On October 3, 2008, Congress enacted the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Act of 2008 (MHPAEA). This law requires health insurance plans, which cover mental health or substance use disorders, to offer coverage for those services in a manner that is no more restrictive than the coverage provided medical and surgical conditions. It does not require health plans to provide mental health and substance use disorder benefits. However, if plans provide them, such benefits must be in parity with medical and surgical benefits.
On November 8, 2013, the Departments of Health and Human Services, Labor and Treasury, acting together, issued a final rule to implement MHPAEA. This final rule requires parity between mental health and substance use disorder benefits and medical and surgical benefits in group and individual health plans. It prohibits health plans that offer mental health and substance disorder benefits from making financial requirements and treatment limitations for those benefits - such as copay, deductibles and visit limits – generally more restrictive than those allowed for medical and surgical benefits.
Beginning in 2014, the Affordable Care Act will require small group and individual market plans in existence before March 2010 to comply with these parity requirements. Qualified health plans offered through health insurance exchanges also must include mental health and substance use disorder benefits as one of the 10 essential health benefits, which must be included in those health plans. There are exceptions to the parity requirement, such as individual and small employer plans created before January 1, 2014, church sponsored and nonfederal government sponsored plans, retiree-only plans, TriCare, Medicare, and traditional Medicaid plans.
Under the final rule, health plans must ensure that parity applies to intermediate levels of care received in residential treatment or intensive outpatient settings. The final rule also clarifies the scope of transparency required by health plans, including the disclosure rights of plan participants, to ensure compliance with the law. Health plans must make available information concerning mental health and substance use disorders, medical necessity criteria and the reasons for the denial of such services; and, if requested, health plans must provide mental health necessity criteria to plan administrators, participants and beneficiaries, as well as contracted providers. It also requires plans to explain denials to participants and beneficiaries. In addition, the final rule clarifies that parity applies to all plan standards, including geographic limits, facility-type limits and network adequacy. It eliminates an exception to the existing parity rule for non-quantitative treatment limitations that was determined to be confusing, unnecessary and open to abuse.
The final rule applies to group health plans and health insurers offering group health insurance for plan years on or after July 1, 2014. It also governs individual insurance coverage for policy years beginning on or after July 1, 2014.