Employee Benefits News examines legal developments that impact the employee benefits and executive compensation employers provide, including federal and state legislation, rules from federal...
Nov. 8 -- The Obama administration issued a long-awaited final rule that requires most health plans offering benefits for mental health and substance abuse disorders to treat those benefits the same as other medical benefits.
The final rule (CMS-4140-F; T.D. 9640) was issued Nov. 8 by the departments of Health and Human Services, Treasury and Labor. It applies to health plan years (or, in the individual market, policy years) beginning on or after July 1, 2014.
The rule, which is scheduled for publication in the Nov. 13 Federal Register, is aimed at ensuring that health plan features such as copayments, deductibles and office visits aren't more restrictive for patients with mental health or substance abuse disorders than they are for patients with purely physical disorders.
The rule implements the parity requirements set forth in the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA). With certain exceptions, the final rule adopts most of the requirements included in an interim final rule issued in early 2010 (19 PBD, 2/1/10;37 BPR 259, 2/2/10).
The final rule also includes several consumer protections, such as:
• ensuring that parity applies to intermediate levels of care received in residential treatment or intensive outpatient settings;
• requiring transparency by health plans on how they determine parity; and
• clarifying that parity applies to all plan standards, including geographic limits, facility-type limits and network adequacy.
The final rule also expressly applies the MHPAEA parity requirements to:
• subclassifications of benefits, such as office visits, and all other outpatient items; and
• cumulative financial requirements and cumulative treatment limitations.
Mental health advocacy groups, many of which had pushed for the final rule for years, applauded its release.
Michael J. Fitzpatrick, executive director of the National Alliance on Mental Illness, in a statement called the rule “a crowning achievement.” He said that it was “the result of a 20-year bipartisan campaign by individuals and families affected by mental illness to end unfair discrimination.”
Pamela Greenberg, president and chief executive officer of the Association for Behavioral Health and Wellness (ABHW), said in a statement: “ABHW member companies appreciate the clarity that comes with having a final rule. We now have the guidance necessary to move forward toward full implementation.”
Insurers also welcomed the rule.
“Health plans have long supported the [parity law] and have worked to implement these requirements in a manner that is affordable, safe, and effective for patients,” Karen Ignagni, president and CEO of America's Health Insurance Plans, said in a statement. “We appreciate that the final rule enables patients with mental and behavioral health conditions to continue to benefit from the innovative programs and services health plans have pioneered.”
Release of the final rule completes implementation of 23 executive actions aimed at combating mental illness that President Barack Obama pledged he would take in early 2013, following the 2012 school shootings in Newtown, Conn., said Sarah Bianchi, White House policy adviser, who spoke about the rule with reporters on a conference call.
The rule includes new requirements added by the Affordable Care Act that mandate coverage of mental health and substance abuse disorder services as one of 10 essential health benefits that must be included in plans offered in the individual insurance market, as well as in plans offered on new health insurance exchanges.
Building on the rule, “the Affordable Care Act is expanding mental health and substance abuse disorder benefits and parity protections to 62 million Americans,” Health and Human Services Secretary Kathleen Sebelius said during the conference call.
Employers with 50 or fewer employees offering group health plans are exempt from the rule.
It also doesn't apply to Medicaid managed care plans, alternative benefit plans or the Children's Health Insurance Program.
In January, however, the Centers for Medicare & Medicaid Services issued a letter to state Medicaid officials saying it endorsed the parity requirements of the MHPAEA and urged Medicaid programs to apply them, according to an introduction to the final rule. CMS intends to issue additional guidance on how states should apply the law's requirements, the introduction said.
Both the final rule and the interim final rule set forth parity protections for “nonquantitative treatment limitations” (NQTLs), which are limits on the scope or duration of treatment that aren't expressed numerically, such as medical management techniques such as prior authorization.
The interim rule included an exception to the NQTL requirements for differences in NQTLs between medical/surgical benefits and mental health or substance abuse disorder benefits. The exception applied in situations where there were “clinically appropriate standards of care” for the designated nonquantitative treatment.
The final rule eliminates this exception. The three federal departments, in guidance in the form of a set of frequently-asked-questions and answers issued about the final rule, the agencies' 17th set of FAQs on ACA implementation, said they decided the exception was “confusing, unnecessary, and subject to potential abuse.”
In further explaining why they eliminated the exception, the departments said, “The underlying requirements regarding nonquantitative treatment limitations (even without this exception) are sufficiently flexible to allow plans and issuers to take into account clinical and other appropriate standards when applying nonquantitative treatment limitations.”
Although the MHPAEA requires disclosure to patients of how insurers determine parity of benefits, the introduction to the rule said that the departments of Labor and HHS would also solicit comments on whether and how to ensure greater transparency and compliance with parity requirements.
Finally, the rule sets forth a mathematical formula explaining how plans and insurers may take advantage of the law's “increased cost exception.”
The exception states that when plans can show that complying with the MHPAEA's parity requirements has increased their costs by at least 2 percent in the first year the law applies to the plan, the plan is exempt from the law's parity requirements for the following plan or policy year.
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