- The Mental Health Parity and Addiction Equity act (MHPAEA) requires that coverage of mental health/ substance use disorder(MH/SUD) benefits must be on par with (i.e., at least as good as) coverage of medical/ surgical benefits in the same category.
- The DOL and HHS issued guidance in May 2016 warning plan sponsors about certain health plan provisions that might signal non-compliance with the mental health parity requirements. This article summarizes that recent “warning signs” guidance and also reviews the MHPAEA requirements in general. Click here for link to HHS/CMS webpage with the guidance.
Overview of MHPAEA Requirements
The Mental Health Parity and Addiction Equity act (MHPAEA) requires that IF a plan provides coverage of mental health/ substance use disorder(MH/SUD) benefits, such coverage must be on par with (i.e., at least as good as) coverage of medical/ surgical benefits in the same classification or category. There are six categories of benefits:
- Inpatient, in-network
- Inpatient, out of network
- Outpatient, in network
- Outpatient, out of network
- Prescription drugs
- Emergency care
For example, if a plan does not limit the number of office visits (outpatient care) for medical/surgical benefits, then it cannot limit the number of office visits for MH/SUD benefits.
There are also two different types of limitations that plans impose on medical/surgical and MH/SUD benefits:
- Financial requirements and
- Treatment limitations, which include both quantitative treatment limitations (QTLs) and non-quantitative treatment limitations (NQTLs).
The rules for financial limitations and QTLs are different from the rules for NQTLs. Additional detail is provided below in the section entitled Background. The recent “warning signs” guidance addresses parity for NQTLs. As stated in prior MHPAEA regulations, parity requires that plans and insurers may not impose NQTLs on MH/SUD benefits unless any processes, strategies, evidentiary standards or other factors in applying the NQTLs are comparable to, and are applied no more stringently than, those used in applying the NQTL to medical/surgical benefits in the same classification (the six that are listed above).
NQTLs and the May 2016 Guidance
The DOL and HHS issued guidance in May 2016 that lists examples of NQTLs (health plan provisions) that some plans or policies apply to MH/SUD benefits, and that sponsors of such plan should carefully review to ensure that these provisions apply equally to medical/surgical benefits. If they do not, this would indicate non-compliance with MHP requirements. This article summarizes the recent “warning signs” guidance in the form of a checklist for plan sponsors. It also notes several examples from FAQs the departments issued April 20th 2016 and from final regulations the Departments issued in November13, 2013 (which applied to plan years (policy years, in the individual market) beginning on or after July 1, 2014).
Sponsors of self-insured plans may be particularly interested in this information since they have more discretion in determining plan provisions for MH/SUD and medical surgical benefits then do sponsors of insured health plans.
Additionally, in the past 6-12 months many plans have seen an increase in out-of-network MH/SUD claims for “intermediate levels of care” such as intensive outpatient services, partial hospitalization, and residential treatment. These types of treatment (and this terminology) apply to MH/SUD benefits but not to medical/surgical benefits, so many plans (and insurers) have been unsure how to apply the parity rules. The Final Rule attempted to clarify this by stating that the six classifications (listed above) were never intended to exclude these intermediate levels of care. The Final Rule also requires that plans must assign intermediate levels in the MH/SUD area to the same classification as plans (or issuers) assign “intermediate levels” of services for medical/surgical conditions. The Final Rule provides some examples, but apparently the Departments believe that some plans still are not properly applying parity rules in these areas, so they issued the “warning signs” guidance to encourage employers and insurers to review their plan provisions.
Penalties for Non-compliance
It is important that plan sponsors and insurers understand what the Departments consider to be non-compliance, since they have indicated they will be stepping up enforcement efforts, and since MHPAEA violations can result in a breach of fiduciary duty claim under ERISA and an IRS penalty of $100 per covered individual per day. IRC 4980D(b).
Employers and Plans Subject to and Exempt from MHPAEA
The MHPAEA applies to large employers (with more than 50 employees) that provide MH/SUD benefits. It generally does not require plans to provide MH/SUD benefits. However, there are several exceptions to this general rule, and there are also several stated exemptions from the MHPAEA.
