Parity Regulations Published in Today's Federal Register
As expected, the regulations implementing the federal Mental Health Parity Act of 1996 were jointly issued by the Departments of Health and Human Services, Labor and Treasury in today’s Federal Register. The regulations, are available on-line at http://gatekeeper.dol.gov/dol/pwba/public/regs/fedreg/final/97033262.htm. As readers of the NAMI E-News know, supporters of parity in insurance coverage for mental illnesses have been engaged in a struggle to ensure that the regulations meet the law’s objective of ending discriminatory annual and lifetime dollar limits that restrict coverage for treatment of brain disorders such as schizophrenia, bipolar disorder and major depression. After January 1, 1998, employers with 50 or more workers must have equal annual and lifetime dollar limits for physical and mental illnesses.
Throughout the process of drafting the regulations, the 1% increased cost exemption has been the most contentious issue. This provision will allow plan sponsors whose costs rise more than 1% as a result of complying with the law to exempt themselves. On this critical issue, NAMI and its allies won a huge victory in narrowing the scope of exemption and requiring employers to first comply with the law for at least 6 months before being able to use the exemption. Firms seeking the exemption must use retrospective data based upon actual experience with equal lifetime and annual limits. The regulations specify that costs must be directly attributable to compliance with the MHPA or the administrative costs associated with compliance, i.e. actual claims and administrative costs, not premium costs.
The regulations estimate that approximately 30,000 health plans, or about 10% of all health plans that must comply with the law, will seek an exemption under the 1% provision. This represents nearly 11 million covered lives. However, because of the costs associated with seeking an exemption, and the expected deterrent effect that will result from disclosure of the plan sponsor’s name, the regulations estimate that less than a quarter (22%) of the eligible plans will pursue it.
In addition, firms seeking to use the exemption must first notify 1) the appropriate government enforcement agency and 2) all plan participants of their intent to waive the law. While neither the government nor plan participants will be able to see the proprietary data upon which the exemption is based, they must make available to each a summary of the data upon which their 1% cost increase claim is based. This summary must include overall plan expenditures, the dollar value of claims that would have been denied if parity were not in place, and administrative costs attributable to compliance with the MHPA. Plan sponsors will be specifically barred from including any individually identifiable information in a data summary. Once an employer submits a notice under the 1% exemption, they will have to wait 30 days before the exemption becomes effective. However, this notice is not a formal application and employers do not have to wait for approval from the government before proceeding.
The regulations will allow third parties, including NAMI and its state and local affiliates, to obtain the names of these employers. A limited number of employers will be allowed a 3-month "grace period" in 1998 if they reasonably believed that the 1% cost increase would have been available to them on a prospective basis. The regulations closely follow the analysis that was sent to all NAMI E-News subscribers on December 15 (if you have deleted this message from your computer, please contact email@example.com for another copy).
Congratulations Mr. President
As readers of the NAMI E-News know, NAMI waged a very public effort to urge President Clinton to make sure that employers first comply with the law before seeking to exempt themselves from the minimal anti-discrimination law. The NAMI policy staff would especially like to thank everyone who made the effort to contact the White House in recent weeks in support of strong parity regulations. On November 5, NAMI ran a half-page paid advertisement in the Washington Post calling on President Clinton to "stand tall" against opposition to parity. With this victory, NAMI is urging all chapters and affiliates to contact the White House and express NAMI’s gratitude for the President’s support toward ending discrimination against people with severe mental illnesses and their families. Please thank the President for opposing the efforts of special interest groups to gut the federal parity law and absolve employers and insurance companies from their responsibility to offer equitable coverage for serious brain disorders. The address for the White House is 1600 Pennsylvania Avenue, N.W., Washington, D.C. 20500. The President’s e-mail address is firstname.lastname@example.org.