Final parity rule supports protections for mental health and
On Nov. 8, 2013, mental health stakeholders across the nation
applauded the release of a "Final Rule" implementing the Mental
Health Parity and Addiction Equity Act of 2008
(MHPAEA).1 The long-awaited regulations arrived more
than five years after the MHPAEA was signed into law. Although
interim regulations were issued in 2010, the Final Rule offers much
needed clarification and more definitive guidance on a complex area
of health care law.2
Background on MHPAEA
The MHPAEA is a federal law that requires many health benefit
plans to cover mental health and substance use disorder (MH/SUD)
services to the same extent the plans cover medical and surgical
services. For example, health plans cannot impose greater financial
requirements (e.g., copayments) or more restrictive non-financial
treatment limits (e.g., prior authorization policies) on behavioral
health care. The MHPAEA is not a mandated benefit law in that it
does not require a health plan to offer mental health or substance
use disorder benefits. However, if a health plan offers these
benefits, it must do so in compliance with the MHPAEA.
Health plans subject to MHPAEA requirements include large group
employer-sponsored health plans (both fully insured and
self-funded), Medicaid plans administered by a Managed Care
Organization (MCO), and large non-federal government employee plans
that have not "opted out" of the law. The Patient Protection and
Affordable Care Act (ACA)3 extends federal parity
protections to even more health plans. As of Jan. 1, 2014, all
individual health plans and most small group plans must comply with
the MHPAEA as a result of the ACA's "essential health benefits"
Health plans have some time to come into full compliance with the
MHPAEA's final regulations; new provisions in the Final Rule do not
take effect until plan years beginning on or after July 1, 2014.
Because most health plans operate on a calendar year basis, they
will have until Jan. 1, 2015, to become fully compliant.
Final Rule Highlights
While the MHPAEA provides significant consumer protections for
health plan members requiring mental health or substance use
disorder treatment, the lack of final regulations led to
uncertainty surrounding application of the law. State and federal
agencies charged with enforcing the MHPAEA were unsure how to
effectively implement the law's requirements, resulting in
relatively weak enforcement efforts. The final regulations provide
more clarity and give more clout to the agencies, which will
ultimately improve access to needed treatment of mental health and
substance use disorders.
The key provisions of the final regulations include:
- Clarification that parity requirements apply to the full "scope
of services" offered by a health plan, including "intermediate"
services such as residential treatment, partial hospitalization and
intensive outpatient programs.
- Prohibition of discriminatory limitations on coverage based on
provider geographic location, facility type, or specialty.
- A requirement that insurers disclose more comprehensive
information about how they make coverage decisions.
- Clarification that states have primary enforcement authority
when it comes to parity.
Parity across a broader scope of services
Prior to the Final Rule, a major unresolved issue was whether the
MHPAEA's requirements apply to the full "scope of services"
available to treat mental health and substance use disorders. While
the MHPAEA and its 2010 interim regulations discussed inpatient and
outpatient benefits, they were silent on "intermediate" services
such as residential treatment, partial hospitalization, and
intensive outpatient programs. Significantly, the Final Rule
clarifies that intermediate MH/SUD services are subject to federal
parity requirements. While health plans do not have to offer
benefits for any particular intermediate MH/SUD service, a plan
must cover any intermediate MH/SUD services that are comparable to
intermediate services covered for medical/surgical
Non-Quantitative Treatment Limitations
The MHPAEA and its interim regulations prohibited plans from
imposing disparate financial requirements (e.g., copayments) for
MH/SUD treatment, and barred plans from covering fewer office
visits or hospital days for such care. The interim rule also
interpreted the law to prohibit "non-quantitative treatment
limitations" (NQTLs), which cannot be measured in numbers or dollar
amounts. Two examples of NQTLs are prior authorization procedures
and "fail first" policies, where patients must first try and fail
at a lower level of care (e.g., outpatient therapy) before a higher
level of care (e.g., residential treatment) will be approved. Under
the law as interpreted in the interim rule, a health plan may not
impose any NQTL on mental health or substance use disorder benefits
unless a comparable NQTL is imposed on medical/surgical
The interim regulations included a partial list of NQTL practices
and policies covered by the MHPAEA. The list includes, among other
examples, medical necessity guidelines, prescription drug
formularies, and standards used to develop networks of health care
providers. The Final Rule adds two new examples of NQTLs: 1) the
design of provider network "tiers" and 2) coverage limits based on
geographic location, facility type, provider specialty and/or other
criteria that limit the scope or duration of coverage.
The Final Rule affirms several important provisions of the interim
regulations, including the understanding that the list of NQTLs is
illustrative, not exhaustive. The Final Rule also discusses
provider reimbursement rates as a form of NQTL and explains that
any factors a plan uses in setting provider reimbursement rates
(e.g., geographic market, supply and demand, training and licensure
of providers) must not be used more stringently for MH/SUD services
than for medical/surgical services.
The requirement that NQTLs be applied comparably across MH/SUD
benefits and medical/surgical benefits does not bar all variation
in the application of NQTLs. The Final Rule recognizes that health
plans may take into account "clinically appropriate standards of
care" in establishing medical coverage policies; however, the rule
eliminates clinical appropriateness as an express exemption from
compliance with the parity law.
Increased health plan transparency and disclosure
The Final Rule requires increased transparency and disclosure
about how health plans make decisions on what they cover. According
to the rule, health plans must disclose to members and providers
the medical necessity criteria applied to a particular MH/SUD
service or treatment, as well as the reasons for any denial of
coverage. Health plans must meet the requirements of the MHPAEA
Final Rule in addition to any disclosure requirements under other
state or federal laws, such as the Employee Retirement Income
Security Act (ERISA) and the ACA. For example, ERISA requires large
group health plans to provide consumers with copies of the
"instruments" under which the plan operates. The MHPAEA Final Rule
defines "instruments" to include medical necessity criteria and
policies establishing NQTLs for both medical/surgical and MH/SUD
benefits. For plans not subject to ERISA, the ACA similarly affords
consumers the right to receive copies of documents relevant to a
benefits claim. Access to more complete plan information about
MH/SUD benefits will make it easier to identify and establish
parity violations, a necessary precursor to adequate enforcement of
the federal parity law.
- Pub. L. No. 110-343, Div. C §§ 511-512, 122 Stat. 3881
(codified in scattered sections of 26, 29, and 42 U.S.C.).
- 78 Fed. Reg. 68,239 (codified at 26 C.F.R. pt. 54; 29 C.F.R.
pt. 2590; 45 C.F.R. pts. 146, 147).
- Pub. L. No. 111-148, 124 Stat. 119.