modified, and will include features such as 100% coverage of outpatient mental health and/or substance abuse disorder services.
The outpatient benefit category will be impacted most by the rules.
Non-standard plans will be evaluated during the renewal process. Please contact your broker or sales representative for additional information.
: If cost sharing can be applied, the cost sharing amount is determined using the 50% (“predominate”) rule. The cost share is the amount that applies to more than half of the benefits in that category.
Administration of mental health and/or substance abuse disorder benefits through a third-party vendor
Definition of Mental Health and Substance Abuse Conditions
Under the regulations, whether a condition is considered a mental health and/or substance abuse disorder condition is to be determined “consistent with generally recognized independent standards of current medical practice.” Examples of such standards in the regulations include the Diagnostic & Statistic Manual of Mental Disorders, the International Classification of Diseases, and state guidelines. (Note: Standards listed as examples may include conditions not covered by a plan.) Our review indicates no changes are needed due to this provision.
