Parity in Health Insurance

System Transformation Issues

Policy

All Americans should have an enforceable right to essential health-care benefits, including behavioral health services. Mental Health America (MHA) calls on the federal and state governments to ensure, as a matter of law, that public and private health plans afford people coverage for and access to needed behavioral health care and treatment on the same terms as surgical and other medical care, without regard to diagnosis, severity, or cause. MHA supports:

  • Universal parity education,
  • Extensive parity counseling of people in need of treatment who are affected by health insurance policies that impede access to care,
  • Support of claimants in presenting persuasive parity evidence to insurers and regulators,
  • Prospective and retrospective reviews of health insurance data and medical necessity criteria,
  • Random audits of denials of coverage to ensure that decisions are transparent and evidence-based, and
  • Vigorous advocacy and litigation as needed to make parity a reality.
  • Congressional legislation to:
    • Appropriate funds to allow for randomized compliance audits, rather than just responding to complaints
    • Subject Medicare to parity
    • Eliminate Medicare’s arbitrary 190-day lifetime limit on inpatient psychiatric hospital care—a restriction that does not exist for any other inpatient Medicare service.
    • Authorize the DOL to collect civil monetary penalties for parity violations
    • Subject non-ERISA plans to the same disclosure requirements as ERISA plans
    • Eliminate the HIPAA provision allowing self-insured state and local governments to opt out of parity requirements
    • Subject ERISA and fee-for-service Medicaid plans to the same standard of proof as any other health insurance plan.
  • State legislation to improve state regulation of parity

This position statement illustrates the significant progress that the mental health and substance use advocacy community is making toward those goals and suggests the long road ahead. MHA aspires to support parity in everything it does.

Read full policy statement:
Full Policy Statement

Executive Summary

Historical Process. MHA has struggled to establish parity of health insurance coverage between mental health and substance use disorders and general medical conditions for forty years. Beginning with federal legislation in 1996, limited to mental health, the implementation of the statute proved frustrating and futile. The continuing practice of providing inferior behavioral health coverage compared to other medical coverage not only limited access to needed care, but subjected many Americans to the risk of major losses from out-of-pocket costs and diminished income and quality of life.

Employers lost valuable workers and incurred major expenses for leave. A landmark 2005 report by the National Business Group on Health recommended that employers equalize their medical and behavioral benefit structures given the over-whelming evidence that parity yields significant clinical benefits without increasing overall healthcare costs. Mental Health America and other mental health advocates then forged a coalition with business to support improved insurance-parity legislation, which finally culminated in passage of the Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”). Improvements, including mandating mental health and substance use coverage, were made through the Affordable Care Act (“ACA”) of 2010. Thus, the statutes must be read together.

NQTLs. The greatest difficulty with the implementation of the MHPAEA has been the comparison of non-quantitative treatment limitations (“NQTLs”). As passed, the MHPAEA definition of NQTL proved unworkable, and the implementing regulation effectively rewrote the statute. Under the regulation, “…[H]ealth insurance coverage may not impose an [NQTL] with respect to mental health or substance use disorder benefits in any classification unless, under the terms of the …health insurance coverage… as written and in operation, any processes, strategies, evidentiary standards, or other factors used in applying the non-quantitative treatment limitation to mental health or substance use disorder [“MH/SUD”] benefits in the classification are comparable to, and are applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation with respect to medical/surgical benefits in the classification.” (emphasis supplied)

Tools. The position statement describes the implementation of the MHPAEA, focusing on the tools that have been developed for comparison of NQTLs. MHA takes the position that cross-walking comparison of general/medical conditions and MH/SUD conditions is appropriate, that evidence-based standards must be applied to both, and that transparent medical necessity decisions are the key to enforcing parity in individual cases. Although many other tools and FAQs are cited, MHA favors the “Six Steps” analytical framework that it participated in creating and the online tool developed by the ClearHealth Quality Institute Online Parity Tool which provides a proactive and effective solution to achieve effective NQTL comparison.

