The Mental Health Parity and
Addiction Equity Act:
Parity in Practice
Eugene Simms & Victoria Chihos, Student Attorneys
University of Maryland Francis King Carey School of Law
Drug Policy and Public Health Strategies Clinic
Adrienne Ellis, Director, Maryland Parity Project at the Mental
Health Association of Maryland
Sponsored by Maryland Medicaid Matters
Overview
• What the Act accomplishes
• Health plan features that are regulated:
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Quantitative Treatment Limitations
Financial Requirements
Annual and Lifetime Limits
Non-quantitative Treatment Limitations
Prescription Drug Benefits
• Standards for identifying parity violations
• Enforcement tools and the federal/ state agencies
responsible for investigating claims
• Audience Questions
Paul Wellstone and Pete Domenici Mental Health
Parity and Addiction Equity Act of 2008
(Parity Act)
• Pre-legislation Discrimination
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Greater cost-sharing
More Limited Coverage
Restrictive Plan Management Standards
• Parity Act Timeline
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October 2008- Signed into law; October 2009- Effective
Date
Interim Final Regulations: Applies to plans beginning on
or after July 2010
Final Regulations – Pending
Affordable Care Act Extension 2014
What Does the Parity Act Accomplish?
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Requires plans to provide mental health and/or substance use
disorder benefits that are comparable to medical/surgical
benefits.
Applies to Large Group Health Plans
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Affordable Care Act Extends Parity Act – January 2014
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Greater than 51 Employees
Self-Insured or Commercial Plans
Small Group and Individual Plans
Sold in and outside of the Health Benefit Exchange
Does not mandate coverage for either mental health or
substance use services, but State law may mandate such
coverage for commercial insurance plans.
Maryland Parity Law
• What additional protections does the state law provide?
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Requires Coverage: Commercial Insurance and HMOs
for large groups and individuals must provide coverage
for mental health and substance use disorder benefits
Inpatient benefits: plan must cover at least the same
number of days of inpatient treatment for MH/SUD as
M/S
Partial Hospitalization: must cover at least 60 days
Outpatient Coverage: unlimited visits annually but tiered
copayments
• 80% visits 1-5
• 65% visits 6-30
• 50% visits 31+
Which Law Applies?
Plan Type
Large Group
51+ Employees
Fully Insured
Large Group
51+ Employees
Self Insured
Small Group
2-50 Employees
Individual
Maryland Law Federal Law
Yes
Yes
No
Yes
No
Yes(under ACA)
Yes
Yes(under ACA)
Other Plans Subject to Parity Standards
• Federal Government Employees:
• Federal Employee Health Benefit Plan (FEHBP) has
required parity since 2001
• Does not apply to Department of Defense plans covered
under Tricare
• Non-federal Government Employees:
• Self-funded state and local government plans may elect
to opt-out
• Medicaid Managed Care Plans:
• Federal parity law applies
• Medicare plans specifically exempt from parity
• 2008 Medicare Improvement for Patients and Providers
Act (MIPPA) creates some equality in outpatient
behavioral health benefits
Plan Features Regulated
• Quantitative Treatment Limitations and
Financial Requirements
• Cumulative Financial Requirements and
Quantitative Treatment Limitations
• Annual and Lifetime Limits
• Prescription Drug Benefits
• Non-Quantitative Treatment Limitations
Definitions
• Quantitative Treatment Limitation
• Number of visits, days of coverage, frequency of
visits, days in a waiting period.
• Restrictions on plan benefits that can be
expressed numerically
• Financial Requirements
• Deductibles, copayments, coinsurance, and out-ofpocket expenses
• Aggregate lifetime and annual limits are subject to
different standards
Treatment Limitations and Financial
Requirements: What Does the Law Require?
• Prohibits treatment limitations and financial
requirements for mental health/substance use disorder
benefits (MH/SUD) that are:
• Separate from M/S benefits in same classification
• More restrictive than those applied on M/S benefits in
same classification
• What does separate and more restrictive mean?
