More than five years after the initial adopting legislation was passed into law, the Departments of Treasury, Labor and Health and Human Services jointly issued final regulations implementing the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), as amended by ACA. MHPAEA amends certain provisions of the Public Health Service Act (PHSA), ERISA and the Internal Revenue Code in a manner designed to provide increased parity between mental health and substance use disorder benefits and medical/surgical benefits.
In general, MHPAEA prohibits the imposition of financial requirements (such as coinsurance and deductibles) as well as treatment limitations (such as office visit limits) on mental health and/or substance use disorder benefits that are more restrictive than the predominant financial requirements and treatment limitations applicable to substantially all medical/surgical benefits. In other words, plan features cannot be more restrictive for patients with mental health or substance abuse disorders than they are for patients with purely physical disorders. For purposes of these regulations, the terms “mental health benefits” and “substance use disorder benefits” (the categories of protected benefits) have the following definition – “benefits with respect to services for mental health conditions or substance use disorders, respectively, as defined under the terms of the plan and in accordance with applicable Federal and State law.” According to the final regulations, benefits means both items and services.
The final regulations, which become effective for plan years (or, in the individual market, policy years) beginning on or after July 1, 2014 (which means January 1, 2015 for calendar year plans), incorporate agency FAQs issued since the 2010 interim final regulations that they replace and also provide new clarifications. Until the final regulations’ effective date, plans (and health insurance issuers) subject to MHPAEA must continue to comply with the interim final regulations (which originally became effective for plan (or policy) years beginning on or after July 1, 2010).
Here are a few highlights of the final regulations, which were accompanied by new a new set of DOL FAQs, applicable for group health plans.
1. ELIMINATION OF THE NQTL EXCEPTION
Perhaps the most notable change in the final regulations is the elimination of the exception contained in the interim final regulations for differences in nonquantitative treatment limitations (NQTLs) between medical/surgical benefits and mental health or substance use disorder benefits based on “clinically appropriate standards of care”. The DOL FAQ notes that the reason for not including this exception in the final regulations was that they believed it was “confusing, unnecessary, and subject to potential abuse.”
2. CLARIFICATION ON INTERMEDIATE LEVEL OF CARE
The final regulations also clarify that parity is required for intermediate mental health and substance use disorder benefits. Specifically, the final regulations provide that a plan must assign covered intermediate mental health/substance use disorder benefits (such as residential treatment, partial hospitalization, and intensive outpatient treatment) in a consistent manner to the existing six classifications ((1) inpatient in network; (2) inpatient out of network; (3) outpatient in network; (4) outpatient out of network; (5) emergency care; and (6) prescription drugs) in the same way that they assign comparable intermediate medical/surgical benefits to these classifications.
An example in the final regulations provides that if a plan classifies medical care in skilled nursing or rehabilitation facility as inpatient benefits, then it must also treat covered mental or substance abuse health care in residential treatment facilities as inpatient benefits. Similarly, if a plan or issuer treats home health care as an outpatient benefit, then any covered intensive outpatient mental health or substance use disorder services and partial hospitalization must be considered outpatient benefits as well.
3. INCREASED DISCLOSURE REQUIREMENTS
The final regulations also attempt to clarify MHPAEA’s disclosure obligations of plans with respect to mental health and substance use disorder benefits:
• The criteria for medical necessity determinations – this information must be made available to any current or potential participant, beneficiary, or contracting provider upon request.
• The reason for any denial of reimbursement or payment for services – such a claim denial must be made available to participants and beneficiaries, generally in a manner that complies with ERISA’s claim regulations.
4. SMALL EMPLOYER – EHB AND MHPAEA INTERSECTION
As a reminder, ACA requires that non-grandfathered health insurance coverage in the (individual and) small group markets must provide all categories of essential health benefits (EHBs), including mental health and substance use disorder benefits. The final EHB regulations require that such benefits be provided in compliance with the requirements of the MHPAEA regulations. Thus, while the MHPAEA small employer exemption (generally applicable for employers with not more than 50 employees) still exists, it is only available for small employers that are not required to offer EHBs, such as those with self-insured health plans.