Mental Health Parity and Addiction Equity Act
65
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This Employer Webinar Series program is presented by Spencer Fane Britt & Browne LLP in conjunction with United Benefit Advisors. Mental Health Parity and Addiction Equity Act. Mental Health Parity and Addiction Equity Act. Presented by Kenneth A. Mason Julia M. Vander Weele. Presenters. - PowerPoint PPT Presentation
Transcript of Mental Health Parity and Addiction Equity Act
This Employer Webinar Series program is presented by Spencer Fane Britt & Browne LLP
in conjunction with United Benefit Advisors
www.spencerfane.comwww.ubabenefits.com
Mental Health Parity and Addiction Equity Act
This Employer Webinar Series program is presented by Spencer Fane Britt & Browne LLP
in conjunction with United Benefit Advisors
Copyright 2010 2
Mental Health Parity and Addiction Equity Act
Presented by
Kenneth A. MasonJulia M. Vander Weele
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History of Mental Health Parity
Mental Health Parity Act (1996) Prohibited lower annual or aggregate lifetime max
Did not apply to substance abuse
Mental Health Parity and Addiction Equity Act (2008) Expanded to substance use disorder benefits
Imposes additional parity requirements in connection with financial requirements and treatment limits
Interim Final Regulations issued 2010
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Which Plans are Covered?
Applies to “group health plans” Fully insured and self-funded Parallel provisions in ERISA, Tax Code, and
PHSA Includes governmental and church plans
unless self-funded governmental plan has opted out
Does not include HIPAA “excepted benefits”
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Aggregation of Plans
All medical care benefits provided by employer constitute a single group health plan for purposes of MHPAEA requirements
Cannot meet MHPAEA requirements by offering mental health and substance use disorder benefits under separate plans
Parity must be satisfied with respect to each separate medical/surgical benefit package
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Small Employer Exception
Exemption for employer who employed an average of 50 or fewer employees during the preceding calendar year
Measured on a “controlled group” basis
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Small Plan Exception
Exemption for plans that, on first day of plan year, have fewer than 2 participants who are current employees
May mean that retiree only plans are exempt
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Health Insurance Issuers
Insurers prohibited from selling coverage that fails to comply with MHPAEA requirements
Exception: okay to sell to plan for a year for which plan qualifies for an exemption
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Preemption of State Law
ERISA generally preempts state law MHPAEA requirements not to be construed to
supersede any provision of state law which establishes or continues in effect any standard or requirement solely relating to health insurance issuers in connection with group health insurance coverage, except to the extent that such standard or requirement prevents the application of a MHPAEA requirement
More onerous state insurance laws will still apply to fully insured plans
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Overview of MHPAEA Requirements
Requires full parity between mental health benefits and medical/surgical benefits
Applies to “mental health” and “substance use disorder” benefits
Old MHPA restrictions on annual and lifetime limits extended to substance use disorder benefits
New MHPAEA restrictions on financial requirements and treatment limitations
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“Mental Health” Benefits
Defined by plan Must be consistent with generally
recognized independent standards of current medical practice
Intended to ensure that plan does not misclassify a benefit in order to avoid complying with MHPAEA
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“Substance Use Disorder” Benefits
Benefits with respect to substance use disorders (substance abuse or chemical dependency), as defined by plan
Subject to same consistency requirement as mental health benefits
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MHPAEA General Rule
If a group health plan provides medical/surgical benefits and mental health benefits (or substance use disorder benefits), the “financial requirements” and “treatment limitations” that apply to mental health benefits (or substance use disorder benefits) must be no more restrictive than the “predominant” financial requirements or treatment limitations that apply to “substantially all” medical/surgical benefits
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Financial Requirements
Deductibles Can’t be different or separate
Copayments Coinsurance Out-of-pocket maximums Not annual dollar or aggregate lifetime
limits
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Treatment Limits
Includes limits on benefits based on frequency of treatment, number of visits, days of coverage, days in a waiting period, or other similar limits on the scope or duration of treatment
Also includes non-quantitative treatment limitations (e.g., case management)
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“Substantially All”
A type of financial requirement or treatment limitation applies to substantially all medical/surgical benefits in a coverage classification if it applies to at least 2/3 of the medical/surgical benefits in that classification
