Federal Parity for Mental Illness and AddictionIn November 2013 the federal government released rules to implement the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (MHPAEA), a historic bipartisan bill passed by Congress in 2008 to ensure equal coverage of treatment for mental illness and addiction.
What is federal parity?
Parity is the recognition of mental health conditions and substance use disorders as equal to physical illness. Before this law, mental health treatment was typically covered at far lower levels in health insurance policies than physical illness. Federal parity will help ensure fair and equal coverage of mental health and substance use disorders for people in large self-insured plans, which include more than 82 million Americans, as well as insurance purchased through health insurance marketplaces.
Will my health insurance plan be required to cover mental health services?
Federal parity does not require plans to offer coverage for mental health or substance use disorders, but if these conditions are covered, than the new law requires coverage that is equal to coverage for other health conditions. Health insurance plans are also allowed to decide which mental health and substance use disorders, if any, they will cover. State-regulated group health plans must continue to follow state requirements to provide coverage of specific (or all) mental health and/or substance use disorders. Check to see whether your state has a parity law at www.nami.org/stateparity .
Which health insurance plans have to follow federal parity?
Health plans that MUST follow federal parity include:
- Group health plans for employers with 51 or more employees.
- The Federal Employees Health Benefits Program.
- State Children’s Health Insurance Programs (S-CHIP).
- Some state and local government health plans.
- Any health plans purchased through the Health Insurance Marketplaces.
Which health insurance plans DO NOT have to follow federal parity?
Health plans that DO NOT have to follow federal parity include:
- Medicare. (However, Medicare's cost-sharing for outpatient mental health services do comply with parity.)
- Individual plans not purchased through the health insurance marketplaces.
- Group plans with 50 or fewer employees.
- Plans who received an exemption based on increase of costs related to parity.
Federal parity allows health insurance plans to seek an exemption from parity requirements for a period of one year if they can document that having to follow the law results in costs going up more than 2 percent in the first year or 1 percent after that. An analysis must demonstrate that increased costs were directly related to parity. If an exemption is granted, a plan must come back into compliance with parity after one year.
This cost exemption is a new option for state-regulated large group plans. However, the administrative costs of obtaining and using this cost increase exemption are expected to exceed any potential savings to a health plan from using this exemption.
What services and treatments must be covered equally under federal parity?
If a plan has to follow federal parity law, then the following must be covered equally when it comes to treatment limits and payment amounts:
- Inpatient in-network and out-of-network.
- Outpatient in-network and out-of-network.
- Intensive outpatient services.
- Partial hospitalization.
- Residential treatment.
- Emergency care.
- Prescription drugs.
- Maximum out-of-pocket limits.
- Geographic location.
- Facility type.
- Provider reimbursement rates.
Federal parity also applies to clinical criteria used by health insurers to approve or deny mental health or substance use treatment. The standard for medical necessity determinations—whether the treatment or supplies are considered by the health plan to be reasonable, necessary, and/or appropriate—must be made available to any current or potential health plan member upon request. The reason for denials of coverage must also be made available upon request.
What if my state has a parity law?
If a state has a stronger state parity law, then health insurance plans regulated in that state must follow those laws. For example, if state law requires plans to cover mental health conditions, then they must do so, even though federal parity makes inclusion of any mental health benefits optional.
Federal parity replaces state law only in cases where the state law “prevents the application” of federal parity requirements. For example, if a state law requires some coverage for mental health disorders, then the federal requirement of equal coverage will trump the “weaker” state law.
Where do I go if I think my insurance plan is not following parity?
States are responsible for parity in health insurance plans bought through state or federally facilitated Health Insurance Marketplaces. Go here for a list of State Health Insurance Departments.
The Federal Center for Medicaid and Medicare Services (CMS) can also enforce parity if states do not enforce the law. If you have concerns about your insurance plan’s not following parity, contact the CMS help line at 1 (877) 267-2323, extension 6-1565 or email firstname.lastname@example.org.
The U.S. Department of Labor has authority over enforcing parity in self-insured plans. To find out more, call the Department of Labor’s toll free number at 1 (866) 444-3272 or contact a benefit advisor in one of the Department’s regional offices, www.askebsa.dol.gov.
The Role of Advocates
For parity to achieve its goals, it is important for mental health advocates to work closely with their state insurance divisions. Together, advocates can promote education about parity and compliance with parity requirements, monitor results, help handling of consumer complaints, increase transparency and responsibility, and expand needed consumer protections.