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Comparison of the Proposed House and Senate Parity Bills
Similarities Between HR 1424 and S 558
The separate House and Senate bills contain a number of major similarities and are designed to achieve the same goal – a simple requirement for employers and health plans to cover treatment for mental illness on the same terms and conditions as all other illnesses. Both bills:
- Expand on the limited 1996 Mental Health Parity Act that requires equitable coverage for mental illness only with respect to annual and lifetime dollar limits. Both expand on these requirements by requiring parity for treatment limitations (limits on inpatient days and outpatient visits that apply only to mental illness and substance abuse) and financial limitations (higher cost sharing, co-payments or deductibles that applied to mental illness or substance abuse treatment).
- Impose a parity standard as a coverage condition. Neither bill mandates coverage of mental health or substance abuse treatment, but instead they require that if mental health and substance abuse benefits are offered, they must be on equal terms with medical surgical benefits. In other words, both bills allow employers and health plans to avoid the parity requirement by simply dropping mental health and substance abuse coverage altogether.
- Amend the laws governing self-insured ERISA plans and fully insured plans regulated by the states. This means that parity would reach the 82 million covered lives in self-insured plans that are beyond the reach of state parity laws. Likewise, both bills amend the federal Public Health Services Act (PHSA) to reach fully insured plans in states that have not passed parity laws.
- Exempt group health plans sponsored by small employers, those with 50 or fewer workers, from the requirements of parity coverage.
- Allow for employers or group health plans to seek an exemption if costs rise more than 2% as a result of compliance with the parity requirement. Both require health plans to first comply with the law for 6 months before seeking this cost increase exemption, and both would require plans getting an exemption to come back into compliance the following year.
Differences Between HR 1424 & S 558
While the House and Senate bills achieve the same objectives, there are a few differences.
- Scope of Mental Health Benefits -- The Senate bill maintains the definition in 1996 federal parity law and has been a part of most parity bills in Congress over the past decade, i.e. “mental health benefits as defined by the plan.” This definition defers to employers to define the scope of mental health benefits. By contrast, HR 1424 contains a “triggered” coverage mandate for a broad range of mental health and substance abuse disorders. Specifically, HR 1424 states that if a health plan offers coverage for mental health or substance abuse, then the plan must cover at parity all of the disorders and conditions in the Federal Employees Health Benefits Program (FEHBP) with the highest enrollment in the most recent plan year. The sponsors included this reference to the highest enrollment FEHBP as a proxy for the APA’s Diagnostic Statistical Manual (DSM), i.e. current federal rules require all health plans available through the FEHBP program to cover all diagnoses and conditions in the DSM.
- State Preemption – One of the most challenging issues that must be dealt with in developing federal parity legislation is determining how the federal standard interacts with the 41 state parity laws – or laws that states may enact in the future. S 558 contains a narrow preemption provision that would supersede existing state parity laws on a targeted basis. Specifically, the Senate bill preempts only the standards in state laws that establish parity for day/visit limits and financial limitations. The Senate bill does NOT preempt existing state requirements for plans to either cover or offer mental health benefits. In addition, the bill does NOT preempt provisions in state parity laws that require specific diagnoses (typically, a list of severe mental illnesses) or a broad listing (the entire DSM) to be covered equitably. By contrast, HR 1424 contains a vague reference to the bill not overriding “any state law that provides greater consumer protections, benefits.” However, the bill does not define what “greater consumer protections” are. What remains unclear in the House bill is whether or not the new federal parity requirement would supersede numerical limits on inpatient days or outpatient visits that are integrated into a state parity law (e.g., state laws that require parity and also requires a minimum offering of 20 inpatient days and 30 outpatient visits) or maintained separately as a mandated offering requirement. While the Senate bill would clearly preempt these numerical limits on inpatient days and outpatient visits as part of a state parity law, the House bill appears not to preempt these limits.
- Out-of-Network Coverage – Both bills require group health plans to have parity for out-of-network services, i.e. in cases where the plan has a benefit for services rendered by a provider not in the plan’s network or list of preferred providers. This would require health plans to have equalized cost sharing for out-of-network mental illness and substance abuse services relative to the out-of-network benefit on the medical-surgical side. However, the House bill goes further and would mandate that group health plans provide an out-of-network benefit for mental health and substance abuse if there is an out-of-network benefit on the medical-surgical side. By contrast, the Senate bill states that if out-of-network benefits are covered for mental health and substance abuse, they must be at parity to the out-of-network in the medical-surgical benefit.