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The Mental Health Parity Act (MHPA) was signed into law on September 26, 1996, and required that annual or lifetime dollar limits on mental health benefits be no lower than any such dollar limits for medical and surgical benefits offered by a group health plan or health insurance issuer offering coverage in connection with a group health plan. MHPA’s provisions are subject to concurrent jurisdiction by the Departments of Labor, the Treasury, and Health and Human Services.
(For information on the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008, and the interim final rules implementing this Act, see below.)
Scope
MHPA of 1996 applied to group health plans for plan years beginning on or after January 1, 1998, and contained a sunset provision that provides that the parity requirements do not apply to benefits for services furnished on or after September 30, 2001. The Tax Relief and Health Care Act of 2006 amended the sunset date of MHPA to December 31, 2007. The original sunset provision was extended six times.
Regulatory citations
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Key definitions
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Summary of requirements
The law. The MHPA of 1996 provided for parity in the application of aggregate lifetime and annual dollar limits on mental health benefits with dollar limits on medical/surgical benefits. A plan that did not impose an annual or lifetime dollar limit on medical and surgical benefits could not impose such a dollar limit on mental health benefits offered under the plan.
MHPA did not apply to benefits for substance abuse or chemical dependency. Health plans were not required to include mental health benefits in their benefits package. MHPA only applied to those plans that do offer mental health benefits.
The law also contained the following two exemptions:
- Small employer exemption: MHPA does not apply to any group health plan or coverage of any employer who employed an average of between two and 50 employees on business days during the preceding calendar year, and who employs at least two employees on the first day of the plan year.
- Increased cost exemption: MHPA does not apply to a group health plan or group health insurance coverage if the application of the parity provisions results in an increase in the cost under the plan or coverage of at least one percent.
The new Mental Health Parity Act. On October 3, 2008, the President signed the Paul Wellstone and Pete Domenici Mental Health Parity and addiction Equity Act of 2008 (HR 6983). This act expands the 1996 Mental Parity Act to put mental health or substance use disorder benefits on the same playing field as medical and surgical benefits. It does not contain a sunset provision. Interim final rules were released which take effect for plan years beginning on or after July 1, 2010.
Financial requirements. Per the new legislation, the financial requirements that apply to mental health or substance use disorders are to be no more restrictive than those requirements that apply to all medical and surgical benefits. For example, there are to be no separate cost sharing requirements for plan deductibles, copayments, coinsurance, and out-of-pocket expenses related to these types of disorders.
Treatment limitations. Nor are the treatment limitations for these disorders to be any more restrictive than the treatment limitations applied to all medical and surgical benefits covered by the plan. These limitations include limits on the frequency of treatment, number of visits, days of coverage, or other similar limits on the scope or duration of treatment.
Limitations can include both quantitative treatment limitations (expressed numerically, such as 50 outpatient visits per year), and non-quantitative limitations such as medical appropriateness, formulary design for prescription drugs, plan methods for determining usual, customary, and reasonable charges, and exclusions based on failure to complete a course of treatment. The original law only required parity coverage for annual and lifetime dollar limits.
Classification of benefits. Classification of benefits refers to:
- Inpatient, in-network;
- Inpatient, out-of-network;
- Outpatient, in-network;
- Outpatient, out-of-network;
- Emergency care; and
- Prescription drugs.
Out-of-network providers. For health plans that allow out-of-network providers to be used for both medical and surgical benefits, these same rules must apply to mental health and substance use disorder benefits as well. All coverage must be offered consistently for all types of health plan benefits.
Cost exemption. Although these provisions apply across the board to health plans, there is a possibility of a plan being exempted from the requirements. This would pertain to a plan which results in an increase for the plan year involved of the actual total costs of coverage for all benefit types (medical, surgical, mental health, and substance abuse) which exceeds 2 percent in the case of the first plan year and 1 percent in subsequent plan years.
The plan would need to notify the appropriate agencies of an election of an exemption.
Although an employer may choose to continue to apply the mental health parity voluntarily, it is not required to do so if it meets these exemption requirements. The exemption would apply for one plan year.
Determination of these costs must be made and certified by a qualified and licensed actuary in a written report provided by the actuary. This report must be maintained by the health insurer for a period of six years after notification is made to the Secretary, the appropriate State agencies, and participants and beneficiaries in the plan. However, an employer must comply with the regulations for the first six months of the plan year.
Group health plans who claim the exemptions may have the books and records, including actuarial reports, audited to ensure compliance. Such audits may be made during a six-year period following the notification of the exemption.
The Departments intend to issue guidance implementing the new requirements for the increased cost exemption under MHPAEA and invite comments on implementing the new requirements for this exemption.
Small employer exemption. The new regulations are not applicable to a small employer. This includes one that employed an average of at least two (or one in some states) but not more than 50 employees on business days during the preceding calendar year.
Plan information. The criteria for medical necessity determinations made under the plan with respect to mental health or substance use disorder benefits must be made available to current or potential participants, beneficiaries, or contracting providers upon request.
Effective date. The secretaries of Labor, Health and Human Services, and the Treasury issued these interim final rules to provide guidance in implementing the Act which apply to group health plans and group health insurance issuers for plan years beginning on or after July 1, 2010.
For a group health plan maintained pursuant to a collective bargaining agreement ratified before October 3, 2008, these requirements do not apply for plan years beginning before the later of either the date on which the last agreement relating to the plan terminates or July 1, 2010.