Mental Health Parity and Addiction Equity Act, part 1: How it began

This is the first in a four-part series from MZQ Consulting Benefits Compliance that will appear each Tuesday on BenefitsPRO. The series examines the long and ongoing journey to achieving better outcomes for mental health and addiction in the U.S. health care systems. The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) is a federal law that generally prevents group health plans and health insurance issuers that provide mental health and substance use disorder (MH/SUD) benefits from imposing less favorable benefit limitations on those benefits than on medical/surgical coverage.

As easy as that is to articulate, achieving those objectives continues to be challenging. In particular, it can be daunting and confusing for employers and plans to understand and to report on, especially since the process seems to be ever-changing.

In 2008, when the Mental Health Parity and Addiction Equity Act (MHPAEA) was enacted, it was considered a breakthrough victory in a decades-long fight for clearer and fairer pathways to mental health and substance use disorder care. Yet despite that initial victory, a lot of work remains to be done. The primary purpose of the Act was to bring benefits for mental health and substance use disorders in line with medical/surgical benefits. The law requires that mental health benefits must not be more difficult for someone to access and utilize than their medical or surgical care. The simple principle is this: It should be just as easy for someone to get treated for a substance use disorder, anxiety, depression, PTSD, or any other behavioral condition as it is for them to get treated for a broken wrist, diabetes, asthma, or any other common ailment.

Initially, the Mental Health Parity Act of 1996 (MHPA) provided that large-group health plans could not impose annual or lifetime dollar limits on mental health benefits that are less favorable than any such limits imposed on medical/surgical benefits. Before the MHPA, insurance carriers were not required to provide benefits for mental health care, resulting in limited opportunities for treatment. To circumvent the requirements of the legislation, the carriers and employers increased out-of-pocket maximums and, in some cases, limited the number or visits to a provider. MHPA also had a sunset date, which was extended at least seven times through 2007.

So, along comes the MHPAEA, with an effective date for plan years beginning October 3, 2009, and later, which does not apply directly to small group health plans. However, its requirements are applied indirectly in connection with the Affordable Care Act’s essential health benefit (EHB) requirements and include the following changes:

• If a group health plan or health insurance coverage includes medical/surgical benefits and MH/SUD benefits, the financial requirements (e.g., deductibles and co-payments) and treatment limitations (e.g., number of visits or days of coverage) that apply to MH/SUD benefits must be no more restrictive than the financial requirements or treatment limitations that apply to medical/surgical benefits.
• MH/SUD benefits may not be subject to any separate cost-sharing requirements or treatment limitations that only apply to such benefits.
• If a group health plan or health insurance coverage includes medical/surgical benefits and MH/SUD benefits, and the plan or coverage provides for out-of-network medical/surgical benefits, it must provide for out-of-network MH/SUD benefits.
• Standards for medical necessity determinations and reasons for denying MH/SUD benefits must be disclosed upon request.

Four years later, a final regulation was published, and the provisions of that regulation addressed the following:

• The regulation requires that all cumulative financial requirements in a classification, including deductibles and out-of-pocket limits, must combine both medical/surgical and MH/SUD benefits in the classification. The regulation includes examples of permissible and impermissible cumulative financial requirements.
• The regulation distinguishes between Quantitative and Nonquantitative Treatment Limitations (NQTLs). Quantitative Treatment Limitations are numerical, such as visit limits and day limits. Nonquantitative treatment limitations include, but are not limited to, medical management, step therapy, and pre-authorization. A group health plan or coverage cannot impose a nonquantitative treatment limitation concerning MH/SUD benefits in any classification unless, under the terms of the plan (or coverage) as written and in operation, any processes, strategies, evidentiary standards, or other factors used in applying the nonquantitative treatment limitation to MH/SUD benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation concerning medical surgical/benefits in the classification.
• The regulation provides that all plan standards that limit the scope or duration of benefits for services are subject to the nonquantitative treatment limitation parity requirements. This includes restrictions such as geographic limits, facility-type limits, and network adequacy.

Stay tuned for part two in this series, which will focus on understanding non-quantitative treatment limitations.

Dave Mordo is senior compliance advisor at MZQ Consulting. For questions or more information, please email us at engage@mzqconsulting.com