Several additional tools exist that can help promote parity compliance including the U.S. DOL Self-Compliance Tool, and the CMS Parity Compliance Toolkit for Medicaid/CHIAP addition, CHQI is beta testing the only MH/SUD Parity Accreditation Program in the marketplace. As implementation of the MHPAEA and the ACA proceed, ParityTrack’s analysis of state enforcement through legislation, consent decrees, and over 50 individual appeals has forged a comprehensive data base that can be used to fight insurer limitations on coverage of MH/SUD conditions and as a template for state parity legislation. An excerpt is provided in Appendix II. A growing number of states are doing parity market conduct exams, though the methodology that they use is not consistent from one state to the next.  The NAIC is developing a model parity market conduct exam that should make such exams more uniform, though early drafts have been heavily criticized.

The position statement focuses on three areas of ongoing MHA concern: The potential over-institutionalization inherent in the medical model of care, to which MH/SUD treatment is to be compared, the ongoing difficulties with medical necessity standards and disclosure, and especially the hope that parity may serve to provide more appropriate MH/SUD care than the current reliance on drug therapy. Drugs have become the dominant treatment for MH/SUD conditions, despite improvements in more specialized care that may better meet the needs of MH/SUD patients. Access to specialty mental healthcare services is constrained due to benefit design with substantial NQTLs -- higher co-pays, visit limits, and management of utilization. These additional financial limitations are not applied to psychotropic drug benefits or to many behavioral health interventions delivered in the general healthcare setting. This has created a perverse incentive for patients to (1) access mental healthcare from general healthcare providers (where there are no visit limitations and co-pays are significantly lower) and to (2) rely on psychotropic medication as an exclusive method of treatment. Thus, enforcement of NQTL parity is essential to reform of the MH/SUD system of care.

Applicability, ERISA, and the Wit case. The position statement describes the applicability of the MHPAEA to various plans and the evidentiary barriers to enforcing parity in ERISA-governed plans, which includes most large employer plans. In a section on litigation and in Appendix I, the position statement describes in detail the recent landmark decision in Wit and Alexander v. United Behavioral Health. The case is still at the District Court level, pending a decision on the remedy to be applied in light of the Court’s far-reaching decision for the plaintiffs. The essential finding was the United’s inadequate internal guidelines violated its fiduciary duty under ERISA. Although the MHPAEA was only cited twice in passing, the standards analysis is integral to the Six Steps MHPAEA analysis, as emphasized in an endnote.

The Wit Court found the following to be the eight generally accepted standards for behavioral healthcare from which United’s Guidelines deviated:

  • More than Symptom-Based. It is a generally accepted standard of care that effective treatment requires treatment of the individual’s underlying condition and is not limited to alleviation of the individual’s current symptoms.
  • Co-Occurring Conditions. It is a generally accepted standard of care that effective treatment requires treatment of co-occurring behavioral health disorders and/or medical conditions in a coordinated manner that considers the interactions of the disorders and conditions and their implications for determining the appropriate level of care.
  • Safe and Effective Threshold Requirements. It is a generally accepted standard of care that patients should receive treatment for mental health and substance use disorders at the least intensive and restrictive level of care that is safe and effective – the fact that a lower level of care is less restrictive or intensive does not justify selecting that level if it is also expected to be less effective. Placement in a less restrictive environment is appropriate only if it is likely to be safe and just as effective as treatment at a higher level of care in addressing a patient’s overall condition, including underlying and co-occurring conditions.
  • Erring on the Side of Caution. It is a generally accepted standard of care that when there is ambiguity as to the appropriate level of care, the practitioner should err on the side of caution by placing the patient in a higher level of care.
  • Maintaining Function or Preventing Deterioration. It is a generally accepted standard of care that effective treatment of mental health and substance use disorders includes services needed to maintain functioning or prevent deterioration.
  • No Default Time Limits. It is a generally accepted standard of care that the appropriate duration of treatment for behavioral health disorders is based on the individual needs of the patient; there is no specific limit on the duration of such treatment.
  • Factoring in the Needs of Young Patients. It is a generally accepted standard of care that the unique needs of children and adolescents must be considered when making level of care decisions involving their treatment for mental health or substance use disorders.
  • The Need for a Multidimensional Assessment. It is a generally accepted standard of care that the determination of the appropriate level of care for patients with mental health and/or substance use disorders should be made based on a multidimensional assessment that considers a wide variety of information about the patient.

