The Mental Health Parity and Addiction Equity Act
The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) is a federal law that generally prevents group health plans and health insurance issuers that provide mental health and substance use disorder (MH/SUD) benefits from imposing less favorable benefit limitations on those benefits than on medical/surgical coverage.
MHPAEA applies to large group health plans. CMS has jurisdiction over non-Federal governmental plans, while the Department of Labor (866-444-3272) has jurisdiction over private group health plans.
Employment-related group health plans are classified as either “insured” or “self-funded” and may be regulated by States, the Department of Labor, or both. The insurance that is purchased through a private employer-based group health plans is primarily regulated by the State’s insurance department (the group health plan is regulated by the Department of Labor). Private employer-based group health plans that pay for coverage directly, without purchasing health insurance from an issuer, are called self-funded group health plans. These plans are regulated solely by the Department of Labor. Contact your employer’s plan administrator to find out if your group coverage is insured or self-funded to determine what entity or entities regulate your benefits.
MHPAEA does NOT apply to small group health plans. For non-Federal governmental plans, a small group health plan is one that has 100 or fewer workers. Although there were changes to the definition of a small group health plan in the Public Health Service Act under the Patient Protection and Affordable Care Act, the Employee Retirement and Income Security Act and the Internal Revenue Code continue to define a small group health plan as one that has 50 or fewer workers. Until 2016, States may have different definitions of small groups for purposes of state insurance laws. (To view State specific information requiring mental health parity, visit www.ncsl.org, and on the right hand side of the page enter “mental health parity” then select “State Laws Mandating or Regulating Mental Health Benefits”.)
The Mental Health Parity Act of 1996 (MHPA) provided that large group health plans cannot impose annual or lifetime dollar limits on mental health benefits that are less favorable than any such limits imposed on medical/surgical benefits.
MHPAEA preserves the MHPA protections, and adds significant new protections, such as extending the protections to substance use disorders. Although the law requires a general equivalence in the way MH/SUD and medical/surgical benefits are treated with respect to annual and lifetime dollar limits, financial requirements and treatment limitations, MHPAEA does NOT require large group health plans and their health insurance issuers to cover MH/SUD benefits. The law’s requirements apply only to large group health plans and their health insurance issuers that choose to include MH/SUD benefits in their benefit packages.
Key changes made by MHPAEA, which is generally effective for plan years beginning after October 3, 2009, include the following:
- If a group health plan includes medical/surgical benefits and MH/SUD benefits, the financial requirements (e.g., deductibles and co-payments) and treatment limitations (e.g., number of visits or days of coverage) that apply to MH/SUD benefits must be no more restrictive than the predominant financial requirements or treatment limitations that apply to substantially all medical/surgical benefits (this is referred to as the “substantially all/predominant test”).This test is discussed in greater detail in the MHPAEA regulation (linked below) and the summary of the MHPAEA regulation found below.
- MH/SUD benefits may not be subject to any separate cost-sharing requirements or treatment limitations that only apply to such benefits;
- If a group health plan includes medical/surgical benefits and MH/SUD benefits, and the plan provides for out-of-network medical/surgical benefits, it must provide for out-of-network MH/SUD benefits; and
- Standards for medical necessity determinations and reasons for any denial of benefits relating to MH/SUD benefits must be disclosed upon request.
There are certain exceptions to the MHPAEA requirements.
