MENTAL HEALTH PARITY ACT
The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (the Parity Act) was passed on October 3, 2008, and was signed into law by President Bush the same day it passed Congress. The compliance date for each health plan is the annual renewal that occurs 12 months after the date the Parity Act became law (October 3, 2008). The Parity Act states that the law must be complied with even if the regulations have not been published by the effective date of compliance. Therefore, employers need to begin to evaluate their plan designs and establish a strategy for compliance.
Plan sponsors and their administrators cannot afford to ignore this law, and the implications it has for your Plans. The Phia Group has been working with industry experts, such as Interface EAP (www.ieap.com) CEO Fred Newman, in determining how this act will affect our clients’ rights, and what they can do to ensure they maintain control over plan benefits. As a national psychology firm, Interface EAP in well positioned to espouse on the interaction between benefit plans, mental health patients, and health and organizational psychology programs.
Mr. Newman writes:
The failure of the House to initially pass the Economic Stimulus Package in September of 2008 led to the passing of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (the Parity Act) on October 3, 2008. After the House failed to pass the Stimulus Package, the Senate looked for an incentive to motivate certain House members to switch their votes. They found it in the pending Parity Act, which had broad support in the House. Since the White House was supportive of the Stimulus Package, the Parity Act was signed into law by President Bush the same day it passed Congress.
Although regulations regarding the Parity Act are slated to be published within one year from the date the bill became law, the Parity Act states that the law must be complied with even if the regulations have not been published by the effective date of compliance. Therefore, employers need to begin to evaluate their plan designs and establish a strategy for compliance based on the information that is known, and adjust, if need be, when the regulations are published.
The compliance date for each health plan is the annual renewal that occurs 12 months after the date the Parity Act became law (October 3, 2008). For health plans under collective bargaining agreements, the Parity Act language appears to have an error relating to the effective date and I would look to the regulations for clarification. All employers with more than 50 employees are covered by the Parity Act, although it appears that non-federal governmental agencies may op-out of the Parity Act under a provision of HIPAA.
The Parity Act does not require that mental health and/or substance abuse (MH/SA) benefits be provided under a health plan, it simply states that if they are, they must be at least equal with the predominant general medical benefits of the health plan. As such, an early question from some employers will be “should I just drop MH/SA benefits?” Also, the Parity Act does not mandate which conditions or diagnosis must be covered if MH/SA benefits are provided. The employer/health plan has the discretion to determine the conditions to be covered under the MH/SA portion of the plan. Another key aspect of the Parity Act is that it does not preempt existing state parity laws (46 states currently have some form of parity).
Regarding the financial requirements of a health plan, the Parity Act states, “the financial requirements applicable to such mental health or substance use disorder benefits are no more restrictive than the predominant financial requirements applied to substantially all medical and surgical benefits covered by the plan (or coverage), and there are no separate cost sharing requirements that are applicable only with respect to mental health or substance use disorder benefits.” Thus, all co pays, coinsurance, deductibles, and other cost sharing arrangements for MH/SA benefits may not be less than those provisions for general medical benefits. Therefore, a plan may not use a specialty care provision of the plan as the benchmark to design the financial provisions for their MH/SA benefits.
The Parity Act states the same for treatment requirements as it does for the above outlined financial requirements. Therefore, day or annual limitations for number of counseling sessions, number of hospital days, etc., may not be more restrictive than the predominant treatment restrictions applied to substantially all medical and surgical benefits.
An area that will need to be clarified through the regulations is the enforcement of compliance. It seems that the IRS will have the ability to tax a health plan for non-compliance at the rate of $100 per day per covered beneficiary. Also, the DOL and Health and Human Services have enforcement rights, but they are not specified and will need to be defined in the regulations. Bottom line; every covered employer providing MH/SA benefits that are less in coverage to medical benefits will have to amend their plan document and comply with the Parity Act at their annual renewal occurring after October 3, 2009.
Under parity, it is imperative that the med-management vendor have years of experience and outcome data from managing not only MH/SA treatment for ERISA plans with limited benefits, but also non-ERISA plans under state mental health parity based solely on medical necessity. The management of MH/SA benefits must be different than medical if appropriate care in a cost efficient manner is to be achieved.
If the gap in benefits between medical and MH/SA coverage has been significant, there may be pent-up demand. Compounding this potential cost impact is the anticipated direct-to-consumer marketing of services by psychiatric hospitals once parity is effective. History will repeat itself. Remember the ads in the 80′s? If you don’t get help from Charter, then get help somewhere. Or the ads geared towards adolescent behavior…if your 13 year old is basically acting like most 13 year olds, then call us for help. For most groups, past claims costs for MH/SA treatment will not be a good indicator of future cost under parity.
So with parity coming soon to a health plan near you, where can you look to determine a more realistic picture of what your exposure may be? The answer is in your prescription drug data.
Consider the following:
• A significant proportion of individuals with behavioral health problems are treated exclusively in the general medical setting, which has become the de-facto mental healthcare system.
• Antidepressants were the number one class of drugs prescribed in this country in 2007 – 236 million scripts!
• In an eighteen-month study of 84,500 patients who filled a script for an antidepressant, only 17 percent were seen by a mental health clinician.
• In two studies across more than 300 psychiatrists, one in the United States and one in the United Kingdom, it was reported that on average less than 12 percent of psychiatrists routinely used rating scales when monitoring patients with depression.
If less than 12 percent of psychiatrists are routinely using rating scales in their treatment, imagine how few general practitioners are using quantitative screening tools with their patients when they are prescribing psychotropic drugs. The treatment outcomes of psychiatric disorders in this country are not being evaluated using standardized and quantifiable outcome measures, even though the tools exist.
Employers also need to address the potential impact on stop-loss from the Parity Act. Today, most policies limit their coverage and exposure for MH/SA treatment. Will the increased exposure result in higher premiums? The answer may lie in how health plans design the management of MH/SA benefits. Employers, brokers, and TPAs need to be talking with their MGUs and carriers well before renewal.
There are several key items that need to be defined in plan design to enhance the effectiveness of med-management for MH/SA treatment. The first is custodial care. Just as a medical plan does not pay for care that is not improving the health of a patient, the same provision needs to apply to MH/SA treatment. Next is experimental treatment. With the inclusion of non-network coverage, plans need to insure that the course of treatment being delivered by a provider meets the definition of medically appropriate for the condition. The third key item is the re-pricing of non-network claims. This needs to be addressed through the use of a non-network fee schedule derived from average contracted rates plus a mark-up.
An aggressive and proactive plan design that is proven to control costs under state parity will do the same under federal parity. Dropping MH/SA benefits will only drive more people with behavioral health issues into the general medical setting and multiply the quality of care issues. Other medical costs will increase, productivity will decrease, and disability claims for stress and depression will continue to increase. The cost of not providing at least a basic level of coverage for certain mental health conditions is much greater than the cost of complying with parity under the right plan design utilizing a proactive med-management approach.
The Phia Group and Mr. Newman have been working together to craft plan language that will allow the uniform handling of physical and mental conditions, while preserving Plan rights to control benefits and ensure sustainability.
Please contact our legal team to learn how to secure your plan rights while remaining in compliance with this new law. To set up an appointment, please call 888-986-0080 and speak to Cindy Monfils at extension 155. Ms. Monfils can be reached by email as well at cmonfils@phiagroup.com.
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