Federal Mental Health Parity and Addiction Law

Group health plans that currently offer some level of mental health or substance use coverage need to be aware of some significant federal law changes that will take effect for plan years starting after October 3, 2009. These changes, made under the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Act of 2008, will require many group health plans to amend their plans to conform with this new federal mandate.

On October 3, 2008, President Bush signed into law the Emergency Economic Stabilization Act of 2008. Included in that economic package was the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Act of 2008 (MHPA). After years of contentious debate at both the federal and state levels, this new law provides a federal floor for mental health coverage for most group health plans. It should be noted that the new law does not mandate that a group health plan include mental health or substance use benefits; it does, however, require parity between mental health and substance use benefits and medical and surgical benefits when a plan includes such benefits.

The “financial limitations” and “treatment limitations” parity prohibits more restrictive limitations for mental health or substance abuse disorder benefits than for medical/surgical benefits. The limitations are as follows:

• Financial limitations include deductibles, co-payments, co-insurance, and out-of-pocket expenses. Also, no separate cost sharing agreements
• Treatment limitations include limits on frequency of treatment, number of visits, days of coverage or other similar limits on the scope or duration of treatment
• Out of Network coverage: Required for mental health and substance use disorders if provided for medical/surgical benefits
  

WHAT THIS MEANS TO YOU AS AN EMPLOYER?

Criteria for medical necessity determinations for mental health or substance use disorder benefits must be provided upon request. Reasons for any denial of such benefits also need to be provided upon request or as otherwise required under regulations to be issued.

• Flexibility in plan design may be retained to a certain extent. The plan sponsor can define covered services. However, these services are subject to applicable federal and state laws
• Neither the original MHPA provisions nor 2008 changes require plans to provide mental health or substance use disorder benefits. If there is such coverage, then parity requirements will apply
  

Exemptions:

Small Employer Exemption

• Not applicable to employers with fewer than 50 employers.

Cost Exemption

• Existing cost exemption replaced with more detailed requirements
• Plans must establish that compliance with 2008 changes will result in a cost increase of more than 2% in the first year and more than 1% in the subsequent year
• Requires certification by qualified and licensed actuaries and notice to appropriate governmental agencies and participants
• Exemption available only if plan initially compiles for the first 6 months of the applicable plan year

Please note: Few employers applied for the cost exemption under existing provisions.

Practical Implications for Employers:

• The changes apply to both insured and self-insured plans (with a few exceptions: small employer, self-insured public sector plans)
  - Any additional state law requirements will apply to insured plans
• Notable changes: Requirement to provide out-of-network coverage for mental health or substance use disorder if plan does so for medical/surgical benefits
  - Many plans currently manage costs by providing only in-network coverage for mental health
  - and substance use disorder benefits
• Law directs issuance of regulations within one year, but compliance still required (generally, January 1, 2010) even if regulations are delayed

WHAT SHOULD I DO NEXT?
If you have any additional questions regarding the information within this eCommunication, please call Corporate Synergies at 1.866.CSG.1719 or click here to contact us today.

This alert is a legislative update designed to help you administer your employee benefits program and is not legal counsel. Please consult with an attorney for legal advice.