- MHPAEA requirements do not apply to:
- Non-Federal governmental plans that have 100 or fewer employees;
- Small private employers who have 50 or fewer employees;
- Large group health plans that are exempt from MHPAEA based on their increased cost. Large group health plan sponsors that make changes to comply with MHPAEA and incur an increased cost of at least two percent in the first year that MHPAEA applies to the plan (the first plan year beginning after October 3, 2009) or at least one percent in any subsequent plan year (generally, plan years beginning after October 3, 2010) may apply for an exemption from MHPAEA based on their increased cost. If such a cost is incurred, the plan is exempt from MHPAEA requirements for the plan year following the year the cost was incurred. Subsequently, the plan sponsors must notify the plan beneficiaries that MHPAEA does not apply to their coverage. These exemptions last one year. After that, the plan is required to comply again; however, if the plan incurs an increased cost of at least one percent in that plan year, the plan could claim the exemption for the following plan year. The following set of FAQ’s provide additional information related to the application of MHPAEA. In particular, see Q. 11 for a discussion of the processes by which plans may claim a cost exemptionhttp://cms.gov/cciio/resources/factsheets/aca_implementation_faqs5.html); and
- Self-funded non-Federal governmental employers that opt-out of the requirements of MHPAEA. Non-Federal governmental employers that provide self-funded group health plan coverage to their employees (coverage that is not provided through an insurer) may elect to exempt their plan (opt-out) from the requirements of MHPAEA by following the Procedures & Requirements for HIPAA Exemption Election posted on the Self-Funded Non-Federal Governmental Plans webpage (Seehttp://cms.gov/cciio/resources/files/hipaa_exemption_election_instructions_04072011.html), then issuing a notice of opt-out to enrollees at the time of enrollment and on an annual basis. Thereafter, the employer must also file the opt-out notification with CMS.
A regulation implementing MHPAEA was published in the Federal Register on February 2, 2010. The regulation, which is an interim final rule, is effective April 5, 2010 and applies to plan years beginning on or after July 1, 2010. See http://edocket.access.gpo.gov/2010/pdf/2010-2167.pdf for the full text of the regulation.
The regulation applies to non-Federal governmental plans with more than 100 employees, and to group health plans of private employers with more than 50 employees. It does not apply to group health plans of smaller employers. Like the statute, it does not require group health plans to provide MH or SUD benefits. If they do, however, the financial requirements and treatment limitations that apply to MH or SUD benefits cannot be more restrictive than the predominant restrictions and requirements that apply to substantially all of the medical/surgical benefits.
The provisions of the regulation include the following:
- The substantially all/predominant test outlined in the statute must be applied separately to six classifications of benefits: inpatient in-network; outpatient in-network; inpatient out-of-network; outpatient out-of-network; emergency; and prescription drug. The regulation includes examples for each classification. Additionally, although the regulation does not require plans to cover MH or SUD benefits, if they do, they must provide MH or SUD benefits in all classifications in which medical/surgical benefits are provided.
- The regulation requires that all cumulative financial requirements, including deductibles and out-of-pocket limits, must combine both medical/surgical and MH/SUD benefits. The regulation includes examples of permissible and impermissible cumulative financial requirements.
- The regulation distinguishes between quantitative treatment limitations and nonquantitative treatment limitations. Quantitative treatment limitations are numerical, such as visit limits and day limits. Nonquantitative treatment limitations include medical management, step therapy and pre-authorization. There is an illustrative list of nonquantitative treatment limitations in the regulation. A group health plan cannot impose a nonquantitative treatment limitation with respect to MH/SUD benefits in any classification (outlined in #1) unless, under the terms of the plan as written or in operation, any processes, strategies, evidentiary standards, or other factors used in applying the nonquantitative treatment limitation to MH/SUD benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation with respect to medical surgical/benefits in the classification, except to the extent that recognized clinically appropriate standards of care may permit a difference.
Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) are not group health plans or issuers of health insurance. They are public health plans through which individuals obtain health coverage. However, CHIP plans, Medicaid Benchmark Benefit plans, as well as managed care plans that contract with State Medicaid programs to provide services are subject to certain requirements of MHPAEA. Seehttp://downloads.cms.gov/cmsgov/archived-downloads/SMDL/downloads/SHO110409.pdf for the State Health Official letter regarding State Medicaid programs and Children’s Health Insurance Program State plans.
We anticipate issuing further responses to questions and other guidance in the future. We hope this guidance will be helpful by providing additional clarity and assistance.
If you have concerns about your plan’s compliance with MHPAEA, contact our help line at 1-877-267-2323 extension 6-1565 or at firstname.lastname@example.org.