As published in The Self-Insurer,
The final regulations regarding the Mental Health Parity and Equity Act (MHPAEA) were published on November 13, 2013, and are generally applicable for plan years beginning on or after July 1, 2014. The MHPAEA does not mandate coverage of any mental health and/or substance use disorder benefits. However, if a plan chooses to provide coverage for mental health and/or substance use disorders, it must do so in compliance with the applicable Federal and/or State laws.
The following plans are subject to MHPAEA: group health plans offering medical and surgical benefits and mental health or substance use disorder benefits; a health insurance issuer offering health insurance coverage for mental health and/or substance use disorder benefits in connection with a group health plan; and a health insurance issuer offering individual health insurance coverage.
There are limited exemptions allowed for certain plans: small employer group health plans (those employing 50 or fewer employees); self-funded non-federal governmental plans (those employing 100 or fewer employees) if they choose to “opt out;” retiree only plans; an employer that can qualify for the increased cost exemption; and plans that provide only “excepted benefits.”
The MHPAEA prohibits certain group health plans and health insurance issuers offering coverage from imposing financial requirements and treatment limitations that are more restrictive for mental health or substance use disorders than the predominant requirements or limitations applied to substantially all medical and surgical benefits.
In determining parity, plans must review several benefit classifications in order to evaluate the financial requirements and treatment limitations between medical and surgical and mental health and/or substance use disorder benefits. To wit:
- Inpatient, in-network
- Inpatient, out-of-network
- Outpatient, in-network
- Office visits and
- All other outpatient items and services
- Outpatient, out-of-network
- Office visits and
- All other outpatient items and services
- Emergency Care
- Prescription Drugs
These classifications cannot be combined and no other classifications are permitted, and the determination must be made separately for each classification of benefits.
If a plan provides mental health and/or substance use disorder benefits in any classification, the coverage must be provided in all classifications where medical and surgical benefits are provided.
As a general rule, financial requirements include deductibles, co-payments, co-insurance and out-of-pocket maximums, and plans may not apply separate cost-sharing arrangements to mental health or substance use disorder benefits.
Treatment limitations may include annual, episodic, and lifetime day and visit limits, as well as other similar limits, and in determining if a plan provides parity, the MHPAEA requires plans to meet treatment limitation thresholds in two categories: Quantitative Treatment Limitations (QTLs) and Non-Quantitative Treatment Limitations (NQTLs).
Generally speaking, QTLs are expressed numerically and are permissible where a limitation or provision applies to at least 2/3 of the benefits in a classification and the predominant limitation applies to more than 50% of the benefits in the classification. NQTLs, which otherwise limit the scope or duration of benefits for treatment under a plan or coverage, are distinct from the numerical analysis for QTLs and may be more difficult to evaluate.
Plans have the flexibility to determine to what extent medical management techniques and other NQTLs apply. However, it is important to understand that the plan processes, strategies, evidentiary standards or any other factors used in applying an NQTL to mental health and/or substance use disorder benefits must be comparable to, and applied no more stringently than, the plan processes, strategies, evidentiary standards or any other factors used in applying the limitation to medical and surgical benefits in the classification. This holds true both under the terms of the plan as written, as well as in the administration and operation of the plan.
Below is an illustrative list of NQTLs from the final regulations:
- Medical Management standards limiting or excluding benefits based on medical necessity or medical appropriateness, or based on whether the treatment is experimental or investigative;
- Formulary design for prescription drugs;
- For plans with multiple network tiers (such as preferred providers and participating providers) network tier design;
- Standards for provider admission to participate in a network, including reimbursement rates;
- Plan methods for determining usual, customary and reasonable charges;
- Refusal to pay for higher-cost therapies until it can be shown that a lower-cost therapy is not effective (also known as fail-first policies or step therapy protocols);
- Exclusions based on failure to complete a course of treatment; and
- Restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits for services provided under the plan or coverage.
By way of example, it is permissible for a plan to require prior authorization that a treatment is medically necessary for all inpatient medical and surgical benefits and for all inpatient mental health and/or substance use disorder benefits. However, if in practice, inpatient benefits for medical and surgical conditions are routinely approved for seven days, and for inpatient mental health and/or substance use disorder benefits routine approval is given only for one day, the application of a stricter NQTL for mental health and substance use disorder benefits would likely violate the MHPAEA.
Likewise, a plan may require prior approval to determine medical necessity for medical/surgical, mental health and/or substance use disorders benefits, and use comparable criteria in determining such. However, failure to obtain prior approval for mental health and/or substance use disorders will result in no benefits being paid, yet failure to obtain prior approval for medical/surgical only results in a 25% reduction in benefits would likely violate the MPHAEA. Although the same NQTL applies to both medical/surgical and mental health and/or substance use disorders, that being medical necessity, it is not applied in a comparable way.
In comparison, for a plan applying concurrent review to inpatient care where there are high levels of variation in length or stay (as measured by a coefficient of variation exceeding 0.8), the application of which affects 60 percent of mental health conditions and substance use disorders, but only 30 percent of medical/surgical conditions, would likely be compliant with the MHPAEA due to the fact that the evidentiary standard utilized by the plan is applied no more stringently for mental health and/or substance use disorders than for medical/surgical benefits, even though the overall results differ in the application.
It is important for TPAs and those administering medical management services to clearly understand the MHPAEA regulations as they apply to these NQTL standards. It is fairly easy to review the terms of a plan document and determine if there is parity upon initial observation, but in large part, when it comes to the NQTLs, parity is determined by the application of policies and procedures that are not defined in the plan but in the administration and operation thereof.
This article is intended for general informational purposes only. It is not intended as professional counsel and should not be used as such. This article is a high-level overview of regulations applicable to certain health plans. Please seek appropriate legal and/or professional counsel to obtain specific advice with respect to the subject matter contained herein.