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Position Statement 15: Mental Health Parity in Health Insurance
All people in America should have a right to health-care benefits, including needed 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 access to needed behavioral health care and treatment on the same terms as surgical and other medical care. Such services should be subject to the same terms and conditions as care and treatment for any other condition, without regard to diagnosis, severity, or cause.
Mental health is essential to leading a healthy life and to the development and realization of every person’s full potential. Yet mental illness and substance-use disorders are leading causes of disability and premature mortality in the United States. As the President’s New Freedom Commission on Mental Health observed in its final report, 1 mental disorders are “shockingly common.” Most people are affected in some way by mental illness at some point in their lives.
With striking scientific advances over the last half century, behavioral health problems are now reliably diagnosed, and there is a range of treatments for virtually every such 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 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,” the Surgeon General observed in the landmark 1999 report on mental health. 2
Health insurance plans, from private individual and group coverage to the Medicare program, have long imposed barriers that limit access to needed behavioral health care for both mental and substance-use disorders, with far-reaching and often tragic results. No comparable barriers limit access to needed care for other illnesses. That such blatant discrimination continues to flourish -- more than a decade after enactment of the Americans with Disabilities Act, some forty years after the adoption of the first modern civil rights’ laws, and nearly a century since this organization’s establishment as a movement based on principles of social justice -- attests to the deep-rootedness of the stigma surrounding behavioral health disorders. But that such ongoing arbitrary discrimination is countenanced by federal law is nothing short of shameful.
The longstanding practice of providing unequal coverage for behavioral health and other medical care not only limits access to needed care, but subjects many Americans to the risk of major financial losses from out-of-pocket costs. At the most profound level, these practices reinforce the poisonous stigma underlying disparate treatment of "others." That disparate coverage of behavioral health should be routine, and that discrimination against people with or at risk of behavioral health disorders should be lawful, is not only morally offensive in itself, but fosters a climate that tolerates and even encourages other forms of discrimination and weakens the fabric of equal-opportunity laws.
No rational basis supports these discriminatory health-insurance practices, which have drawn criticism from voices ranging from President George W. Bush to Fortune 500 chief executive officers.3 A landmark report by the National Business Group on Health recommends employers equalize their medical and behavioral benefit structures given evidence that parity yields significant clinical benefit without increasing overall healthcare costs. 4
Congress took a first step toward ending discriminatory insurance practices when it enacted the Mental Health Parity Act of 1996. The Act established the principle that there should be no disparity in health insurance between mental-health and general medical benefits. However, as the General Accounting Office (GAO) reported in reviewing the Act's implementation, the vast majority of employers it surveyed substituted new restrictions and limitations on mental health benefits, thereby evading the spirit of the law. 5 As GAO documented, employers 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 far higher cost-sharing requirements. 6
Most states have adopted laws requiring parity between mental health and general health benefits in group health insurance. But those state laws vary widely in scope, and, under federal law, do not govern the health plans of the many employers who elect to self-insure. 7 Facing opposition to parity proposals, state legislators have generally limited the scope of such measures and provided parity protection to only certain populations. Sound public policy aimed at achieving fairness is certainly not realized, however, when the law affords fair and equal treatment to some and not others. Mental Health America, therefore, does not support enactment of legislation that limits parity protection only to individuals who have specified diagnoses. 8
While enlightened business leaders in some industries and communities voluntarily provided parity protection for their workforces, 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 insurance-parity legislation, which finally culminated in passage of the Mental Health Parity and Addiction Equity Act of 2008 ("MHPAEA").
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 of total healthcare premium. 9 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 have been estimated to be as high as $105 billion annually.
Against this background, the current debate concerns the regulations and litigation that will define the scope of parity.
Interim Regulations and Litigation Issues
The interim regulations for the Mental Health Parity and Addiction Equity Act of 2008 ("MHPAEA") were approved effective in July, 2010 and passed an initial court test.10 Despite the judge's assurance of prompt action by the administration, the development of final regulations has stalled. Generally, mental health advocacy organizations have been supportive of the interim regulations, and thus have been warily comfortable with delay, but the risk now is that the process will be politicized by the gathering storms of the 2012 campaign, and action could be postponed until 2013 and the issues held hostage in the election. The interim regulations have not been well-received by insurers and self-funded plans, and further litigation is likely.