In addition to the standard of care analysis, the Court pointed out a significant NQTL that United applies to MH/SUD treatment concerning the likelihood of improvement. This cost/benefit calculation is rarely applied to coverage determinations for medical/surgical treatment. This raises the potential of a parity violation because it is highly doubtful that United or any other health insurer applies the same requirement to most medical/surgical conditions when making coverage determinations.

The position statement closes with an analysis of reviewers’ advice about improving the appeal process and a four-page Call to Action for MHA, its affiliates, and other advocates.

Background

With striking scientific advances over the last half century, behavioral health problems (hereafter, mental health and substance use disorder conditions – “MH/SUD”) are now more reliably diagnosed, and there is a range of evidence-based treatments for virtually every disorder. Those treatments have efficacy rates comparable to or exceeding those for many medical and surgical conditions. Yet all too often people with diagnosable mental and substance use disorders do not seek treatment. “Concerns about the cost of care – concerns made worse by the disparity in insurance coverage for mental disorders in contrast to other illnesses – are among the foremost reasons why people do not seek needed mental health care.” [i]  

The Mental Health Parity Act of 1996 was the breakthrough law that established the principle that there should be no disparity between mental health and general medical treatment in health insurance benefits. Larger emphasis on cost sharing, primarily implemented through higher copayments, deductibles, and out-of-pocket maximums, was the main strategy used by insurers to evade parity. As the General Accounting Office (GAO) reported in a 2000 review of the 1996 Act’s implementation, the vast majority of employers it surveyed substituted new restrictions and limitations on mental health benefits.[ii] Insurers and plan administrators routinely limited mental health benefits more severely than medical and surgical coverage, most often by restricting the number of covered outpatient visits and hospital days, and by imposing much higher cost-sharing requirements.[iii]

No rational basis supports these discriminatory health-insurance practices, which drew criticism from voices ranging from former President George W. Bush to Fortune 50 chief executive officers.[iv] A landmark report by the National Business Group on Health recommended that employers equalize their medical and behavioral benefit structures given the over-whelming evidence that parity yields significant clinical benefits without increasing overall healthcare costs.[v]

Most states have adopted laws requiring parity between mental health and general health benefits in group health insurance, but have provided parity protection to only certain diagnoses. Most states have also addressed substance use disorders, without providing the required funding. But state laws vary widely in scope and, under federal ERISA statute (The Employer Retirement Income Security Act), do not govern the health plans of the many employers who elect to self-insure by paying claims directly, using an insurance company only to administer the plan. ERISA plans are regulated by the U.S. Department of Labor (“DOL”), rather than by state regulators.[vi] Although state parity laws were welcomed as a helpful advance in the past, and state regulation of both group and individual plans remains a critical focus of advocacy for parity, Mental Health America does not support enactment of legislation that limits parity protection to individuals who have specified diagnoses[vii] and urges major federal, state, and employer funding to address the opioid crisis and ongoing deficits in substance use disorder care.

In the early 2000s, enlightened business leaders in some industries and communities voluntarily provided parity protection for their workforces. But voluntary measures proved an insufficient answer to the widespread discrimination facing most insured Americans. Thus, Mental Health America and other mental health advocates forged a coalition with business to support improved insurance-parity legislation, which finally culminated in passage of the Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA”).[viii]

Those opposing the 2008 legislation asserted that it would add to the cost of health care. But as the National Business Group on Health observed in its employer’s guide to behavioral health services, a number of parity studies have found that equalizing specialty behavioral health and general medical benefits will either not increase total healthcare expenses at all or will increase them by only a very modest amount relative to employers’ total healthcare premium.[ix] The real cost lies in not treating behavioral health disorders. As the National Business Group noted, the indirect costs associated with mental illness and substance-use disorders – excess turnover, lost productivity, absenteeism and disability – commonly meet or exceed the direct treatment costs, and were estimated to be as high as $105 billion annually in the United States in 2010.

