Parity means equality, and a new law seeks to create equality in the way group health plans cover mental health and addiction treatment as compared to traditional medical and surgical benefits. The Paul G. Wellstone and Pete Dominici Mental Health Parity and Addiction Equity Act was passed in October 2008 as a part of the Emergency Economic Stabilization Act. For most health plans, the effective date for compliance with the Act is January 1, 2010. Regulations offering guidance for implementation were to have been promulgated by October 3, 2009. However, representatives of the federal government have now suggested that the target date for publication of regulations is the end of this year. With many questions unanswered and incomplete compliance details, implementation without regulatory guidance could be difficult.
It is important to note that the Act does not require an employer to offer mental health and addiction treatment coverage as a part of its health benefits plan. However, if an employer chooses to provide coverage for mental health and addiction treatment, it must ensure that the “financial requirements” (for example, co-payments, deductibles, out-of-pockets expenses) for coverage of such treatment are the same as the financial requirements for medical/surgical care.
Parity must also be evident in out-of-network benefits. In other words, out-of-network care for mental health and addiction treatment must be covered at the same level as out-of-network medical/surgical care. Treatment limitations on mental health and substance abuse treatment, such as limits on the number of office visits allowed per year, or the number of inpatient hospital days allowed per year, also cannot be more restrictive than “substantially all” medical/surgical benefits covered by the plan.
The Act applies to all insured or self insured group health plans with more than 50 employees, including plans using a separate vendor to manage mental health and substance abuse benefits. It also applies to Medicaid managed care plans. The new law does not apply to plans with 50 or fewer employees, disability and long-term supplemental care plans,or indemnity plans. Some government sponsored plans may also be exempt.
Employers that believe compliance with the Act will increase their costs by more than 2% will have an opportunity to apply for a cost exemption. However, the employer must still comply with the law the first year, and perform a cost assessment after the first six months.
A request for a cost increase exemption must be supported by a qualified actuarial determination and report. Exemptions, when granted, are effective for one year.
Look for the implementing regulations to be released in early January 2010. Until then, if you have questions concerning the Act and compliance, feel free to contact Kathy Kravitz or Mark Smith.