Small employers (generally those with 50 or fewer employees), are exempted from the MHPAEA, however:
- “Employer” includes all members of a controlled group, so if the controlled group has more than 50 employees, then small group entities in the controlled group will be subject to MHPAEA.
- Insured small group plans are required under the Affordable Care Act (ACA) to cover 10 “essential health benefits” (EHB), and one of the EHBs are mental health benefits. Thus, insured small group plans must meet mental health parity requirements.
The ACA extended the MHPAEA to individual coverage.
The following exemptions from the MHPAEA continue to apply:
- Self-funded non-federal government plans can opt out of MHPAEA compliance, but only if they follow specific procedures (at https://www.cms.gov/CCIIO/Resources/Files/ hipaa_exemption_election_ instructions_ 04072011.html ), which include opting out before the beginning of the year and notifying employees in writing .
- Plans that meet the “increased cost” exemption can opt out. If plans changes to comply with MHPAEA result in an increased cost of at least 2% in the first year or at least 1% in any subsequent plan year, the plan can claim exemption for the next year. The plan must notify plan beneficiaries that MHPAEA does not apply to their coverage.
- Retiree-only health plans continue to be exempt from MHPAEA compliance.
Background on Financial Limitations and Treatment Limitations
As noted previously, there are two different types of limitations that plans impose on medical/surgical and MH/SUD benefits. These are:
- Financial requirements and Quantitative Treatment Limitations (QTLs)
- Examples of financial requirements include co-pay amounts and out-of-pocket limits. Examples of QTLs include limits on the number of treatments, office visits or hospital inpatient days.
- The parity rule is that plans and issuers cannot impose a financial requirement or quantitative treatment limitation on MH/SUD benefits that is more restrictive than the “predominant” financial requirement or quantitative treatment limit that applies to “substantially all” medical/surgical benefits in the same classification. The regulations define these terms as follows:
- “Predominant” means the level (e.g., $20 copay per visit) that applies to more than half of the medical/surgical benefits in that same classification or coverage unit. (Examples of coverage unit are self-only or family coverage.) If there are different levels, a plan must combine them (e.g., $15, $25 and $50 copays) until they total at least half of the medical/surgical benefits, and then must use the least restrictive level (e.g., $15).
- “Substantially all” means the type of financial or quantitative treatment limits apply to at least two-thirds of the medical/surgical benefits in that classification or coverage unit. This is determined based on the dollar amount of all plan payments for medical/surgical benefits in the classification that are expected to be paid by the plan for the plan year. This can be based on prior years’ amounts if there has not been a significant change in plan benefit design, cost-sharing structure, or utilization that would affect the financial or QTL limit.
- NON- Quantitative Treatment Limitations (NQTLs)
- NQTLs are “limits on the scope or duration of treatment that are not expressed numerically.”
- Examples include medical management techniques like prior authorization and concurrent review.
- The parity rule is that any processes, strategies, evidentiary standards or other factors in applying the NQTLs to MH/SUD benefits must be comparable to, and applied no more stringently than, those used in applying the NQTLs to medical/surgical benefits in the same classification.
- The final regulations issued by the Departments included numerous examples which show that quantity and magnitude are factors in determining whether or not an NQTL is comparable and no more restrictive.
Two Examples from the Final Regulations
The following two examples are from page 68247 of the Final Regulations (issued in November 2013):
- If a plan or issuer classifies care in skilled nursing facilities or rehabilitation hospitals as inpatient benefits, then the plan or issuer also must treat any covered care in residential treatment facilities for MH/SUD as an inpatient benefit.
- If a plan or issuer treats medical/surgical home health care as an outpatient benefit, then it must also treat MH/SUD covered intensive outpatient services and partial hospitalization as outpatient benefits as well.
Red Flags from the May 2016 Guidance—A Checklist for Plan Sponsors
The reason the Departments issued the May guidance is that, even with the examples in the final regulations, insurers and plan sponsors asked the Departments for examples of NQTLs that plans might impose on MH/SUD benefits that the Departments would or might consider to be non-compliant with the MHPAEA.