• Quantitative Treatment Limitations: Not applied to
M/S benefits or fewer days of coverage, fewer
number of visits allowed, less frequent visits.
• Financial Requirements: Not applied to M/S
benefits or larger cost-sharing burden for the patient.
Six Classifications for
Comparisons
• Inpatient/ In-Network
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Inpatient/ Out-of-Network
Outpatient/ In-Network
Outpatient/ Out-of-Network
Prescription Drug
Emergency Care
Cross-Classification Parity
• To the extent an insurer provides a benefit for a
MH/SUD service in one of the six
classifications, it must provide a MH/SUD
benefit in each of the classifications in which
the plan offers a M/S benefit.
• If a plan’s formulary offers a prescription
medication for a mental health disorder, the plan
must also offer inpatient, outpatient, and
emergency care treatment for the disorder if the
plan offers M/S benefits in those classifications.
Test for Quantitative Treatment
Limitations and Financial Requirements
• Does this financial requirement or treatment limitation apply to
“substantially all” (2/3) of the M/S benefits in the same
classification based on projected plan payments
• What level of the restriction may be imposed on MH/SUD
treatment:
• Predominant Level – the value that applies to at least 51% of
M/S benefits in the same classification based on projected plan
payments
• The value placed on the MH/SUD benefit may not be more
restrictive than the predominant level
• Different cost-sharing requirements or lengths of stay for MH/SUD
benefits than M/S benefits within the same classification (e.g. outpatient in-network) may flag a possible parity violation
Cumulative Financial Requirements and
Quantitative Treatment Limitations
• Benefits that are dependent on meeting a
threshold level such as a deductible, maximum
out-of-pocket expenses, or day or visit limits.
• A plan may not apply any cumulative financial
requirement or treatment limitation that
accumulates separately for MH/SUD and M/S
benefits in that same classification
• A plan may not impose a $250 deductible on all M/S
benefits and a separate $250 deductible on MH/SUD
benefits.
• A single deductible may be applied and is reduced
down by use of either MH/SUD or M/S services
Annual and Lifetime Limits
• A dollar limitation on the total amount of specified
benefits that may be paid under a group health plan
• No AL/LL may be applied to MH/SUD if the limit does
not apply to at least 1/3 of M/S benefits
• If AL/LL applies to 2/3 of the M/S benefits:
• Plan may impose an AL/LL on MH/SUD benefits
• Plan may impose that limit to both M/S and MH/SUD
benefits
• Plan may impose a separate limit on MH/SUD benefits, but
it may not be lower than the limit imposed on 2/3 of the
M/S benefits.
Non-Quantitative Treatment
Limitations
• A restriction that limits the scope or duration of
benefits under a plan but is not expressed
numerically
• Examples
• Medical management standards (medical necessity
criteria)
• Utilization management (UM) practices
(authorizations)
• Formulary design in pharmacy benefit
• Provider network admission standards and
reimbursement rates
• Method for determining usual, customary charges
• “Fail First” policies or step protocols
• Exclusions based on failure to complete course of
treatment
Parity Test for Non-Quantitative
Treatment Limitations
• An NQTL for MH/SUD benefits must be comparable
to and applied no more stringently than the
standard for M/S benefits
• Are the processes, strategies, and factors the plan uses
to impose these limitations on MH/SUD benefits the same
considerations as those used to impose an NQTL on M/S
benefits?
• Are they applied more stringently to MH/SUD benefits?
• Recognized clinically appropriate standards of care
may permit a plan to apply different standards.
Applying the Standard
• Processes, Strategies, Factors
• Use of algorithms, reference to medical literature or
guidelines developed by clinical experts, Committee
review
• Decisions based on clinical efficacy, price variation,
practice variation, provider qualifications and
credentialing, utilization above national benchmarks.
• Applied no more stringently
• Is there a separate threshold, more rigorous application
of these processes, strategies, factors when applying
the NQTL to MH/SUD services?