If does not apply to at least 2/3, then the financial requirement or treatment limitation cannot be applied to mental health or substance use disorder benefits in that classification
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“Predominant”
Most common or frequent level of particular financial requirement or treatment limit
Predominant level is the level that applies to more than ½ of the medical/surgical benefits in that coverage classification
Levels may be combined to get to ½ (least restrictive level will apply)
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Measurement
“Predominant” and “substantially all” standards are measured based upon dollar amount of benefits expected to be paid for plan year
Any reasonable method may be used to determine dollar amount expected to be paid
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Coverage Classifications
Whether a financial requirement or treatment limit is “predominant” and whether it applies to “substantially all” medical/surgical benefits is determined separately for each type of financial requirement or treatment limitation
Six types of coverage classifications
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Coverage Classifications (continued)
Inpatient in-network Inpatient out-of-network Outpatient in-network Outpatient out-of-network Emergency care Prescription drugs No other coverage classifications allowed
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Coverage Classifications (continued)
If plan provides mental health or substance use disorder benefits in any coverage classification, must provide such benefits in every coverage classification in which medical/surgical benefits are provided
Regulations do not define inpatient, outpatient, or emergency care Subject to plan design Must be applied uniformly
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Prescription Drug Tiers
Plan will satisfy parity requirements as long as different tiers are based on reasonable factors (e.g., cost, efficacy, generic vs. brand) and without regard to condition for which drug is prescribed
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Specialists vs. General Practitioners
Regulations appear to prohibit charging higher “specialist” co-pays for mental health providers
Due to “predominant” and “substantially all” requirements
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Example One
A health plan imposes five different coinsurance rates for inpatient, out-of-network medical/surgical benefits: 0% 10% 15% 20% 30%
Using reasonable methods, the plan projects its payments in each of these categories for the upcoming year, as shown in the following table:
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Example One (continued)
Coinsurance Rates
0% 10% 15% 20% 30% Total
Plan's projected payments at
the coinsurance rate
$200,000$100,00
0$450,00
0$100,00
0$150,00
0$1
million
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Example One (continued)
Must first determine if “substantially all” medical/surgical benefits are subject to coinsurance.
To do so, plan must identify percentage of total expected costs subject to each level of coinsurance, as shown in 3rd row of table:
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Example One (continued)
Coinsurance Rates
0% 10% 15% 20% 30% Total
Plan's projected payments at
the coinsurance rate
$200,000$100,00
0$450,00
0$100,00
0$150,00
0$1
million
% of total plan costs paid at
the coinsurance rate
20% 10% 45% 10% 15% 100%
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Example One (continued)
Total expected medical/surgical benefits subject to coinsurance are 80% of total medical/surgical benefits.
Because 80% is > 2/3, coinsurance applies to “substantially all” medical/surgical benefits in this classification.
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Example One (continued)
Next question is which coinsurance rate is the “predominant” one.
Must determine percentage of those medical/surgical benefits that are subject to coinsurance ($800,000) falling within each coinsurance rate group. E.g., 10% rate = $100,000 $800,000 = 12.5%.
The following chart shows similar percentages for all coinsurance rates:
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Example One (continued)
Coinsurance Rates
0% 10% 15% 20% 30% Total
Plan's projected payments at the
coinsurance rate
$200,000 $100,000$450,00
0$100,00
0$150,00
0$1
million
% of total plan costs paid at
the coinsurance rate
20% 10% 45% 10% 15% 100%
% of total plancosts that are
subjectto coinsurance
N/A 12.5% 56.25% 12.5% 18.75% 100%
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Example One (wrap up)
The 15% coinsurance rate represents 56.25% of all projected medical/surgical benefits in this classification that are subject to coinsurance.
Because 56.25% > 50%, the “predominant” coinsurance rate is 15%.
Accordingly, mental health or substance use disorder benefits in this classification may be subject to a coinsurance rate of up to 15%.
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Example Two
Plan imposes five different copayment amounts for outpatient, in-network medical/surgical benefits: $0 $10 $15 $20 $50
Using reasonable methods, the plan projects that, for the following year, these copayment amounts will apply to the benefit payment amounts shown in the following table:
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Example Two (continued)
Copayment Rate
$0 $10 $15 $20 $50 Total
Plan's projected payments at the copayment rate
$200,000
$200,000
$200,000
$300,000
$100,000
$1 million
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Example Two (continued)
Must first determine if “substantially all” medical/surgical benefits are subject to copayment requirement.