The May guidance warns that “the following provisions (absent similar restrictions on med/surg benefits) can serve as a red flag that a plan or issuer may be imposing an impermissible NQTL. Further review of the processes, strategies, evidentiary standards, or other factors used in applying the NQTL to both MH/SUD and med/surg benefits will be required to determine parity compliance.”
The guidance specifically says that the plan/policy terms listed do not automatically violate the MHPAEA, but in the event of an enforcement action the plan sponsor or insurer “will need to provide evidence to substantiate compliance.” The categories listed are examples but are not exhaustive, and could be changed by future regulations or other interpretive guidance issued by the Departments. The general categories of “warning signs: are:
- Preauthorization & Pre-service Notification Requirements
- Fail-first Protocols
- Probability of Improvement requirements
- Written Treatment Plan requirements
The DOL/HHS “Warning Signs” guidance says:
“If you see these types of plan or policy provisions, investigate if these types of limits are also applied to med/surg benefits and if so, if they are being applied to MH/SUD and med/surg benefits in a manner that complies with MHPAEA.”
- Blanket preauthorization for all MH/SUD services.
- Treatment Facility Admission Preauthorization:
- Precertification required for inpatient mental health.
- Pre-notification or notification ASAP for non-scheduled MH/SUD admissions, and benefits reduced 50% if pre-notification is not received.
- Preauthorization for all inpatient and outpatient treatment of chemical dependency and of serious mental illness and mental health conditions.
- Plan requires preauthorization or concurrent care review every 10 days for MH/SUD services but not for med/surg services.
- Medical Necessity Review Authority: Plan’s/insurer’s medical management program (precertification and concurrent review) delegates its review authority to attending physicians for med/surg services but conducts its own reviews for MH/SUD services.
- Prescription Drug Preauthorization: Plan/insurer requires preauthorization every 3 months for pain meds prescribed in connection with MH/SUD conditions.
- Extensive Pre-notification Requirements: Plan/insurer requires pre-notification for all mental health and substance use disorder inpatient services, intensive outpatient program treatment, and extended outpatient treatment visits beyond 45-50 minutes.
- Progress Requirements: For coverage of intensive outpatient treatment for MH/SUD, the plan/insurer requires that patient had not achieved progress with non-intensive outpatient treatment of lesser frequency.
- Treatment Attempt Requirements: Plan/insurer will not cover inpatient SUD rehabilitation treatment unless patient has first attempted 2 forms of outpatient treatment, including intensive outpatient, partial hospital, outpatient detoxification, ambulatory detoxification or inpatient detoxification levels of care.
- For any inpatient MH/SUD services, plan/insurer requires that an individual first complete a partial hospitalization treatment program.
Probability of Improvement Requirements
- Likelihood of Improvement: For residential treatment of MH/SUD, the plan/insurer requires the likelihood that inpatient treatment will result in improvement.
- Plan/policy only covers services that result in measurable and substantial improvement in mental health status within 90 days.
Written Treatment Plan Requirements
- Written Treatment Plan: For MH/SUD benefits, plan/insurer requires a written treatment plan prescribed and supervised by a behavioral health provider.
- Treatment Plan Required within a Certain Time Period: Plan/insurer requires that within seven days, an individualized problem-focused treatment plan be completed, including nutritional, psychological, social, medical and substance abuse needs to be developed based on a complex biopsychosocial evaluation. Plan needs to be reviewed at least once a week for progress.
- Treatment Plan Submission on a Regular Basis: Plan/insurer requires that an individual-specific treatment plan will be updated and submitted, in general, every 6 months.
- Patient Non-compliance: Plan/policy excludes services for chemical dependency if covered person fails to comply with the plan of treatment; excludes benefits for MH/SUD services if a covered individual ends treatment for chemical dependency against the medical advice of the provider.
- Residential Treatment Limits: Plan/policy excludes residential level of treatment for chemical dependency.
- Geographical Limitations: Imposed on treatment for MH/SUD conditions but not for med/surg benefits.
- Licensure Requirements: Requires that MH/SUD facilities be licensed by a State but does not impose same requirement on med/surg facilities.