The Mental Health Parity and Addiction Equity Act (MHPAEA) is a federal law amended in 2008 by the Patient Protection and Affordable Care Act. This law ensures people with mental health and substance abuse disorders are offered benefits comparable to their general medical/surgical health coverage. Policies and laws surrounding the MHPAEA were first introduced in 1961 under President Kennedy. At its core, the MHPAEA’s parity rules are a nondiscrimination measure.
This law underscores the notion that those suffering from mental health and substance abuse disorders are just as worthy of protection as those with medical, physical or surgical needs. Like so many broad, complex bodies of law, however, the MHPAEA is not always implemented properly in the self-funded industry or America’s healthcare system as a whole. Open, clear communication, consulting with professionals, and standardization of tools and materials can often help with establishing and adhering to proper compliance procedures.
In practice, although federal and state regulators have not always been efficient or consistent in enforcing these laws. In any event, it is important to be aware of the protections, limitations, and requirements created by the Mental Health Parity and Addiction Equity Act.
The MHPAEA is beneficial for those who may need the most intensive treatment and financial protection. To comply with specific requirements of the law, therefore, health plans need to pay close attention to the benefits they offer.
Protections under the MHPAEA include financial requirements and treatment limitations. The MHPAEA is best-known for its parity requirement, which requires that benefits related to mental health or substance abuse disorder treatment cannot have more restrictions or limitations than the restrictions placed on general medical and surgical benefits. Examples of treatment limitations that are easily quantifiable, and therefore easily comparable between mental health/substance abuse disorder benefits and medical/surgical benefits include copayments, deductibles, and coinsurance. It is very simple to gauge whether a given mental health benefit is subject to a higher coinsurance than a given medical service, for instance.
Under MHPAEA, you are also protected against nonquantitative treatment limitations (NQTL), such as precertification requirements or uneven network provider participation. To ensure compliance with this NQTL parity requirement, the Consolidated Appropriations Act imposes an additional MHPAEA requirement that health plans subject to the law perform comparative analyses to demonstrate parity.
MHPAEA regulations mandate that the health plan’s identification of whether a given benefit is related to medical/surgical or mental health/substance abuse disorders must be in accordance with general standards of current medical practice. Regulations also outline the MHPAEA’s disclosure provisions requiring that the appropriate criteria for medical necessity determinations are made available in certain situations.
Some health care plans may be eligible for a one-year exemption from MHPAEA compliance. To be considered exempt from certain parity regulations, health care plans and issuers must notify their participants and beneficiaries of their elected exemption. Some exceptions under MHPAEA also state that some regulations may not be applicable in specific situations. Some of these include:
- Small employers: This includes self-insured non-federal governmental plans or self-insured private employers with 50 or fewer employees.
- Retiree-only group health plans: The MHPAEA does not apply to retiree-only plans under the Employee Retirement Income Security Act (ERISA).
- Increased cost exemptions: Health care plans and issuers may be eligible for an exemption if they see an increased cost of at least 2% in the first year that MHPAEA applies to the plan or coverage.
State and Federal Requirements
The MHPAEA does not require health plans to cover mental health or substance abuse disorder benefits. If a given health plan does so cover, however, the plan becomes subject to parity-related payment amount and treatment limits, as well as other conditions of coverage, such as facility type, provider reimbursement rates and strategies, and underlying criteria used to approve or deny claims.
Some state parity laws under MHPAEA may already provide a wide range of coverage for mental health or substance abuse disorder benefits, which may also include substance abuse treatment. Other states may only provide coverage for specific mental illnesses according to individual state essential health benefits plans. The MHPAEA is not designed to replace those state laws, but supplement them, and a health plan subject to state law is required to comply with both the state law and the MHPAEA.
If coverage is denied to a patient and the patient feels that he or she has been discriminated against or that the health plan has otherwise violated applicable law, both states and the federal government provides patients formal complaint and appeals methods.
We urge you to perfect your health plan with The Phia Group, LLC. Our goal is to make health benefits more affordable for employers and employees alike. We are committed to delivering custom solutions to meet your specific needs, through plan document drafting, subrogation and overpayment recovery, claim negotiation, general consultation, fiduciary transfer, and much more.
Contact us today to learn more about The Phia Group and how we can help empower your plans.