— Karen Ignani, President and Chief Executive Officer America’s Health Insurance Plans

How It Works

“The Act requires that the financial and treatment limitations placed on mental health and substance abuse services in a health plan that covers such services cannot be any more restrictive than the financial and treatment limitations for medical and surgical benefits offered in the same plan,” said Joseph Faha, Director of Legislation for SAMHSA.

That means that annual and lifetime limits, copayments, coinsurance requirements, deductibles, and out-of-pocket expenses for mental health and substance abuse services may not be any more restrictive than those for medical and surgical services.

It also means that the limits on the frequency of treatment, number of visits, days of coverage, or similar limits on the scope and duration of treatment for mental health and substance abuse services cannot be any more restrictive than those for medical and surgical benefits.

The Act also stipulates that coverage for mental health and substance abuse services provided by out-of-network providers must be consistent with the coverage of out-of-network medical and surgical services.

“The Federal law, which goes into effect for most plans on January 1, 2010, is not a panacea, however,” Mr. Faha emphasized. “For example, the law does not require that a plan include mental health and substance abuse benefits.”

The law exempts employers with fewer than 50 employees from its requirements, although they may choose to implement them in their health plans.

The law also permits an exemption for businesses that can demonstrate through an actuarial assessment that implementing parity has increased costs by more than 2 percent in the first year or 1 percent in subsequent years. The exemption lasts for 1 year.

Still unclear is whether the law covers Medicaid managed care programs. It will be up to the Centers for Medicare & Medicaid Services (CMS) to make that determination. Also unknown is whether the law will apply to the State Children’s Health Insurance Program (SCHIP).

Many states already have their own parity laws. The new law does not preempt state laws that offer richer benefits than the Federal version. If a state law offers lesser benefits, however, the state must follow the Federal statute.

Subtitle B - Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008

Section 511 -
             Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 - Amends the Employee Retirement Income Security Act of 1974 (ERISA), the Public Health Service Act, and the Internal Revenue Code to require a group health plan that provides both medical and surgical benefits and mental health or substance use disorder benefits to ensure that: (1) the financial requirements, such as deductibles and copayments, applicable to such mental health or substance use disorder benefits are no more restrictive than the predominant financial requirements applied to substantially all medical and surgical benefits covered by the plan; (2) there are no separate cost sharing requirements that are applicable only with respect to mental health or substance use disorder benefits; (3) the treatment limitations applicable to such mental health or substance use disorder benefits are no more restrictive than the predominant treatment limitations applied to substantially all medical and surgical benefits covered by the plan; and (4) there are no separate treatment limitations that are applicable only with respect to mental health or substance use disorder benefits.
            Requires the criteria for medical necessity determinations and the reason for any denial of reimbursement or payment for services made under the plan with respect to mental health or substance use disorder benefits to be made available by the plan administrator. Requires the plan to provide out-of network coverage for mental health or substance use disorder benefits if the plan provides coverage for medical or surgical benefits provided by out-of network providers.
             Exempts from the requirements of this Act a group health plan if the application of this Act results in an increase for the plan year of the actual total costs of coverage with respect to medical and surgical benefits and mental health and substance use disorder benefits by an amount that exceeds 2% for the first plan year and 1% for each subsequent plan year. Requires determinations as to increases in actual costs under a plan to be made and certified by a qualified and licensed actuary.
             Requires determinations for such an exemption to be made after such plan has complied with this Act for the first six months of the plan year. Sets forth requirements for notifications of exemptions under this Act, including notification of the Secretary of Health and Human Services, the appropriate state agencies, and participants and beneficiaries in the plan.
             Authorizes the Secretary and the appropriate state agency to audit the books and records of a group health plan relating to an exemption. Directs the Secretary to: (1) report to the appropriate congressional committees on compliance of group health plans with the requirements of this Act; and (2) publish guidance and information concerning the requirements of this Act and provide assistance concerning such requirements and the continued operation of applicable state law.
            Requires the Comptroller General to report to Congress on the specific rates, patterns, and trends in coverage and exclusion of specific mental health and substance use disorder diagnoses by health plans and health insurance.