Mental Health Parity Law as It Relates to Health Insurance

The Mental Health Parity Act (MHPA) was signed into United States law in 1996. The legislation mandates that any annual or lifetime dollar limits imposed on mental health benefits must be at least as high as the corresponding limits for physical health benefits provided by group health insurance plans — or insurers associated with such plans.

Before this legislation and similar measures were implemented, mental health care coverage was not compulsory for insurers, resulting in limited access to adequate treatment. This highlights the significance of the act in ensuring comprehensive health care coverage for mental health services.

Here, we'll discuss the 2008 update to the MHPA, how to remain compliant with mental health parity laws and what the future may look like in terms of mental health legislation.

What is mental health parity law?

Since 1996, mental health parity law has undergone a few upgrades — most notably in 2008 when former U.S. senators Paul Wellstone and Pete Domenici signed the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) into federal law. The intent of this new legislation, which went into effect on January 1, 2009, was largely meant to fill gaps and close loopholes that the former act left open.

Under this new act, health insurers and group health insurance plans are obligated to maintain parity between mental health or substance use disorder benefits, and medical and surgical benefits. This means that financial requirements like co-pays, deductibles and out-of-pocket maximums — as well as treatment limitations on benefits such as visit caps or hospital stays — cannot be more restrictive for mental health services.

Essentially, the updated act ensures that individuals seeking mental health or substance use disorder treatment have equitable access to necessary care without facing discriminatory financial barriers.

In accordance with the MHPAEA, insurers are required to provide detailed explanations and justifications in cases where they deny reimbursement or payment for mental health or substance abuse treatment.

There are some exceptions with the MHPAEA in terms of who the legislation does and does not apply to. In summary, the MHPAEA parity requirements typically do not apply to many public programs and other program types, such as:

• Retiree-exclusive group health insurance plans.
• Medicare.
• Fee for service Medicaid.
• Church-sponsored plans.
• Veterans Administration plans.
• Grandfathered plans*.

*A grandfathered plan refers to those that were in existence on March 23, 2010. These plans are exempt from the obligation to offer all the benefits and protections mandated by the Affordable Care Act (ACA).

In general, the act applies to most group health insurance plans and health issuers that provide medical/surgical benefits and either mental illness or substance abuse disorder benefits.

Remaining compliant with mental health parity law

Remaining compliant with mental health parity law is important, and for reasons that go beyond the law. Non-compliance can result in a number of problems for consumers. Most prominently, nonconformity with mental health parity laws can cause problems for employees who require mental health services. It may prevent or significantly hinder their access to the appropriate — and recommended — care that they need.

To ensure employees are getting the best possible insurance coverage, here are a few best practices for ensuring compliance with mental health parity laws:

Ensure network adequacy for mental health providers

It is essential to have an adequate network of mental health providers to meet the needs of employees. It's best practice to verify insurance providers to ensure they offer a broad range of mental health specialists, such as:

• Psychiatrists.
• Psychologists.
• Therapists.
• Counselors.

Remove prior authorization barriers

Eliminating or minimizing authorization requirements can simplify the process for employees. Requirements can often create problems — such as delays in treatment — which can be problematic for individuals with acute mental health needs.

Benefits packages that ensure mental health services are treated no differently than physical health services can help improve access for employees and compliance with parity laws.

Provide adequate coverage for intensive treatments

Some mental health conditions may require more intensive treatment, such as inpatient hospitalization. To comply with parity laws, employee benefits packages need to offer sufficient coverage for intensive mental health and substance abuse disorder treatments — just as they would for physical health conditions.

Benefits packages should not have limitations, higher out-of-pocket costs or otherwise be disproportionate compared to physical health coverage.

Offer employee assistance programs (EAPs) and mental health resources

Employers can go beyond compliance to supplement benefits packages with additional resources to support employees' mental health. EAPs can provide confidential counseling services, referrals and education on mental health and any related topics.

These programs can help destigmatize mental health conditions in the workplace and foster employees' mental well-being.

Regularly review and update benefits packages

One of the most important parts of mental health parity compliance is to stay privy to rules and regulations together with reviewing and updating benefits packages accordingly. If external support is needed, consult with legal counsel that has expertise in mental health parity. This can help you ensure that your organization's policies align with the latest regulations.

The future of mental health parity law

Mental health parity law in the United States will no doubt continue to evolve. While no one knows for certain what the future holds, we can make predictions.

Here are a few examples of changes that may arise in the near or distant future:

Expanded coverage and scope

As we continue to learn more about mental illness and effective ways to treat various conditions, the coverage and scope of benefits packages as they relate to mental health will continue to progress. Lower costs and increased coverage for behavioral health insurance are two examples of changes that some states are currently seeking.

Services such as teletherapy, intensive outpatient programs, and alternative therapies like acupuncture or mindfulness-based interventions may become a standard.

Enhanced enforcement and oversight

Efforts to strengthen enforcement mechanisms and increase oversight could be seen in the future. This could involve more rigorous monitoring of insurance plans and stricter penalties for non-compliance with mental health parity laws. Regulatory agencies may be granted greater authority and resources to ensure compliance across the board.

Addressing disparities and access issues

Recognizing the existing disparities in mental health care, future policies may aim to address issues related to affordability — which is the most commonly reported barrier to health care access. Other impediments to access include language barriers and transportation limitations. Future policies may increase measures to improve the availability of mental health services in underserved areas, ensuring parity for marginalized populations.

Integration of mental health and primary care

Mental health parity laws, as they currently exist, do not mandate the integration of primary care and mental health. Oftentimes, individuals seeking mental health treatment are referred to specialists. Laws may evolve to recognize the importance of addressing mental health concerns in a holistic way, focusing on incentivizing primary care providers to offer mental health screenings and treatments.

Emphasis on prevention and early intervention

The importance of early intervention in preventing mental health crises cannot be understated. Recognizing early signs of mental health conditions or substance use disorder may make it easier for the affected individual to receive effective treatment. However, current mental health parity laws do not put enough emphasis on preventative measures, such as employee wellness programs, mental health education, and early detection programs.

At Lewis & Ellis, we understand the importance of mental health parity and the criticality of compliance with related laws. We provide in-depth health care industry consulting services, including policy planning, financial management, and managed care strategies that keep you informed and prepared for changes to stay ahead of the health care reform curve.