New Guidelines for Mental Health Benefits
Mental health benefits and medical health benefits need to be made available on an equal basis, according to Congress. The idea was to prevent employers from being more generous with health benefits for standard medical and surgical services than they were for mental health and addiction services.
This is why Congress passed the Mental Health Parity and Addiction Equity Act of 2008. To measure the equality of the two types of benefits, they added criteria such as co-pays, deductibles, maximum days of treatment or access to high quality, non-local “centers of excellence.”
Since 2008 when Congress originally passed this law, the federal government issued interim regulations with the goal of making adherence and enforcement easier. Now, after sifting through about 5,400 public comments, federal agencies issued final regulations on November 8th. The Labor Department, Treasury Department and Health and Human Services combined to clarify some ambiguous issues and tightened up others.
What You Need to Know
First, the new regulations apply both to group benefit plans and individual policies. If you are self-insured, you will face somewhat similar requirements under the Affordable Care Act (ACA), as will insurers offering policies through the public exchanges.
The ACA’s “minimum essential benefits” include mental health and substance abuse services. This applies to plans which are available through public exchanges. As you already know, if an employer has at least one employee who seeks and receives a tax subsidy by buying insurance through a public exchange, that employer is subject to a substantial excise tax (beginning in 2015). However, this only applies, when the employer either doesn’t offer health coverage at all, or offers coverage that flunks the ACA’s affordability or minimum value standards.
Distinction Drawn on Benefit Caps
The ACA prevents employers from placing annual or lifetime caps on health benefits and additional treatment. But the Mental Health Parity Act doesn’t prevent caps, as long as such limits pertain equally to other health benefits. So mental health and substance abuse services which are covered under the ACA are not subject to annual or lifetime caps. Such services which are not covered under ACA may have limits.
Technically the Mental Health Parity Act doesn’t apply to employers with 50 or fewer employees. The same is true for the ACA and some other federal labor laws. Yet smaller employers (other than, perhaps, the smallest of the small) often decide it’s wiser to act as if they are subject to the law. Why? Reasons include state laws, labor market competition, and an expectation that they may soon exceed the 50-employee threshold.
The new elements in the final mental health regulations take effect for plan years beginning on or after July 1, 2014. So if your benefit plan’s annual cycle coincides with the calendar year, you won’t need to comply until Jan. 1, 2015. But that’s no reason to forget about it for now. Instead, it’s a good opportunity for a refresher course on what was required under the 2010 rules.
New “Consumer Protections”
Here is the government’s official summary of key changes under the new final regulations (from the November 8 announcement). Examples of new “consumer protections” include:
- Ensuring parity applies to intermediate levels of care received in residential treatment or intensive outpatient settings;
- Clarifying the scope of the transparency health plans must adhere to. This includes disclosure rights of plan participants, to ensure compliance with the law;
- Clarifying that parity applies to all plan standards, including geographic limits, facility-type limits and network adequacy; and
- Eliminating a provision which lets insurance companies avoid the parity requirements for some benefits based on “clinically appropriate standards of care.” Clinical experts advised this was confusing and open to potential abuse.
The regs put elements of health care and mental health care into six categories. This allows for greater comparability between the two types of care, and makes it easier to ensure compliance. The categories are:
- Inpatient in-network
- Inpatient out-of-network
- Outpatient in-network
- Outpatient out-of-network
- Emergency care, and
- Prescription drugs
The final regulations make it clear, mental health benefits must fit into one of these categories. It is not acceptable to create a new category.
Parity for “Qualitative” Benefits
The final regulations also spelled out how mental health benefits must be equal to health care benefits, based on qualitative factors. An example would be looking at the hoops employees have to jump through to get authorized treatment.
Finally, the new regulations include several disclosure requirements. For example, a health plan must spell out the criteria used to determine whether mental health and substance abuse treatment is needed, therefore covered. Similarly, when reimbursement for treatment in this area is denied, plans must explain the reasons for the denial.
A user-friendly rundown on how to comply with the Mental Health Parity Act and how it intersects with the ACA can be found on this Department of Labor Q&A web page.