Rules on Addiction and Mental Health Parity Issued by Obama Administration

New rules for implementing the addiction and mental-health parity law passed by Congress in 2008 are being hailed by advocates, despite their issuance three months after the law actually went into effect.

The interim final regulations unveiled on Jan. 29 included detailed guidelines and guidance on implementing the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), which took effect in October 2009. “The rules we are issuing today will, for the first time, help assure that those diagnosed with these debilitating and sometimes life-threatening disorders will not suffer needless or arbitrary limits on their care,” said U.S. Department of Health and Human Services (HHS) Secretary Kathleen Sebelius.

The final rules will go into effect on April 5, and will be applicable to insurance plan years that begin on or after July 1. Rep. Patrick Kennedy (D-R.I.), who along with former Rep. Jim Ramstad (R-Minn.) was a key advocate for the Wellstone bill in Congress, said the rules “provide the critical guidance necessary to ensure that this landmark legislation is implemented fairly and justly, and will ensure that insurance companies are no longer allowed to discriminate against those suffering from addiction and mental illness.”

Stephen Gumbley, vice chairman of Faces and Voices of Recovery, an advocacy organization for individuals in recovery from addictions, said the rules had been released “not a moment too soon.”

“Some insurance companies have already put plans in place that fall short of this law’s intent, severely restricting patients’ access to life-saving care,” said Gumbley, who cited United Healthcare and Blue Cross/Blue Shield as examples. “This needs to change, and we encourage individuals and families covered by these plans to ask them to fully implement policies consistent with this new law.”

Quantitative and Qualitative Limits Addressed

The Wellstone parity law does not require health plans to cover addiction or mental illness, or any specific types of treatment, but mandates that plans which do include such benefits treat these conditions on par with other illnesses. According to the law, group health insurance plans may not limit benefits or impose higher patient costs for addiction and mental health treatment than those applying to general medical or surgical benefits.

In states that mandate certain addiction or mental-health benefits, the law now requires that they be provided on a parity basis with other health services.

Issued jointly by HHS and the departments of Labor and Treasury, the interim final rule provides an enforcement framework for the Wellstone act. The rules explicitly state that parity applies to both quantitative differences such as higher deductibles or caps on the number of days patients can stay in treatment and qualitative limits such as preauthorization requirements and medical management.

The rule breaks down benefits into six categories: inpatient in-network; inpatient out-of-network; outpatient in-network; outpatient out-of-network; emergency care; and prescription drugs. If a plan provides coverage for addiction and/or mental health services in any of these categories, it must be on par with the medical/surgical benefits provided in that category, according to the interim final rule.

The parity law applies only to public and private employer-based plans from companies with 50 or more employees; it also applies to Medicaid managed-care plans, but the interim final rule doesn’t cover Medicaid. Regulations for Medicaid parity will be issued later, according to HHS.

Enforcement of the law will fall primarily on states, which regulate insurance plans, but both HHS and the Department of Labor have established compliance hotlines.

Law to Affect More than 100 Million Americans

Administration officials estimate than 150 million Americans are covered by employer-provided health plans, 90 percent or more of which currently include addiction and mental-health benefits and thus would be subject to the Wellstone law. Speaking on background, an administration officials said there was “no evidence of companies dropping their benefits in any significant way attributable to parity.”

Under the law (and the interim final rule), all health plans must implement the parity rules. However, they may subsequently opt out if they can prove that parity caused their costs to rise by 2 percent or more in the first year or 1 percent or more in subsequent years. Non-federal government plans also have the ability to opt out of the law.

Rules for determining these exemptions have not been released yet; the Congressional Budget Office estimated that parity would result in a cost increase of .2 to .4 of one percent for health plans.

More than 400 comments on parity were reviewed as part of the rulemaking process. The interim final rule will be published in the Federal Register on Feb. 2, after which consumers, insurers, providers and other interested parties will have 90 days to comment on unresolved issues surrounding non-quantitative treatment limits, drug formularies, the scope of benefits, and more. Deadline for comments is May 3.

See also: Faces and Voices of Recovery press release (PDF)