Although there is no more recent compilation of American data, a comprehensive 2016 international survey[x] found that mental and substance use disorders constituted 10.4% of the global burden of disease and were the leading cause of years lived with disability among all disease groups. These consequences were found not to be limited to patients and their social environment—they affect the entire social fabric, particularly through economic costs. The study found that: “improved epidemiological and economic methods and models together with more complete epidemiological data during the past twenty years now allow the accumulation of comprehensive and increasingly reliable data that give us a good idea about the magnitude of the economic impact of mental disorders. Mental disorders therefore account for more economic costs than [all] chronic somatic diseases such as cancer or diabetes.”

Against this background, the current debate concerns the definition of parity under the MHPAEA and its implementing regulation, legislation and enforcement by the states, the uncertain role of the federal government as the executive branch seeks to repeal, limit, or overturn the Affordable Care Act,[xi] with important impacts on parity, the ongoing litigation that will define the enforcement of parity, and changes to the general medical, surgical, mental health and substance use treatment landscape that may result in additional coverage at parity with medical/surgical benefits.[xii] This position statement addresses these issues in approximately that order.

Call to Action

MHA continues to support the principles of MHPAEA and the ACA and the implementation of the regulation at the federal level and also suggests vigorous enforcement of real parity at both the federal and the state level, through its affiliate network and through the development of consumer advocacy organizations such as established by Connecticut and several other states.

MHA advocates that Congress:

  • Appropriate funds to allow for randomized compliance audits, rather than just responding to complaints
  • Subject Medicare to parity
  • Eliminate Medicare’s arbitrary 190-day lifetime limit on inpatient psychiatric hospital care—a restriction that does not exist for any other inpatient Medicare service.
  • Authorize the DOL to collect civil monetary penalties for parity violations
  • Subject non-ERISA plans to the same disclosure requirements as ERISA plans
  • Eliminate the HIPAA provision allowing self-insured state and local governments to opt out of parity requirements
  • Subject ERISA and fee-for-service Medicaid plans to the same standard of proof as any other health insurance plan.

MHA advocates that Congress examine parity in CMS payments to Medicare Advantage plans, Medicaid Managed Care Organizations, Accountable Care Organizations, and other alternative payment models. The payment formula for these programs are based on historic payment data, which are not parity compliant. By paying based on parity non-compliant data, CMS propagates historic discrimination and advances systemic disincentives to address mental health and substance use. CMS should adjust payment formulae based on what expected payments would be for the population if parity were effectively implemented.

MHA advocates that CMS use the available quality measures as a secondary indicators of parity implementation, determining whether health care systems are performing worse in treating MH/SUD than in medical and surgical care, and determining whether disparities in performance relate to possible parity violations.

MHA is concerned about potential expansion of residential services using parity as a lever, and continues to support community-based care and cost containment. All advocates should ensure that individual cases be decided based on particularized findings of medical necessity.

HHS and DOL, MHA, its affiliates, and other advocates should monitor the enforcement of parity cases and settlements to determine if a systemic problem of over-institutionalization is developing that should to be addressed with further guidance or plan enforcement.

MHA, its affiliates, and other advocates should also monitor the compliance of plans and educate consumers and providers with regard to scope of service, NQTLs, and medical necessity criteria to ensure proper implementation of the MHPAEA.

More transparency must be provided in the deliberation, drafting and publication of MHPAEA decisions. At a minimum, as stated in the position statement, MHA believes that it is essential that health plans disclose the clinical and/or coverage criteria used in the decision and clearly explain the specific steps required to file an appeal.

Regulators should strictly enforce the MHPAEA’s requirement that denial letters include a detailed explanation of why the patient does not meet the plan’s clinical criteria, a description of the evidence reviewed by the plan, and why the evidence submitted by the patient or their provider was deemed insufficient.

