Transcript Parity in Practice - APA Practice Organization

Parity in Practice: From
Passage to Implementation
Monday, March 8, 2010
11:00 a.m.-12:30 p.m.
Ronald Bachman, F.S.A., M.A.A.A., President and CEO, Healthcare
Visions, Inc., Atlanta, GA
Doug Walter, J.D., Counsel for Legislative and Regulatory Affairs,
Government Relations, Practice Directorate
Interim Final Rule (“IFR”) for the Paul Wellstone and Pete
Domenici Mental Health Parity and Addiction Equity Act of
2008 (“MHPAEA”)

Published by the Departments of Health and Human Services,
Labor, and Treasury

Publication Date: February 2, 2010 (75 Fed. Reg. 5,410 et
seq.)
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90-Day comment period (comments due on May 3, 2010)

Replaces the current rule for the Mental Health Parity Act of
1996 (“MHPA”)
MHPAEA Links

Parity IFR—
•
http://edocket.access.gpo.gov/2010/pdf/2010-2167.pdf

APAPO Summary of IFR—
•
http://www.apapracticecentral.org/advocacy/reform/parity-rule.aspx

APAPO Summary of MHPAEA—
•
http://www.apapracticecentral.org/news/2008/parity-summary.aspx
MHPAEA Expands Parity

MHPA requires parity for lifetime and annual dollar limits.
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MHPAEA expands the MHPA to require parity additionally
for all other benefit’s financial requirements and treatment
limitations.
MHPAEA Parity Requirement
MHPAEA requires that a group health plan— that provides
both medical and surgical benefits and mental health or
substance use benefits— must ensure that the financial
requirements and treatment limitations applicable to mental
health/substance use disorder benefits are no more restrictive
than those requirements and limitations placed on
medical/surgical benefits.
MHPAEA Applicability
Applies to all group health plans of 51 or more employees
that provide both medical/surgical (“MED”) and mental
health/substance use disorder (“MH/SUD”) benefits.
MHPAEA Effective Dates

The MHPAEA applies to all health plans effective October 3,
2009.

The IFR applies to health plans for plan years beginning after
July 1, 2010. For most plans this means January 1, 2011.

Health plans must continue “good faith” compliance with
MHPAEA before the effective date of the IFR.
MHPAEA Parity Standard Applied
Three parity standards—
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Parity for lifetime and annual dollar limits.

Parity for financial requirements and “quantitative” treatment
limitations.
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Parity for “nonquantitative” treatment limitations.
Parity for lifetime and annual dollar limits

If a health plan does not impose or imposes a lifetime or
annual dollar limit on less than ⅓ of all MED benefits, then it
may not impose a limit on MH/SUD benefits.
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If a health plan imposes a lifetime or annual dollar limit on at
least ⅔ of all MED benefits, then it may impose the same or a
lesser limit on MH/SUD benefits.

If a health plan imposes a lifetime or annual dollar limit on
more than ⅓ but less than ⅔ of all MED benefits, then it may
not impose a limit on MH/SUD benefits, or it may impose a
limit that is equal to the weighted average of the limits
imposed.
Parity for lifetime and annual dollar limits
The determination of whether the portion of MED benefits
subject to a lifetime or annual dollar limit represents less than
⅓ or more than ⅔ of all MED benefits is based on the dollar
amount of all plan payments for MED benefits expected to be
paid by the health plan (using any reasonable method) for the
plan year.
Parity for financial requirements and “quantitative”
treatment limitations
A health plan may not apply any financial requirement or
quantitative treatment limitation to MH/SUD benefits in any
classification that is more restrictive than the requirement or
limitation of that type applied to substantially all MED
benefits in the same classification.
Parity for financial requirements and “quantitative”
treatment limitations
Terms—

“Financial requirements” include deductibles, copayments, coinsurance,
out-of-pocket maximums and each of these is a type of requirement.

“Quantitative treatment limitations” include number of visits, days of
coverage, days in a waiting period, and other similar limits on scope of
coverage and which provide a numerical limitation (i.e. an annual visit
limit of 20 days); each of these is a type of limitation.

“Classification” means one of six classifications for which parity is
applied—inpatient/in-network, inpatient/out-of-network, outpatient/innetwork, outpatient/out-of-network, emergency care, or prescription
drugs.

“Level” refers to magnitude of a requirement or limitation (i.e. a
copayment of $20 versus $30).
Parity for financial requirements and “quantitative”
treatment limitations
A two step test—

Step 1—Does the type of financial requirement or quantitative treatment
limitation apply to substantially all—meaning ⅔ of all—MED benefits in
a classification? If NO—the requirement or limitation cannot be applied
to MH/SUD benefits. If YES—proceed to Step 2.
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Step 2—What is the predominant level of the financial requirement or
quantitative treatment limitation that applies to MED benefits? The
predominant level—meaning it applies to more than ½ of the MED
benefits—may be applied to MH/SUD benefits.
If no single level applies to more than ½ of MED benefits, a health plan
may combine levels until the threshold is met and then apply the least
restrictive level in the combination.
Parity for financial requirements and “quantitative”
treatment limitations
The determination of whether the portion of MED benefits in
a classification subject to a financial requirement or
quantitative treatment limitation represents ⅔ (substantially
all) or more than ½ (predominant) of all MED benefits is
based on the dollar amount of all plan payments for MED
benefits expected to be paid by the health plan (using any
reasonable method) for the plan year.
Parity for financial requirements and “quantitative”
treatment limitations
Related issues—

A health plan must provide out-of-network MH/SUD
benefits, at parity, when it provides out-of-network MED
benefits.
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Separate (even if equal) deductibles and out-of-pocket
maximums may not be imposed on MH/SUD benefits.

Psychologists and other mental health providers cannot be
classified as “specialists” for the purposes of imposing higher
copayments or other cost sharing.
Parity for “nonquantitative” treatment limitations
Any processes, strategies, evidentiary standards, or other
factors used by a health plan in applying a nonquantitative
treatment limitation to MH/SUD benefits in a classification
shall be comparable to and applied no more stringently than
those used in applying the limitation to MED benefits in the
classification, except to the extent that recognized clinically
appropriate standards of care may permit a difference.
Parity for “nonquantitative” treatment limitations
The IFR provides for an illustrative list of “nonquantitative” treatment limitations—

Medical management standards that limit or exclude benefits based on medical
necessity/appropriateness or whether treatment is experimental/investigative.
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Formulary prescription drug design.
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Provider network participation standards (including reimbursement).
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Plan methods for determining usual, customary and reasonable charges.
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Plan refusal to pay for higher cost therapies until it can be shown that a lower-cost
therapy is not effective.
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Exclusions based on failure to complete a course of treatment.
MHPAEA definition of mental health and substance use
disorders

Mental health and substance use disorder benefits means
benefits with respect to services for mental health conditions
and substance use disorders, as defined under the terms of the
plan and in accordance with applicable federal and state law.

Conditions and disorders must be defined to be consistent
with generally recognized independent standards of current
medical practice (for example, the most current version of the
Diagnostic and Statistical Manual of Mental Disorders).
MHPAEA health plan cost exemption

MHPAEA provides that if a group health plan experiences an
increase in actual total costs with respect to MED and
MH/SUD benefits of 1% (2% in the first plan year), the plan
can be exempted from the law.

This IFR does not address the cost exemption, which the
regulators indicate they will address in a later regulation.
Contact Information
Doug Walter, J.D.,
Counsel for Legislative and Regulatory Affairs, Government
Relations, Practice Directorate
(202)336-5889 (Office)
(202)336-5797 (Fax)
[email protected] (E-mail)