An Overview of the MHPAEA Regulation Requirements

By Jennifer M. McCormick, Esq. of The Phia Group, LLC

Joint issuance of the interim final mental health parity regulations by the DOL, DHHS, and Treasury offer guidance for employers in ensuring compliance with the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA).

In conformity with the earlier law, the Mental Health Parity Act of 1996 (MHPA), and under the MHPAEA, employers are not obligated to offer mental health or substance use disorder benefits. MHPAEA does, however, impress additional restrictions upon group health plans as they are now required to apply the same financial requirements and treatment limitations for mental health and substance use disorder benefits as those imposed on medical and surgical benefits.

The recently published regulations provide direction for employers and are applicable to plan years beginning July 1, 2010 and thereafter. The regulations do not specifically provide how parity is to be achieved, but only that it must.

Pursuant to MHPAEA, a group health plan offering mental health and/or substance use disorder benefits must not impose more restrictive financial requirements than the “predominant” requirements that apply for “substantially all” other medical and surgical benefits.

Benefits must be equally incurred, as employers and plans may not establish pricier requirements solely for mental health and substance use disorder benefits. Thus, in compliance with the regulations, plans can not charger higher “specialist” co-pays for mental health providers.

Accordingly, the financial obligations for deductibles, copayments, coinsurance, and out of pocket expenses must be equivalent. Joint deductibles and out of pocket maximums for mental health and substance use disorder and medical and surgical benefits are permissible, separate deductibles and out of pocket maximums are prohibited.

Mental health and substance use disorder benefits must be provided in parity with medical and surgical care within benefit classifications and coverage tiers. The six benefit classifications are inpatient in-network, inpatient out-of-network, outpatient in-network, outpatient out-of-network, emergency care, and prescription drugs.

The regulations provide parity requirements for both quantitative and nonquantitative treatment limitations. The mental health and substance use disorder benefit limits for the frequency of treatment, number of visits, days of coverage, or other similar limits on the scope or duration of treatment must parallel those limits for medical and surgical benefits.

As limitations must apply in an equivalent way, employee assistance programs (EAP) must not serve as gatekeepers. EAP programs requiring plan members to first exhaust EAP benefits prior to becoming eligible for mental health or substance use disorder benefits are impermissible unless a similar arrangement exists for medical or surgical benefits.

If a plan offers medical or surgical benefits out-of-network, and also provides coverage for mental health and substance use disorder benefits, those mental health and substance use disorder benefits must be offered out-of-network as well.

Additionally, the regulations added a definition for substance use disorder benefits, providing that benefits are definable under the plan terms and in accord with relevant federal and state laws. Further, the regulations indicate plan definitions must conform with “generally recognized independent standards of current medical practice.”

The regulations also clarified a few things employers and plans may do – charge more for using out of network doctors and hospitals, require prior approval for some services, and review claims for medical necessity.

An exception exists for employers with less than 51 employees, employers not offering mental, nervous, drug and alcohol benefits, and an exemption related to cost.

MHPAEA is a floor, not a ceiling. States may establish parity requirements more restrictive than the federal law. For plans not subject to state laws, such as self-funded ERISA plans, however, the federal law acts both as a floor and a ceiling.

Some issues remain unresolved, including, those issues regarding the extent MHPAEA addresses the spectrum of services provided by plans and clarification pertaining to prescription drug coverage. Comments to address potential issues have been requested and are due May 2010.

What is clear from the issuance of these regulations is that employers must take steps forward to be in compliance. As MHPAEA was in effect for plans beginning October 3, 2009 or after, some plans may have already began to make changes.

A plan’s treatment limitations and financial requirements should be analyzed to ensure no terms violate MHPAEA. Among the many questions for consideration, plans should ask: Does the plan impose differentiating limits on the frequency of treatment, number of visits, duration of treatment, etc.? Are there differences in deductibles and out of pocket maximums for mental health and substance use disorder benefits? Are there distinctions in the in-network and out-of-network benefit offerings between medical and surgical and mental health and mental health and substance use disorder benefits?

Not all plan documents are created equally. This new law presents an opportunity to rejuvenate plan documents much in need of an update.

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This entry was posted by Adam V. Russo on Wednesday, February 17th, 2010 at 9:05 am and is filed under Mental Health Parity, Summary Plan Description. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.