Transparent medical necessity decisions require:

  • Complete transparency of medical necessity criteria, ideally on the internet;
  • Support by peer-reviewed scientific studies and recognized clinical standards;
  • Specific citations and explanations showing that the criteria are not met in case of any denial of coverage;                                
  • Plans that fully explain the “processes, strategies, evidentiary standards, or other factors” they use to both design and apply the medical necessity criteria both as written and in operation.

In some instances, ordering or attending providers are not allowed to file an appeal on behalf of their patients. This is counterintuitive and inefficient as the provider is often in the best position to understand the denial decision and then explain why the service or treatment is still recommended or why the care was already delivered. All limitations on the filing of appeals should be abolished.

A national and consistent standard should be implemented to make the appeals process more effective. At present, many different appeal pathways exist. These pathways vary based on how the health plan is regulated, the type of coverage provided, the type of plan sponsor, the jurisdiction, the type of denial (e.g., based upon a medical necessity or benefit determination), the timing of the denial (e.g., prospective, concurrent and retrospective), the urgency of the care being requested (i.e. standard care versus urgent care), and where the patient is in the appeals process. The goal should be to establish one national appeals standard that promotes transparency, fairness and due process to all parties involved. A unified system can be promoted through new model legislation, accreditation standards and Requests for Proposal (RFP) requirements.

Currently, people appealing an adverse coverage decision, or their authorized representatives, must specifically request an external review of their claim. In most cases, the external review appeal only can be pursued after the person first successfully completes an appeal through the health insurer in accordance with the health plan. In some instances, the aggrieved party may not even know that she or he has the right to appeal to an external party. One simple way to address this confusion is to automatically refer the appeal to an independent review organization after the internal appeal is completed or, better yet, make the internal and external appeals concurrent.

All Stakeholders Should File More Appeals, and MHA affiliates should help whenever possible. While working to lower the number of denials issued on claims, stakeholders should simultaneously work to ensure that every questionable denial is subjected to the appeals process so that enrollees receive the care to which they are entitled.

The creation of a transparent dialogue between the treating and the reviewing physician should be required for all coverage disputes, to maximize the potential for a mediated solution prior to an adversary procedure, such as arbitration or litigation.

Since the regulation assigns to states the initial/primary obligation to enforce the federal parity laws and because some states have stronger parity laws than the federal law, affiliates and other advocates should focus their efforts on advocating that state insurance departments and other state actors vigorously enforce both state and federal parity, and that they are adequately funded to do so.

Specifically, and in accordance with MHA Position Statement 32,[i] affiliates should advocate strongly to minimize the use of “fail-first” or “step therapy” policies to restrict needed access to medications. A fail-first policy can only mitigate serious potential harms only if it:

  • Takes into account the history of the illness and past treatments
  • Exempts anyone who is already being successfully treated with another treatment, even if insurance coverage has changed;
  • Provides a quick and easily accessible mechanism through which a clinician can establish a clinical basis for using another treatment without trying and failing with a cheaper one; and
  • Establishes policies, standards and practices which minimize the nature and duration of any failure.
  • Takes into account the financial realities of the clinician and the person in treatment.

States should ban all health insurer limits on coverage of long term residential, in-patient and intensive outpatient care except for limits based on an individual determination of medical necessity.

By statute, effective in 2015, Massachusetts has required mandatory coverage of inpatient and residential treatment for substance use conditions. Health insurance carriers are prohibited from requiring prior authorization for most SUD services. Facilities are required to notify the patient’s health insurer and provide an initial treatment plan to the insurer within 48 hours of accepting the patient. Health insurers may begin to conduct utilization review on day 7 of the stay. Affiliates and other advocates should advocate for similar legislation in every state.

Arbitrary de facto 30-day limits on residential MH/SUD treatment cannot be justified. A medical necessity determination that assesses treatment progress is the only acceptable way of limiting coverage. Affiliates and other advocates should be vigilant in insisting on individual determinations of coverage and on transparency in the decision-making process.

States should ban inflexible outpatient visit limits and preauthorization requirements. The acute danger of psychosis and suicide, for which the general medical/surgical parity comparison would be catastrophic risk, require that any cost containment process not impede immediate access to evidence-based “urgent care.”

