The Emergency Economic Stabilization Act of 2008 (“EESA” or the “bailout law”), which was enacted on October 3, 2008, contains significant amendments to the Mental Health Parity Act of 1996 (“MHPA”) that are pertinent to group health plans. For most plans, these changes will be effective January 1, 2010.
Under the provisions of MHPA prior to this amendment, the annual or lifetime dollar limits on mental health benefits could be no lower than the dollar limits for medical and surgical benefits offered by a group health plan or health insurance issuer offering coverage in connection with a group health plan. The original sunset provision of the MHPA has been extended numerous times, with the current extension running through December 31, 2008. The MHPA, which does not apply to benefits for substance abuse or chemical dependency, provides that employers retain discretion regarding the extent and scope of mental health benefits offered. This includes cost sharing, requirements relating to medical necessity, and limits on numbers of visits or days of coverage. MHPA does not apply to small employers (less than 51 employees), and does not apply to a group health plan or group health insurance coverage if the application of the parity provisions would result in an increase in the cost under the plan or coverage of at least one percent.
A majority of states and the federal employees’ health benefit program further require insurance companies to cover certain mental and physical illnesses equally. Ohio law, for example, provides for coverage of “biologically-based mental illness,” but does not provide for coverage of substance abuse disorders. These state laws are not applicable to many programs, such as employer-sponsored self-insured medical plans, which are exempt from state parity laws pursuant to the Employee Retirement Income Security Act.
EESA eliminated the sunset provision of the MHPA, so that it is no longer set to expire. EESA requires equality in coverage of mental health and “substance use disorder” benefits, but does not mandate that these benefits be provided. As the EESA is amending the existing law, its provisions generally apply to a group health plan that is subject to the existing MHPA requirements. If such a group health plan provides mental health and substance use disorder benefits:
- Financial requirements cannot be more restrictive than the “predominant” financial requirements applied to medical and surgical benefits covered under the plan. Financial requirements include deductibles, copayments, coinsurance, and out-of-pocket expenses, but do not include annual limits and aggregate lifetime limits (which are addressed under existing law).
- Treatment limitations for mental health and substance use disorder benefits cannot be more restrictive than the “predominant” treatment limitations applied to medical and surgical benefits covered under the plan. Treatment limitations include frequency of treatment, number of visits, days of coverage, or other similar limits on the scope or duration of treatment.
- Out-of-network coverage, if available for medical or surgical benefits, must also be available for mental health or substance use disorder in a manner that is consistent with the coverage for medical or surgical benefits. There can be no separate cost-sharing requirements or treatment limitations applicable to mental health or substance use disorder benefits, unless those requirements and limitations also apply to medical and surgical benefits.
- Disclosure of criteria for medical necessity decisions with respect to mental health or substance use disorder must be made by the plan administrator (or claims administrator as applicable) upon request, and the reason for any claim denial or reimbursement request denial for such coverage must be available upon request or as otherwise required.
- Voluntary opt-out is available for a group health plan (or health insurance offered in connection with such plan) if as a result of offering this coverage, the cost of coverage with respect to medical and surgical benefits and mental health and substance abuse disorder benefits rises more than 2 percent in the first year and 1 percent annually thereafter. However, a determination of this cost increase must be made by an actuary in a written report, and a filing for exemption must be made with the Department of Labor. The determination may be made after the first year at issue, or within six months of that year. Records must be maintained for six years from the date of the filing, and the Department of Labor may audit during this period.
Bottom line? If your group health plan is subject to the Mental Health Parity Act requirements, provides coverage for mental health or substance use disorder benefits, and imposes financial requirements or treatment restrictions greater than those now permitted, it will need to be revised before the first plan year beginning on or after October 3, 2009 (or a later date as permitted for certain collectively bargained plans). Unless mental health and substance use disorder benefits are eliminated, the cost of coverage can be expected to increase.