Applying Mental Health Parity in 2014

January 21, 2014 at 11:59 AM Lucy Ye Leave a comment

Hello from MedSpan Access Insights in the New Year! We hope that you had a wonderful end to 2013 and like us, are looking forward to all that’s already happening in 2014.

This week we’ll take a closer look at the November 2013 final ruling of the Mental Health Parity Act which becomes effective this month. While the Act is not new, these guidelines will decisively affect how it is implemented throughout the country.

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The Paul Wellstone and Peter Domenici Mental Health Parity and Addiction Equity Act (or MHPAEA) of 2008 aims to increase access to mental health and addiction treatment services in the United States. MHPAEA is projected to expand mental health and substance abuse benefits and parity protection to more than 50 million Americans.¹ Mental health is one of the Essential Health Benefits under the Affordable Care Act (see figure below), and the ACA expanded the parity law to include individual as well as group plans.²

Source: AHIP Center for Policy and Research

The MHPAEA prohibits discriminatory practices that limit insurance coverage for behavioral health treatment and services. Insurers with plans that offer mental health or substance abuse disorder (MH/SUD) benefits are required to provide the same access to these benefits as to medical/surgical benefits. This means that they are not allowed to impose higher cost sharing requirements or limit the MH/SUD services offered in their medical package.²

The MHPAEA is a big step towards improving access to behavioral health services in the United States, but the vagueness of specific provisions, a complaint-driven enforcement system and low public awareness has resulted in “weak and inconsistent” enforcement of the law.^3,4 Denial of claims to MH/SUD benefits are significantly higher than for other medical treatments and services, and it is difficult for members to successfully appeal the denial. The final ruling introduced in November 2013 addresses these challenges.

The final ruling clarifies and expands upon several areas of the law. First, it states that parity applies to intermediate care services, including partial hospitalization and intensive outpatient care in residential treatment facilities, which significantly expands the scope of service. Second, it indicates that parity applies to all plan standards, including geographic limits, facility-type limits and network adequacy.Third, the ruling clarifies the standards of transparency required for insurers, including disclosing reasons for denials to MH/SUD benefits to members, in order to ensure compliance with the law.²

Finally, the guidelines state that non-quantitative treatment limits (NQTLs) (such as medical management, step therapy and prior authorization) cannot be applied to mental health benefits in a more stringent manner than NQTLs for medical/surgical benefits. It also eliminates an exception that allows the application of mental health NQTLs based on “clinically appropriate standards of care” separate from those for medical/surgical benefits.⁷ This last provision is intended to close a major treatment limitation loophole for insurers.

Though the impact of the final ruling is not yet known, some studies have shown that most insurers have changed their financial standards to comply with MHPAEA, and very few have stopped offering MH/SUD benefits entirely because of the law.⁵ This indicates that health plans are getting on board with mental health parity, and we will likely see this continue at a greater degree with the final ruling.

Increased access to mental health services, along with continued de-stigmatization and awareness education, could lead to significantly greater demand for mental health treatment and services. In the United States, only 36% percent of people who have mental disorders are receiving treatment, according to National Institute of Mental Health.⁸ Mental health expenditure in the U.S. is projected to grow steadily as more people gain access to treatment, and the November 2013 ruling will definitely enhance this trend.

This goes for prescription drug spending as well. While spending for MH/SA pharmaceuticals accounted for nearly half of all MH/SA spending in 1993-2000, a 2007 SAMHSA report projected that prescription drug spending would diminish due to insurers’ increasing use of tiered formularies and step therapy authorizations⁹ (in other words, the NQTLs listed above). The November ruling limits the use of NQTLs for MH/SA treatment, so access to and reimbursement for MH/SA prescription drugs is likely to increase.

Source: SAMHSA MH Spending Report 1986-2009

The November ruling has one glaring omission: it does not address how parity applies to Medicaid, Medicare or other government-run plans. Together these make up the majority of US mental health spending (see figure above), ¹⁰and Medicaid insures a majority of the serious mental illness (SMI) population. Consequently, it is difficult to paint a picture of how MHPAEA will impact mental health expansion without knowing how it will affect Medicaid and other government programs. Information on how these programs will be affected by MHPAEA is expected from the DHHS this month.

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Sources:

1. http://www.whitehouse.gov/blog/2013/08/21/affordable-care-act-and-expanding-mental-health-coverage
2. http://beta.samhsa.gov/health-reform/parity
3. http://ucsfuchastingsconblog.tumblr.com/post/54351211296/a-short-primer-on-mental-health-parity-in-california
4. http://www.medscape.com/viewarticle/814348
5. http://www.hpm.org/en/Surveys/Johns_Hopkins
6. http://www.communitycatalyst.org/doc-store/publications/mh-parity-state-enforcement_062013.pdf
7. http://cms.hhs.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/mhpaea_factsheet.html
8. http://www.nimh.nih.gov/statistics/1ANYDIS_ADULT.shtml
9. http://store.samhsa.gov/shin/content//SMA08-4326/SMA08-4326.pdf
10. http://store.samhsa.gov/shin/content//SMA13-4740/SMA13-4740.pdf