• Clinically Appropriate Standard
• Nationally recognized standards of practice or treatment
outside the plan’s own standards.
Prescription Drug Benefits
• A formulary may apply different financial
requirements to different tiers of prescription drug
benefits based on reasonable factors:
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Cost
Efficacy
Generic versus brand name
Mail order versus pharmacy pick-up
• Cannot distinguish based on whether a drug is
used to treat a mental health or substance use
disorder
• Must comply with the relevant NQTL standards
• “Fail First” and Pre-Authorizations
Required Disclosures
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Medical necessity criteria (internal rule, guideline,
used in denying a health benefit)
• Includes an explanation of the scientific or clinical
judgment that supports its medical necessity
determinations.
• Must provide medical necessity criteria for M/S benefit
in same classification
• Provided to current or potential participant,
beneficiary, or contracting provider
• Reasons for Denial of Reimbursement
• Must be furnished within 30 days of request
You think a health plan is not parity
compliant… Now what?
Step 1: Determine which law applies to the plan
Step 2: Obtain written reason for denial of requested care
Step 3: Gather information from Insurer
• Medical necessity criteria used
• Fail-first requirements
• Other basis for denial of requested care
Step 4: File grievance under plan’s internal review process
Step 5: Pursue external review
• Commercial plans file complaint through MIA
• Self-insured plans can seek external review through
the plan (must meet federal or state system
standards)
Step 6: File Court Action
Enforcement Agencies
• Maryland Insurance Administration
• Fully-insured large group plan or individual policy
(Commercial Plans)
• Individual Plans and Small Group Plans by 2014
• Department of Labor
• Self-insured large group plans
• Department of Health and Human Services
• Non-federal government plans
• May take action against a State for failure to
enforce
In Practice…
• Financial Requirements
• Non-quantitative Treatment Limitations
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Reimbursement Rates
Pre-authorizations
“Fail First” Policies
Network Admission Standards
Analysis: Co-Payments
Step 1: Proper classification
Step 2 : Substantially All
• Determine if the financial requirement applies to 2/3
(substantially all) of the M/S benefits within the classification.
Step 3: Predominant Level
• Determine the co-payment level that applies to at least 51%
of M/S benefits.
Step 4: More Restrictive
• Compare the co-payment for MH/SUD with the predominant
level for M/S
• MH/SUD co-payment may be no greater than the
predominant level
Co-Payments
Outpatient Services
In-Network
Medical/Surgical
PCP Visit
Diagnostic Tests
Rehabilitative Services
Co-payment Level
$20
$20
$25
Specialist Visit
Mental Health/
Substance Abuse
Individual Counseling
$30
Co-payment Level
$30
Co-Payments
Outpatient
Services
Medical/Surgical
In-Network
Co-payment Level
Projected Plan
Payments
Total = $1,000,000
PCP Visit
$20
40%
Diagnostic Tests
$20
15%
Rehabilitative
Services
$25
20%
Specialist Visit
$30
25%
Mental Health/
Substance Use
Individual Counseling
$30
Reimbursement Rates
• Non-Quantitative Treatment Limitation
• What process/factors/standards did the
insurance provider consider when setting the
psychiatrist’s rate as compared to the primary
care doctor’s rate.
• Parity mandates that the same underlying
standards be applied to both
• If not, then the insurer must demonstrate a
justification for the disparity.
Reimbursement Rates
• Medicare rate as a benchmark:
• Many insurance carriers/plans set their
reimbursement rate for medical providers at a
fraction or multiple of the Medicare
reimbursement rate.
• If an insurer sets a primary care physician’s
reimbursement rate at the Medicare rate, but
chooses a different method to determine a
psychiatrist’s reimbursement rate, there may be
a parity violation.
Pre-Authorization
• Utilization Management Practices – NQTL
• Identify the standards the insurer used to determine which
services would have a pre-authorization requirement.