To do so, plan must identify percentage of total expected costs subject to each level of copayment, as shown in 3rd row of table:
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Example Two (continued)
Copayment Rate
$0 $10 $15 $20 $50 Total
Plan's projected payments at the copayment rate
$200,000
$200,000
$200,000
$300,000
$100,000
$1 million
% of total plan costs paid at the copayment rate
20% 20% 20% 30% 10% 100%
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Example Two (continued)
80% of projected medical/surgical benefits in this classification are subject to a copayment.
Because 80% > 2/3, the copayment requirement applies to “substantially all” medical/surgical benefits in this classification.
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Example Two (continued)
Accordingly, the “predominant” copayment rate may be applied to mental health or substance abuse disorder benefits.
To determine the “predominant” copayment rate, must determine percentage of those medical/surgical benefits that are subject to copayment requirement ($800,000) falling within each copayment category:
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Example Two (continued)
Copayment Rate
$0 $10 $15 $20 $50 Total
Plan's projected payments at the copayment rate
$200,000
$200,000
$200,000
$300,000
$100,000
$1 million
% of total plan costs paid at the copayment rate
20% 20% 20% 30% 10% 100%
% of total plan costs that are
subject to copayment
N/Ano
copay25% 25% 37.5% 12.5% 100%
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Example Two (continued)
Because no single copayment rate represents more than 50% of all benefits subject to a copayment, must aggregate multiple copayment rates to arrive at “predominant” rate.
$50 and $20 copayment rates apply to 50% of projected benefits (37.5% + 12.5%). However, 50% is not more than 50% of
projected benefits subject to copayment. Therefore, must include $15 copayment rate, as
well.
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Example Two (continued)
75% of projected medical/surgical benefits are subject to a copayment rate of at least $15 (12.5% + 35.5% + 25%).
The lowest of these three copayment amounts is treated as the “predominant” copayment rate for medical/surgical benefits.
Accordingly, mental health or substance use disorder benefits in this classification may be subject to a copayment rate of no more than $15.
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Cumulative Requirements or Limitations
General Rule -- Plan may not apply any financial requirement or quantitative treatment limitation for mental health or substance use disorder benefits within a classification that accumulates separately from any such requirement or limitation applicable to medical/surgical benefits within that classification.
Applies to financial requirements, such as deductibles or out-of-pocket maximums.
Also applies to quantitative treatment limitations, such as maximum annual outpatient visits or days of inpatient coverage per year.
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Cumulative Requirements or Limitations
Note: Annual or lifetime maximum coverage amounts are not cumulative financial requirements.
Thus, just as under Mental Health Parity Act, plan may have separate annual or lifetime limits for medical/surgical benefits and either mental health or substance use disorder benefits.
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Example Three
Plan imposes $250 annual deductible on medical/surgical benefits and separate $250 annual deductible on mental health and substance use disorder benefits.
This is impermissible, because the two deductibles accumulate separately from each other.
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Example Four
Plan imposes $300 annual deductible on medical/surgical benefits and separate $100 annual deductible on mental health or substance use disorder benefits.
As in Example Three, this is impermissible, even though deductible for mental health and substance use disorder benefits is lower than deductible for medical/surgical benefits.
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Example Five
Plan imposes combined $500 annual deductible on medical/surgical, mental health, and substance use disorder benefits.
This is permissible, because the deductible accumulates in the aggregate for all benefits.
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Example Six
Plan imposes combined $500 annual deductible on all benefits (including medical/surgical, mental health, and substance use disorder benefits), except for prescription drugs.
Using reasonable methods, plan projects its payments for medical/surgical benefits in each of the other five classifications for the upcoming year, as follows:
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Example Six (continued)
ClassificationBenefits Subject
to DeductibleTotal
Benefits
% of Benefits Subject to Deductible
Inpatient, in-network $1,800,000 $2,000,000 90%
Inpatient, out-of-network
$1,000,000 $1,000,000 100%
Outpatient, in-network
$1,400,000 $2,000,000 70%
Outpatient, out-of-network
$1,880,000 $2,000,000 94%
Emergency care $300,000 $500,000 60%
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Example Six (continued)
With the exception of emergency care, more than 2/3 of medical/surgical benefits in each classification are subject to the deductible. Accordingly, the “substantially all” requirement is satisfied.
Moreover, because the $500 deductible is the only level in each classification, it is also the “predominant” level.
