Background

The Wellstone-Domenici Mental Health Parity and Addiction Equity Act of 2008 was signed on October 3, 2008 as part of P.L. 110-343, Emergency Economic Stabilization Act of 2008 and will go into effect for most plans on January 1, 2010.  This law is narrowly written and includes little implementation guidance.  The Departments of Labor, Health and Human Services and Treasury are to work together to issue regulations by October 3, 2009, to carry out the legislation, and to publish and widely disseminate guidance and information. However, the law will go into effect whether or not these regulations are issued by the October 3, 2009 deadline. SAMHSA will continue to work to disseminate information and provide updates on the implementation of the law as they become available.

Implementing the Law

There is great interest in the behavioral health field in the details of how the new law will be implemented. Some of the areas of most significant interest follow.

State and Federal Programs

In general, this law does not to apply to public programs, including Medicare, Medicaid and SCHIP; however, there are still questions about its potential applicability to certain plan types within these programs.  

Medicaid Managed Care - It is unclear whether Medicaid Managed Care will be subject to the parity bill. One interpretation is that Medicaid Managed Care is covered by the bill through linkages to the Balanced Budget Act of 1997 (P.L. 105-33). CBO cost estimates assumed that Medicaid Managed Care would be included. However, some believe that Medicaid Managed Care may be exempted due to provisions in the law that exempt some state and local public programs/plans from parity requirements.  

Institutions for Mental Disease (IMD) - If Medicaid Managed Care plans are subject to parity, many in the field wonder how this coverage will affect payment for services provided in IMDs, given that Medicaid programs are currently prohibited by law from paying IMDs.  

State Children’s Health Insurance Program (SCHIP) – There are questions whether the law applies to all SCHIP programs in the same way , i.e., will stand-alone SCHIP programs that  are modeled on group health plans be affected by this law in the same way as SCHIP programs that were created as Medicaid expansion.2

Medicare Advantage plans offered through an ERISA group health plan – Some believe that a Medicare Advantage plan offered through an ERISA group health plan that is not limited to retirees-only would be subject to parity.1   

State Health Plans – It is unclear if the law covers plans offered by states for employees and their dependents.   Clarification on this issue is needed early as these plans are generally negotiated by states in the spring for implementation the following year.       

Operational Issues

How the parity law will be interpreted with regard to policy directives and operational instructions is of primary interest of all affected by the new law. 

Definition of equity – The law states that “…the treatment limitations…are no more restrictive than the predominant treatment limitations applied to substantially all medical and surgical benefits…” This language leaves open the question of how parity is to be applied to services such as case management, day services, rehabilitation, and crisis counseling that have no clear physical health corollaries.

Benefit and coverage design – Direction on what will be permitted in the plan design including:   what types of practitioners may be included in plan networks; rate setting; and how physical health care standards will be applied to behavioral health,  e.g., restoration to baseline functioning.

Experimental treatment and evidence-based practices – The understanding of and the definition of both experimental treatment and evidence-based practices in the behavior health field is not as consistently defined as that of the physical health arena.  There is significant interest in how standards for behavioral health will be defined to equate to current physical health plan policies and practices.      

Medical necessity – The definition of medical necessity is an ongoing issue in health insurance coverage, physical and behavioral. Transparency of medical necessity criteria and sharing information on claim denials will need to be carefully and thoroughly addressed to afford the promise of parity.

Calculation of exemptions/exclusions – The exemption calculation criteria will need to be looked at closely to avoid any unintended consequences on coverage and benefits.  Given that the law broadly refers to “services” in defining the scope of parity, some question whether related services such as behavioral health drug benefits or health care costs currently a part of primary physician services or part of EAP services could be considered in the 2 percent/1 percent calculation, thereby eroding the provision of treatment services.

Preemption of state laws by the federal  law: 

The implications of the new parity law to State laws need to be carefully reviewed and defined.   Some examples of state law provisions that will be preempted follow.  The original intent of these provisions and whether the principles are or should be preserved within the framework of the new parity law will need to be considered.

Treatment Limitations, Financial Requirements – The law preempts state minimum-benefit requirements that establish certain numerical treatment limitations or certain financial requirements for behavioral health coverage that are inconsistent with the requirement of parity.  For example, state laws that require coverage of a specified number of outpatient mental-health visits or set a maximum on out-of-pocket expenses for behavioral health care that do not apply to substantially all medical and surgical benefits will be preempted.

Out-of-Network Coverage – State parity law provisions that apply only to in-network benefits are preempted, such that  if a plan offers out-of-network benefits for medical or surgical care, it must also offer out-of-network coverage for mental health and addiction treatment. There must also be parity in cost sharing and deductibles between the two types of out of network benefits. 

Cost-exemption – Provisions of state law that establish different standards from the federal parity law for an exemption based on costs, or a cost-exemption of greater duration will be preempted, e.g., a state parity law provision that provides for a permanent exemption from parity requirements on the basis of cost will be preempted.

Substance Use Disorders – Any state provision that excludes substance use disorders from parity would be preempted. 

SAMHSA will support the Department of Health and Human Services in their collaborations with the Departments of Labor and Treasury to implement the law. SAMHSA will develop guidance, and educational materials and will continue to feature articles about the implementation of the parity law in our publications and website.

[1] PL 110-275, Medicare Improvements for Patients and Providers Act of 2008 , stipulates a phase-in period of six years (2014) for parity in mental health co-payments under Medicare. http://thomas.loc.gov/cgi-bin/query/C?c110:./temp/~c110ivEuBr

[2] As of January 2009, Congress was considering parity as part of the SCHIP reauthorization.