States should enforce current deadlines that limit access to urgent care and should require concurrent appeals and an after-hours grievance system

  • A functioning after-hours grievance system is essential
  • California continues to require a 24-hour-a-day urgent grievance system and has sanctioned companies for failing to provide these services.
  • The ACA regulations were amended in 2011 to change a 24-hour turnaround deadline to 72 hours, but emphasize that turnaround must be “as soon as possible.”
  • Although the ACA regulations require an expedited appeal for “urgent care,” concurrent review would better accomplish the purpose, especially for residential and inpatient services, where the review appears to be futile in about 70-80 % of the cases.

Affiliates should analyze differential reimbursement rates for behavioral health and medical and surgical office visits and per diem charges and urge equal reimbursement. Reimbursement rates are directly addressed by the MHPAEA regulation, and low reimbursement for behavioral health services is a critical factor in the documented difficulty that people in need of treatment experience in getting access to effective behavioral health treatment.

Effective Period

The Mental Health America Board of Directors approved this policy on June 13, 2019.  It is reviewed as required by the Mental Health America Public Policy Committee.

Expiration: December 31, 2024

[i] Mental Health: A Report of the Surgeon General (1999) at 23.

[ii] “Mental Health Parity Act: Despite New Federal Standards, Mental Health Benefits Remain Limited,” United States General Accounting Office, May 2000, at 21.

[iii] Id. at 13-14.

[iv] Remarks by the President on Mental Health, April 29, 2002; Hackett, J.T., CEO of Ocean Energy Inc., testimony before the Subcommittee on Health of the Energy and Commerce Committee, House of Representatives, July 23, 2002.

[v] “An Employer’s Guide to Behavioral Health Services,” National Business Group on Health, 2005, https://www.businessgrouphealth.org/pub/?id=f3139c4c-2354-d714-512d-355c09ddcbc4  at 68.

[vi] The Employer Retirement Income Security Act of 1974 (ERISA) allows employers to offer uniform national health benefits by preempting states from regulating employer-sponsored benefit plans. Thus, while states can regulate health insurers, they are unable to regulate employee benefit plans established by employers.

[vii] A law that requires health plans to provide parity only for those with a severe mental illness or those with a “biologically-based mental illness,” for example, implicitly conveys the message that it is acceptable to discriminate against those with other mental and substance use disorders, and suggests that such disorders do not merit the law’s protection. Such limited parity protection discourages early intervention and leaves children at particular risk, since the few illnesses covered under such laws seldom can be diagnosed until late adolescence or early adulthood. Mental Health America does, nevertheless, recognize that enactment and implementation of such laws have enabled advocates in some states to build on an incremental gain and later win passage of comprehensive legislation.

[viii] Public Law 110-343, https://www.cms.gov/cciio/programs-and-initiatives/other-insurance-protections/mhpaea_factsheet.html

[ix] An Employer’s Guide to Behavioral Health Services,” National Business Group on Health,  https://www.businessgrouphealth.org/pub/?id=f3139c4c-2354-d714-512d-355c09ddcbc4 

[x]  Trautman, S., Rehm, J,& Wittchen, H-U, “The Economic Costs of Mental Disorders: Do Our Societies React Appropriately to the Burden of Mental Disorders?” EMBO Rep. 2016 Sep; 17(9): 1245–1249.Published online 2016 Aug 4. doi: 10.15252/embr.201642951      https://www.ncbi.nlm.nih.gov/pmc/articles/PMC507565/

[xi] The regulation must be read in pari materia (with equal force) with the MHPAEA and the requirements of the 2010 Affordable Care Act (“ACA”) and its implementing regulations.

[xii] Stacey A. Tovino, “All Illnesses Are (Not) Created Equal: Reforming Federal Mental Health Insurance Law,” 49 Harv. J. on Legis. 1, 42 (2012), at 40-42 (“[M]any health insurance plans that were previously exempt from [providing mental health benefits at parity] are now are prohibited from offering inferior mental health insurance benefits.”).

[i] http://www.mentalhealthamerica.net/positions/access-medications