In Plain English-Mental Health Parity

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In Plain English-Mental Health Parity

Mental Health Parity

Three years ago last month, President Obama signed the Affordable Care Act (ACA) into law. Although some of the Act’s provisions have already gone into effect, many of the ACA’s largest programs are set to roll out next year, including a substantial expansion of existing mental health parity protections under the 1996 Mental Health Parity Act and the 2008 Mental Health Parity and Addiction Equity Act.

As these changes go into effect, advocates have urged federal policymakers to put renewed focus on the continuing need for and impact of mental health parity laws. For the newest edition in our “In Plain English” segment, we will break down some of the basic concepts behind parity laws and outline the protections they provide.

What is Mental Health Parity?

Mental health parity is shorthand for health insurance coverage for mental health care that is offered on an equal basis as coverage of physical health care, including medical and surgical benefits.  Historically, health insurance coverage for physical illnesses has been substantially more generous than that which is offered for mental illnesses.  As a result, large coverage disparities occur, including: no coverage for particular mental health conditions and treatment services, lower annual or lifetime dollar limits, fewer allowed office visits, and increased cost sharing, among others.

Coverage disparities result in people not getting the services they need, and also creates a large economic burden on society. According to the Bazelon Center for Mental Health Law, “

[F]ailing to cover mental health treatment is both discriminatory and bad public policy. Providing equal coverage makes good economic sense. When mental illnesses go untreated, costs escalate and those costs are shifted to the public sector and our economy. Major mental disorders cost the nation at least $193 billion annually in lost wages, and the cost of alcohol and drug problems in the United States is more than $400 billion.”

Policymakers have worked to end these discriminatory practices by enacting parity laws.  Parity laws tend to distinguish between “mandated coverage” and “parity coverage,” which may be offered individually or in combination. See below. 

Policy Distinctions

Mandated CoverageRequires insurers to cover certain or all mental illnesses. 

 

Example: Law requires all insurance plans to cover treatment for major depression.

 

Parity CoverageRequires insurers to provide benefits that are on par or equal to those for physical illnesses 

Example: Law requires all insurance plans to offer equal prescription coverage for physical and mental illnesses.

 

Approach Categories

Full Parity

Coverage mandate & parity coverage

Minimum Mandated Benefit

Coverage mandate only

Mandated Offering Parity

Parity coverage only

Federal Mental Health Parity Laws

In the last two decades, Congress has passed several laws requiring mental health parity in insurance coverage. The most significant laws include the 1996 Mental Health Parity Act (MHPA, Pub.L. 104-204) and the 2008 Mental Health Parity and Addiction Equity Act (MHPAEA, Pub.L. 110-343).  Both Acts take a mandated offering parity approach.  Thus, neither law requires insurers to cover mental health and substance use disorder (MH/SUD) benefits, but if health plans do include MH/SUD coverage, they must offer equitable benefits for other health conditions. In particular, federal law prohibits insurers from imposing more restrictive coverage for MH/SUD benefits than provided for other medical and surgical (medical/surgical) benefits in four categories of health plan policies: 

  1. Annual & Lifetime Aggregate Spending Caps
  2. Financial Requirements (i.e., deductibles, copays, coinsurance and out-of-pocket maximums)
  3. Treatment Limitations (i.e., number of office visits, days covered for hospital stays, frequency of treatments, and other limits relating to the scope and duration of treatments)
  4. Out-of-Network Benefit Coverage

These parity coverage protections apply to group health plans offered by employers with more than fifty employees, Medicaid managed care organizations, and Children’s Health Insurance Program (CHIP) benefits. These protections cover an estimated 140 million Americans.

Under the 2008 Parity law, the Substance Abuse and Mental Health Services Administration (SAMHSA) is required to issue regulations implementing the Act and provide more detailed guidance to health insurers. SAMHSA issued interim rules in January 2010, outlining six specific categories of services requiring parity: inpatient care in-network, inpatient care out-of-network, outpatient care in-network, outpatient care out-of-network, emergency care and prescription drugs.  Under the interim rules, if a health plan covers any services within one of these six categories, it must provide equitable coverage for both medical/surgical and MH/SUD benefits.

SAMHSA has yet to issue final rules for implementing the MHPAEA. Many advocates argue that the lack of federal guidance has resulted in significant confusion regarding some of MHPAEA’s core provisions, including the scope of required services and mechanisms for enforcement, ultimately undermining the intended impact of parity protections. In January, President Obama promised to issue final rules on federal mental health parity requirements as part of his larger “Now Is The Time” plan to protect children and communities by reducing gun violence.  

 Affordable Care Act

The 2010 Patient Protection and Affordable Care Act (ACA, Pub.L. 111-148) is the most recent federal law addressing mental health parity.  The ACA expands federal parity protections to three types of health plans: 

  1. Qualified Health Plans (plans eligible for state health insurance exchanges)
  2. Medicaid non-managed care benchmark and benchmark equivalent plans
  3. Health plans offered on the individual and small group markets

Set to take effect in 2014, the ACA is expected to expand federal mental health parity protections to an additional 30.4 million Americans. 

Further, the ACA requires that all non-grandfathered individual and small group health plans offer a core package of services, known as “essential health benefits” (EHBs).  Prior to the ACA, almost 20 percent of all self-insured individuals had no access to mental health benefits.  The ACA addresses this gap by taking a full parity approach, requiring coverage of mental health services and parity between MH/SUD and medical/surgical coverage within this category of health plans.  The act specifically requires states to develop benchmark plans that include ten categories of health benefits:

  1. Ambulatory patient services
  2. Emergency services
  3. Hospitalization
  4. Maternity and newborn care
  5. Mental health and substance use disorder services, including behavioral health treatment
  6. Prescription drugs
  7. Rehabilitative and habilitative services and devices
  8. Laboratory services
  9. Preventative and wellness services and chronic disease management
  10. Pediatric services, including oral and vision care

As a result of these provisions, an estimated 5.1 million Americans currently covered by individual or small group plans will gain mental health and substance use disorder benefits starting in 2014. Another 27 million previously uninsured Americans will have access to mental health services covered under EHB packages through health insurance plans offered in the individual and small group markets, state health insurance exchanges, and Medicaid. Taken together, a total of 32.1 million Americans will gain access to mental health and substance use disorder health insurance benefits that also comply with federal MH/SUD parity requirements. 

For more information on federal mental health parity laws, check out these resources below: 

The Bazelon Center for Mental Health Law
Mental Health Parity

SAMHSA
Mental Health Parity and Addiction Equity Act

United States Department of Labor
2012 Report to Congress: Compliance with the Mental Health Parity and Addiction Equity Act of 2008

The Atlantic
Since 2008, Insurers Have Been Required by Law to Cover Mental Health- Why Many Still Don’t

Parity Implementation Coalition
Federal Resources

Department of Health & Human Services
ACA Expands Mental Health and Substance Use Disorder Benefits and Federal Parity Protections for 62 Million Americans

By |2019-04-24T13:41:25-08:00May 1st, 2013|Featured Posts, In Plain English|0 Comments

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Young Minds Advocacy
Posted by the Editors of Hear Me Out.