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Example Six (continued)
Accordingly, mental health or substance use disorder benefits in each of those four classifications may be subject to a $500 deductible.
However, because less than 2/3 of projected emergency care claims are subject to the deductible, mental health or substance use disorder benefits for emergency care may not be subject to a deductible.
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Nonquantitative Treatment Limitations
General rule ─ Plan may not impose a nonquantitative treatment limitation with respect to mental health or substance use disorder benefits within any classification unless any such limitation is comparable to, and applied no more stringently than, limitations applied to medical/surgical benefits within that classification.
Exception for recognized clinically appropriate standards of care, which may permit a difference in these nonquantitative treatment limitations.
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Nonquantitative Treatment Limitations (continued)
Examples of nonquantitative treatment limitations: Medical management standards based on
medical necessity, medical appropriateness, or exclusions for experimental or investigative treatments.
Formulary design for prescription drug benefit. Standards for admission to provider networks,
including reimbursement rates. Methods for determining usual, customary, and
reasonable charges.
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Nonquantitative Treatment Limitations (continued)
Refusal to pay for higher-cost therapies until lower-cost therapies have been shown to be ineffective (“fail-first” policies or “step therapy protocols”).
Exclusions based on failure to complete a course of treatment.
Note: Plan may not condition access to mental health or substance use disorder benefits upon exhausting counseling sessions provided by employee assistance program (“EAP”) unless similar exhaustion requirement applies to medical/surgical benefits.
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Disclosure Requirements
Upon request, criteria for medical necessity determinations involving mental health or substance use disorder benefits must be made available to any current or potential participant, beneficiary, or contracting provider.
Reason for any denial of reimbursement or payment for services involving mental health or substance use disorder benefits must be made available to participant or beneficiary in accordance with ERISA’s claims and appeals procedures.
Even non-ERISA plans (e.g., governmental or church) must comply with those ERISA procedures for this purpose.
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Penalties and Enforcement
Violations may trigger excise tax of $100 per day per affected employee.
Tax is to be self-reported and paid by filing IRS Form 8928.
Plan participants and beneficiaries may also file suit to obtain benefits.
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Effective Dates
Statutory effective date was first day of first plan year beginning after 10-3-2008.
Interim final regulations apply to plan years beginning on or after 7-1-2010. Good-faith compliance with statutory
requirements required prior to that date. Collectively bargained plans subject to
regulations as of later of general effective date or first day of first plan year beginning after expiration of last bargaining agreement in effect on 10-3-2008.
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Cost Exemption
Requirements for this exemption are “reserved” in regulations. Agencies are seeking comments.
According to statute, plan is exempt from Act’s requirements if certain anticipated cost increases are demonstrated. Based on at least six months of data, plan must
demonstrate anticipated cost increase of at least 1% (2% during first year for which Act applies).
Any exemption applies for only one year. Accordingly, a plan may rely on exemption only in
alternate years.
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Cost Exemption (continued)
Experts have estimated that most plans will see an increase in costs of only ½% due to this Act.
Some experts even project a long-term decrease in costs, due to savings resulting from better treatment of mental health or substance use disorders.
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Compliance Alternatives
Option # 1 - Eliminate All Mental Health and Substance Use Disorder Benefits.
Group health plan is not required to provide mental health or substance use disorder coverage.
ADA implications? Inadvertent provision of mental health
benefits?
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Compliance Alternatives (continued)
Option # 2 - Eliminate Some, But Not All, Mental Health and Substance Use Disorder Benefits.
Can you offer mental health benefits but eliminate substance use disorder benefits?
Yes – Provision of benefits for one or more mental health conditions or substance use disorders does not require plan to provide benefits for any other mental health condition or substance use disorder.
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Compliance Alternatives (continued)
Option # 3 - Exclude Certain Conditions
A permanent exclusion of all benefits for a certain condition or disorder is not a treatment limitation (e.g., provide benefits for schizophrenia but exclude coverage for general depression)
ADA implications?
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Compliance Alternatives (continued)
Option # 4 – Fully Comply with MHPAEA Requirements
Requires careful analysis of financial requirements and treatment limitations for each coverage classification
Review prescription drug formulary to ensure compliance with parity requirements
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Compliance Alternatives (continued)
Option # 5 – Consider Cost-Based Exemption
Requires demonstrated cost increase based on actual claims experience
Practicality limited by every other year applicability
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Questions and Answers
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