Mental Health Parity at a Crossroads
Issue Brief
Behavioral health care includes any medication or service used to treat a mental health and/or substance use disorder and would include conditions and treatment for developmental disabilities such as autism.
Development of a bipartisan package of legislative reforms on various aspect of behavioral health care concerns is underway in both chambers of Congress. The Senate Finance Committee issued a Request for Information in 2021 and in March 2022 released a report, Mental Health Care in the United States: The Case for Federal Action, that includes a discussion of mental health parity. https://www.finance.senate.gov/chairmans-news/finance-committee-releases-bipartisan-report-on-mental-health-care-in-america-
Parity applies regardless of status as a grandfathered or nongrandfathered plan if the plan covers BH.
Plans can opt out annually using a process administered by CMS. 42 U.S.C. § 300gg-21(a)(2). According to the last CMS posted list, over 200 nonfederal plans have opted out of compliance with MHPAEA.
ABPs are an alternative to the traditional Medicaid state plan benefit package and are based on private insurance designs. States can generally choose to offer ABPs but are required to offer them to newly eligible adults if the state expands Medicaid to this population under the ACA. The Medicaid parity rules do not apply to other Medicaid covered BH services that are provided fee-for-service although CMS encourages states to apply parity protections to those services.
Variations in how MHPAEA applies to Medicaid expansion CHIP programs, separate CHIP programs and programs that are a combination of both are described in section 8 of the CMS Parity Compliance Toolkit Applying Mental health and Substance Use Disorder Parity Requirements to Medicaid and Children’s Health Insurance Programs (January 2017), pp. 57-58. https://www.medicaid.gov/sites/default/files/2019-12/parity-toolkit.pdf
This means that parity does not apply to Medicare Part A, B or D services covered by Medicaid MCOs through integrated plans for dual eligible (Medicare and Medicaid) beneficiaries. 61 Federal Register 18424 (March 30, 2016).
29 U.S.C. § 1185a(c)(2). Federal agencies have not indicated whether any plans have applied for this exemption.
The EHB benchmark choices are (1) any of the three largest state employee plan health benefit options, (2) the largest plan in any of the three largest small group insurance market products, (3) any of the three largest national Federal Employee Health Benefit Program (FEHBP) national plan options, and (4) the coverage offered by the largest insured commercial non-Medicaid HMO in the state. 45 C.F.R. § 156.100.
The IMD exclusion prohibits Medicaid payment for services for adults aged 22 to 64 in institutions with more than 16 beds that are primarily engaged in behavioral health treatment. While this might be considered a limitation on coverage that must be compared with limits on medical benefits in the inpatient classification under MHPAEA, CMS did not include this as part of their Medicaid MHPAEA regulation. Despite the exclusion, some states use Section 1115 waivers and other options to finance IMD services. Kaiser Family Foundation, State Options for Medicaid Coverage of Inpatient Behavioral Health Services (November 2019) https://www.kff.org/medicaid/report/state-options-for-medicaid-coverage-of-inpatient-behavioral-health-services/
75 Federal Register 5412 (February 2, 2010).
CMS, Parity Compliance Toolkit Applying Mental health and Substance Use Disorder Parity Requirements to Medicaid and Children’s Health Insurance Programs, pp. 10-15.
42 C.F.R. §§ 438.910(c)(4), 440.395(b)(3)(iv).
81 Federal Register 18398-9 (March 30, 2016).
Separate dollar limits can apply to BH and medical/surgical benefits but more restrictive limits on BH are prohibited. For example, if an annual aggregate dollar limit applies to less than two-thirds of expected payments for medical/surgical benefits in a year, plans cannot impose any annual aggregate dollar limit on BH benefits in a year.
45 C.F.R. § 146.136(c)(4)(ii); 42 C.F.R. § 438.910(d)(2)
DOL, Treasury and HHS, 2022 MHPAEA Report to Congress (January 2022) p. 34
DOL, Treasury and HHS, FAQs About Mental Health and Substance Use Disorder Parity Implementation & the 21st Century Cures Act Part 39 (FAQs Part 39), Question 7 (September 5, 2019). https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/aca-part-39-final.pdf
FAQs Part 39, Question 6.
45 C.F.R. § 146.136 (definition of “treatment limitation”)
FAQs Part 39, Question 4.
A model disclosure request form was developed to facilitate enrollee requests for this information as well as information on a plans’ comparative analysis of NQTLs. The form is optional for plans to use and was created by DOL and the other agencies who implement the non-Medicaid parity rules.
Medicaid plans are generally deemed to comply with these CAA rules if they met certain disclosure requirements in Medicaid parity regulations. In 2017, states had to document similar parity analysis and post it publicly on a website for benefits provided to Medicaid managed care enrollees. Similar documentation rules apply to Medicaid Alternative Benefit Plans. 42 CFR § 438.920; 42 CFR § 440.396.
Separate from MHPAEA, DOL can assess civil penalties in other circumstances, such as a failure of a plan sponsor to disclose certain information to a participant upon request (such as medical necessity criteria). DOL also has other enforcement tools under ERISA to bring actions against those who are “fiduciaries” under ERISA. An ERISA fiduciary is any entity that has discretionary authority or control of a plan’s management or administration or the disposition of plan assets. Who is a fiduciary is often very fact specific, subject to evolving case law, and has generally left out the entities that design and control the key factors that determine what health benefits are covered.
It is not clear whether Treasury has ever assessed a penalty using this authority. According to a 2019 General Accountability Office (GAO) report on parity enforcement, the DOL has never referred a case to Treasury to assess a penalty. GAO, State and Federal Oversight of Compliance with Parity Requirements Varies (December 2019) (GAO Parity Enforcement Report), p. 25 https://www.gao.gov/assets/gao-20-150.pdf
29 USC § 1132(b)(3).
Insurers are often the third-party administrators (TPA) of self-insured plans and are the entities that design and implement behavioral health benefits, build provider networks, and oversee medical management structures. Employers often adopt the TPA’s prototype plan as is with limited changes. These TPA activities are not always defined by courts as ERISA fiduciary functions.
CMS, Frequently Asked Questions: Mental Health and Substance Use Disorder Parity Final Rule for Medicaid and CHIP, Q7 and Q8 (March 29, 2016). https://www.medicaid.gov/sites/default/files/2019-12/faq-cms-2333-f.pdf
A 2019 GAO report on parity enforcement for commercial plans concluded that the extent of parity compliance was unknown and that agency reliance on targeted reviews based on complaints and other information may not be adequate to assess compliance. GAO Enforcement Parity Report, (December 2019).
These three changes are also included in President Biden’s Fiscal Year 2023 Budget. https://www.whitehouse.gov/wp-content/uploads/2022/03/budget_fy2023.pdf. The House-passed Build Back Better legislation from 2021 also included these three changes. https://www.congress.gov/bill/117th-congress/house-bill/5376/text.
The House-passed Build Back Better legislation from 2021 would have given the DOL the authority to assess civil penalties for parity violations. This is similar to legislation introduced in 2021, H.R. 1364, the Parity Enforcement Act of 2021. https://www.congress.gov/bill/117th-congress/house-bill/1364/text. H.R. 7780 would make additional changes to ERISA’s enforcement scheme. https://www.congress.gov/bill/117th-congress/house-bill/7780/cosponsors?r=1&s=1