The two of us have been talking quite a bit about mental health lately. We both find ourselves having stress nightmares about Internet breaking for good due to too many Zoom happy hours and school children online for hours. Also, we’re the kind of friends who frequently start phone calls and texts to one another with, “tell me if this idea is insane…”
More relevant to employee benefits, several clients have wondered if their current mental health coverage practices raise compliance concerns. In every case, the client's questions sent us down a legal rabbit hole. Which begs the question – why, when we all need access to mental health and substance abuse services more than ever, is it so hard for employers to understand the relevant laws and make sure that they offer compliant coverage meets the needs of their workforce? When we started digging into it, we realized that there was so much there, we needed to do a two-part series!
The first step to understanding mental health parity is knowing what laws and rules are involved. The federal Mental Health Parity and Addiction Equity Act (MHPAEA) of 2008 is the law that most people think of when it comes to parity. However, that's only ONE of the many state and federal laws that address health insurance coverage of mental health and substance use disorder (MH/SUD) treatment services. Since we know that only nerdy people (and our mothers) read this blog, indulge us as we turn back time and examine how mental health parity, as we know it today, came to be.
Private health insurers first began covering mental health services to a limited extent after World War Two. As soon as they did, mental health advocates began lobbying for increased coverage. Through the 1980s, most of these lobbying efforts targeted state legislatures. By the end of that decade, roughly half the states had minimum benefit standards in place. Most state efforts focused on alcoholism and drug abuse, but some addressed other forms of mental health care. (As a reminder, these state laws generally only apply to fully insured health plans.)
At the federal level, Congress took its initial step towards ending discriminatory mental health coverage practices in 1996 with the enactment of the Mental Health Parity Act (addition equity came later…). The law brought national attention to the idea that there should be equality in insurance coverage for mental health care services, but the 1996 statute itself was limited. It only applied to employer group plans with 50 or more employees, and just established that those plans could not impose disparate annual or lifetime dollar limits on mental health care. While employers did comply, stricter limits on mental health coverage when compared to other benefits, namely in the form of higher cost-sharing and durational limits on outpatient visits and hospital stays, were still regular parts of benefit design.
The federal law's momentum led to even more legislative and regulatory activity to increase equal access to mental health and substance abuse treat(services. Many states passed new parity measures or expanded the scope of existing requirements. By 1998, 19 states had a parity measure on the books. Then, in 1999, President Clinton used his regulatory authority to ensure that the Federal Employees Health Benefits Plan operated with complete mental health and substance abuse parity by 2001. State-level action continued, too, so that by 2006, 37 states had parity requirements. However, those state laws varied widely in terms of both scope and applicability.
The year 2008 brought about two of the most extensive parity advances. The Medicare Improvements for Patients and Providers Act eliminated Medicare's discriminatory copayment requirements for mental health care effective January 1, 2010. Then came the enactment of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). This federal law applies to employers with more than 50 employees who offer group health coverage and related health insurance carriers. Group health plans of this size do not have to cover MH/SUDs. However, if they do, they cannot treat MH/SUD differently from other medical/surgical services. Beyond that, MHPAEA applies to Medicare Advantage coverage offered through a group health plan, Medicaid managed care plans, the State Children's Health Insurance Program, and state and local government plans that do not opt-out.
In 2010, the passage of the Affordable Care Act (ACA) required all fully-insured individual and small employer group health plans to cover ten essential health benefits (EHBs), including mental health and substance abuse disorder treatment, by January 1, 2014. When the federal Department of Health and Human Services (HHS) adopted final EHB regulations, they mandated treatment of MH/SUD to be consistent with the MHPAEA. This effectively extended the mental health parity rules into the small group fully insured market.
To help ensure all parties subject to the MHPAEA carrying out its provisions, in 2016, as part of the 21st Century Cures Act, Congress mandated that the federal government step up its MHPAEA compliance efforts. As a result, federal agencies have issued a great deal more guidance about parity compliance to group health insurers and employer plan sponsors. They've also increased parity enforcement, including mandatory parity audits if health plan violates the federal requirements five or more times.
Meanwhile, states have continued to act, and now all states have at least one law in effect that addresses MH/SUD requirements. In some cases, they are broad-based supplements to the MHPAEA, and in others, they are coverage mandates specific to particular disorders and kinds of treatment.
Now that you know the back story, you also know that you need to keep track of many different potential requirements when considering mental health parity compliance. Beyond that, the applicability of all of the various laws is a concern. To help you, we made this chart explaining who has to do what and when.
It’s not a simple process to determine which laws apply to which entities, but a good rule of thumb is that almost every group has to think about compliance with some MH/SUD coverage rules. Of course, when it comes to compliance, there are some exceptions, and we would be remiss if we did not point them out to you!
Employers with fewer than fifty employees who elect to self-fund their group health plan (this includes level-funded coverage) are exempt from the MHPAEA and ACA parity requirements. State parity laws do not apply to them either. Some fee-for-service Medicaid plans also do not have to comply. Self-funded non-federal governmental health plans may opt-out of the MHPAEA, and therefore are not required to provide equivalent MH/SUD coverage. Medicare has a 190-day lifetime limit on inpatient psychiatric care.
Now you know all about the history of mental health and substance abuse parity requirements in the United States, and you have a handy chart to reference when you are trying to figure out who has to do what. So, of course, we know that you are itching to know precisely what compliance steps to take next. However, in the interest of your mental health and ours, you will have to exercise the virtue of patience. We will be back next week with detailed information about what things like QTLs and NQTLs mean and how you can make sure a benefit plan meets the required parity standards!