Deloitte, published in BenefitsLink.com, 12/12/11
The Department of Labor released a set of Frequently Asked Questions (FAQs) responding to questions raised regarding how the new parity requirements apply to nonquantitative treatment limitations, such as medical management standards, formulary designs, standards for provider admission to the network, and methods to determine reasonable and customary fees.
The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) imposes standards on the financial requirements and treatment limitations that a group health plan or group health plan issuer may impose on mental health and substance use disorder (MHSUD) benefits. Generally, financial requirements (e.g., copayments, coinsurance) and treatment limitations (e.g., limits on the number of outpatient visits, or prior authorization requirements) cannot be more restrictive than those that apply to substantially all medical and surgical (MS) benefits. With regard to financial requirements or quantitative treatment limitations (e.g., the number of inpatient days covered), a plan cannot impose a requirement or limitation on MHSUD benefits that is more restrictive than what is imposed on two-thirds (2/3) of the MS benefits in the same classification. (There are six classifications: inpatient in-network, inpatient out-of-network, outpatient in-network, outpatient out-of-network, emergency care, and prescription drugs.) As the FAQs explain, if a plan generally applies a $25 copayment to at least 2/3 of outpatient, in-network MS benefits, a higher copayment could not be imposed on outpatient, in-network MHSUD benefits. Plans are prohibited altogether from imposing separate financial requirements or treatment limitations that apply only to MHSUD benefits.
Treatment Limitations Must Be Comparable
The Labor Department recently issued FAQs to address questions raised by stakeholders concerning these MHPAEA standards as they apply to nonquantitative treatment limitations such as medical management standards that limit or exclude benefits based on medical necessity or medical appropriateness, or on whether the treatment is experimental. The rules require that processes, strategies, evidentiary standards and other factors which are used to apply nonquantitative treatment limitations to MHSUD benefits must be comparable to and applied no more stringently than those applied to MS benefits, except to the extent that recognized clinically appropriate standards permit a difference.
The FAQs make clear that applying a nonquantitative treatment limitation to MHSUD benefits that is not applied to MS benefits — such as requiring prior authorization — is prohibited. Likewise, a nonquantitative treatment limitation that is applied more strictly in practice is prohibited — such as where prior authorization is required for all inpatient benefits, both MHSUD and MS, but the inpatient MS benefits are routinely approved for seven days while the inpatient MHSUD benefits are routinely approved for only one day.
Differences Based on Clinical Standards Are Permitted
Differences in applying nonquantitative treatment limitations are permissible if they are based on recognized clinically appropriate standards of care. While this exception would not justify a stricter limitation being applied for all MHSUD benefits than for all MS benefits, it could justify some differences (e.g., in prior authorization practices) being applied with regard to individual conditions or treatments, the FAQs explain. For example, a plan that considers a wide range of factors in designing medical management techniques for both MHSUD and MS benefits — such as cost of treatment, high cost growth, variability in cost and quality, elasticity of demand, provider discretion in determining diagnosis (or type or length of treatment), clinical efficacy of proposed treatments or services, licensing and accreditation of providers, and claim types with a high percentage of fraud — might be permitted to require prior authorization for some MHSUD benefits as well as for some MS benefits.
The Department cautions, however, that this approach would not likely justify a plan design that requires prior authorization for all outpatient MHSUD health benefits but for only three types of outpatient MS benefits (outpatient surgery; speech, occupational and physical therapy; and skilled home nursing visits).
An evidentiary standard used by the plan and applied no more stringently to MHSUD benefits than to MS benefits is permitted, even though it results in a difference in the application of the limitation to the two types of benefits. For example, plan design could apply concurrent review to inpatient care where there are high levels of variation in length of stay (measured by a coefficient of variation exceeding 0.8), even though applying the standard results in sixty percent (60%) of MHSUD conditions but only thirty percent (30%) of MS conditions being subject to concurrent review, the FAQs explain.
Maximum Copayment Is Determined by Classification
The maximum copayment that can be applied to MHSUD benefits is determined by the predominant copayment that applies to substantially all MS benefits within a classification. The FAQs explain that this means a plan would generally not be limited in the copayment it could charge for all MHSUD providers to that charged for MS generalists. One must look to the classification, the FAQs instruct. If the copayment that meets the standard is the one charged for a MS specialist, that copayment can be charged for all MHSUD benefits within that classification. Similarly, if the copayment that meets the standard is the one charged for a MS generalist, then that is the copayment that can be charged for all MHSUD benefits within that classification.
Employers Continue to Offer MHSUD Benefits
The Government Accountability Office (GAO) recently reported that employers are continuing to offer MHSUD coverage consistent with what was offered prior to passage of the MHPAEA. The November 2011 report reveals that, of the employers who responded to the GAO survey, 96 percent offered MHSUD coverage for the current plan year and for 2008, the year before the Act was passed. The types of MHSUD diagnoses included and excluded in employer coverage remained consistent between the current year and 2008, the GAO also reported.