• Are the same standards applied for both M/S and MH/SUD
benefits?
• Is the pre-authorization requirement being applied more
stringently to MH/SUD benefits?
• Do M/S providers have to submit lengthy treatment plans?
• Are they also subject to lengthy phone calls?
• Is M/S treatment subject to pre-authorization every 5 visits?
• If the standards are not comparable, is there a clinically
appropriate justification?
“Fail First”
• Look to the underlying processes and
strategies used to determine when “fail first” is
applied to both MH/SUD and M/S benefits
• Individually based for all health conditions or a
blanket requirement for certain MH/SUD
services?
• How are “fail first” requirements applied in the
M/S context?
• Can be clinically appropriate if there an
appropriate clinical justification for treating
MH/SUD differently
Provider Network Admissions
• Identify the standards and processes the plan uses to
credential MH/SUD and M/S providers
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Academic requirements
Work experience
Licensure
Certifications
• Are the network admission standards the same for
MH/SUD and M/S providers
• Potential Justifications
• Work requirement is built into the educational requirements
for medical surgical providers but not for certain MH/SUD
credentials
• Inconsistent training or credentialing standards across
subfields in behavioral health
• Inconsistent licensing standards from state to state
2013 General Assembly Session:
New Advocacy Opportunities
• Demonstration of Parity Compliance
• Would require all fully-funded insurance plans and
plans sold in the Exchange to demonstrate
compliance with state and federal parity laws
• Parity Compliance Requirement for Utilization
Review Criteria Used by Private Review Agents
• Would require all utilization review criteria be certified
by MIA as parity compliant
• Consumer Bill of Rights
• Would provide consumers with greater access to their
insurance documents, clearer information about their
rights under the law, and instructions on how to
enforce those rights
Intersection with the ACA
• Requires individual and small group plans to offer
MH/SUD benefits as one of ten essential health
benefits.
• Individual and small group plans offered in the
Exchange and in the commercial market must comply
with the Parity Act.
• Prohibits annual and lifetime dollar limits on essential
health benefits.
• Network adequacy standards for Qualified Health
Plans (QHP):
• Must include essential community providers
• Sufficient number of MH/SUD providers to ensure services
will be accessible without unreasonable delay
• QHP Issuer must provide access to provider directory
identifying providers that are not accepting new patients
Scope of Services
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What’s at stake?
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Access to an appropriate continuum of care
comparable to the continuum for medical conditions.
IFR does not address scope of services but the
Final Rule may
• Health plan has a statutory right to exclude
MH/SUD coverage from their plans, but can a plan
that offers MH/SUD benefits restrict the type of
services offered?
• Coverage for intermediate levels of care: intensive
outpatient, partial hospitalization and residential
treatment.
Scope of Services
• Federal Regulations Govern the Scope of
MH/SUD Services
• Treatment limitations are defined to include
standards that affect the “scope” of care
• Requires parity across classifications to prevent
limitations on services
• Act regulates NQTLs because they limit care
and a restriction on scope of services is a direct
limitation on care.
Scope of Services
• A standard that results in a service restriction for
MH/SUD benefits is an NQTL.
• Is the standard applied to M/S benefits?
• Insurers must provide a clinically acceptable
justification for limiting access to specific MH/SUD
services.
• Evidence demonstrates a full continuum of MH/SUD
services is needed to treat conditions of different severity
and improves the quality of healthcare for MH/SUD
patients
Contact Us
• University of Maryland Francis K. Carey School
of Law: Drug Policy and Public Health Clinic
• Eugene Simms, Student Attorney
Eugene.A.Simms@clinic.law.umaryland.edu
• Vicki Chihos, Student Attorney
Victoria.L.Chihos@clinic.law.umaryland.edu
• Ellen Weber, Supervising Attorney
eweber@law.umaryland.edu
• Mental Health Association of Maryland:
Maryland Parity Project
• Adrienne Ellis, Director
aellis@mhamd.org (410) 235-1178 Ext. 206