Mental Health Parity
The Mental Health Parity and Addiction Equity Act ("MHPAEA") was passed in October 2008 as an expansion to the original Mental Health Parity Act of 1996. The law requires group health plans that choose to cover mental health and substance abuse services cover those services in parity with medical and surgical services also offered. It protects participants in group health plans from unfair and unequal treatment in regards to benefits provided by their plan.
The law in its current form went into effect January 1, 2010, and final regulations related to this law went into effect July 1, 2014.
The Act applies to group health plans maintained by an employer that has an average of at least 51 employees in the preceding calendar year. Retiree-only plans are exempt from the MHPAEA. Non-federal governmental plans may also request to "opt-out" of the MHPAEA’s requirements by petitioning the Centers for Medicare and Medicaid Services on an annual basis.
Plan Design Elements Subject to Parity Rules
Parity applies to the financial requirements (deductibles, copays, coinsurance, OOPMs), quantitative treatment limits (visit or day limits) and non-quantitative treatment limits (medical management procedures, geographic limitations) that are applied to benefits offered in the health plan.
The key requirement is that a plan cannot apply any financial requirement or treatment limitation to mental health and/or substance use disorder benefits that is more restrictive than the predominant financial requirement or treatment limitation the plan imposes on substantially all medical/surgical services in a particular classification of benefits. This applies to both numerical limitations (like visit limits) and non-quantitative limits (such as precertification requirements). There are six (6) different classifications of benefits:
5. Prescription Drugs
6. Emergency Care
NOTE: Intermediate levels of care, such as residential treatment, are also subject to the parity requirements.
While plans are not required by the MHPAEA to cover mental health or substance use disorder benefits, if plans do choose to offer them, they must offer them on par with medical/surgical benefits and offer them across all classifications in which medical/surgical benefits are offered.
Definitions of Mental Health Disorders and Substance Use Disorders
The law does not specifically define mental health and/or substance abuse disorders. However, mental health and/or substance abuse disorders should be defined under the terms of the plan and in accordance with applicable Federal or State law requirements. The defined benefits should be consistent with generally recognized independent standards of current medical practice such as the Diagnostic and Statistical Manual of Mental Disorders and the International Classifications of Diseases.
Testing for Parity
A qualified actuary should be hired to test the plan for parity to ensure compliance with the law. For financial requirements and quantitative treatment limits, plans are tested according to a formula established by the implementing regulations. For non-quantitative treatment limits, plans must ensure those limits are applied equally amongst medical/surgical benefits and mental health and substance use disorders.
Noncompliance with the Mental Health Parity rules can result in regulatory penalties of up to $100 per member per day of noncompliance.
This content is being provided as an informational tool. It is believed to be accurate at the time of posting and is subject to change. It is recommended that plans consult with their own experts or counsel to review all applicable federal and state legal requirements that may apply to their group health plan. By providing this information, Meritain Health is not exercising discretionary authority or assuming a plan fiduciary role, nor is Meritain Health providing legal advice.