The three Departments issuing the regulations have prepared fact sheets11 that highlight the contingent regulation of substance use disorder insurance (if such insurance is provided), a modest advance that MHA advocates keeping in the final regulations. The other major issue is qualitative parity, required by the interim regulations and described below. And coverage issues are being litigated that will spur further controversy.
Six Classifications: The regulations clarify that the parity requirements will be applied against "substantially all" medical/surgical benefits in six classification areas. Those six classifications are: inpatient/in-network, inpatient/out-of-network, outpatient/in-network, outpatient/out-of-network, emergency department, and prescription drugs. Plans offering mental health and substance use coverage must provide parity in all classification areas where medical/surgical benefits are offered.
Quantitative v. Non-quantitative Treatment Limitations: The regulations distinguish between quantitative and non-quantitative treatment limitations. Quantitative treatment limitations include frequency of treatment, number of visits, and days of coverage, and must be at parity with substantially all medical/surgical benefits. The Departments give separate guidance with examples of parity with medical/surgical benefits for non-quantitative treatment limitations like medical management and utilization management. MHA believes this guidance to be reasonable and helpful.
The opposition (Chamber of Commerce) response is: "One of the most unexpected requirements of the Regulation is the requirement for parity for non-quantitative treatment limits.
MHPAEA explicitly imposes parity requirements with respect to treatment limitations and financial requirements, as well as out-of-network coverage. The Act does not, however, expressly extend parity requirements to medical management techniques. In fact, the Act includes a rule of construction that states that nothing shall be construed as affecting the terms and conditions of the plan or coverage to the extent that the plan terms and conditions do not conflict with the Act's parity requirements. ERISA § 712(b). Since there is no explicit parity requirement for medical management in the Act, none should be implied in regulatory guidance by the Agencies."12
Deductibles: Under the interim regulations, mental health and substance use benefits and medical/surgical benefits have combined deductibles and combined financial restrictions and quantitative treatment limitations.
Mental Health as a Non-specialty: Under the interim regulations, mental health and substance use benefits are not a specialty, and are administered in parity with the medical/surgical non-specialty benefits offered by an insurance plan.
Residential Care for Eating Disorders: Studies thus far support the affordability of parity, and business support was and is premised on them.13 The first court tests of parity laws have come in cases challenging denial of coverage for residential care, and the first major appellate case concerned eating disorders. In particular, a Ninth Circuit Court of Appeals decision, Harlick v. Blue Shield of California, -- F. 2d - (9th Cir. 2011),14 which required reimbursement for residential care under California's state parity statute, has inspired a new round of controversy about expansion of benefits. The court ruled that:
Some medically necessary treatments for severe mental illness have no analog in treatments for physical illnesses. For example, it makes no sense in a case such as Harlick's to pay for 100 days in a skilled nursing facility - which cannot effectively treat her anorexia nervosa - but not to pay for time in a residential treatment facility that specializes in treating eating disorders.
Reporting on the decision, the New York Times concluded that:
The insurers consider residential treatments not only costly - sometimes reaching more than $1,000 a day - but unproven and more akin to education than to medicine. Even some doctors who treat eating disorders concede there are few studies proving that residential care is effective, although they believe it has value. 15
The Times continued:
Ira Burnim, legal director of the Bazelon Center for Mental Health Law, which litigates for better mental health treatments, said that while he was not familiar with eating disorders, "study after study" had shown that residential centers for other mental or emotional disorders were not as effective as treatment at home.
Dr Anne E. Becker, president of the Academy of Eating Disorders and director of the eating disorders program at Massachusetts General Hospital, said that despite a paucity of studies, "There's no question that residential treatment is life-saving for some patients."
Some insurers say that there is no treatment for physical illnesses that is equivalent to residential treatment for mental illnesses, and therefore residential treatment does not have to be paid for under parity laws.
Ms. Harlick's lawyer, Lisa S. Kantor, argued that residential treatment centers were equivalent to skilled nursing facilities, which Blue Shield did cover.
This argument has just begun, and there are many more issues to come as the details of this important policy shift are worked through in individual cases.
MHA Comment Submitted: MHA's comments were submitted on April 29th, 2010, and are available at http://www.dol.gov/ebsa/pdf/1210-AB30-5102.pdf.
Call to Action
MHA continues to support the principles of the interim regulations. Although MHA is concerned about potential expansion of residential services using parity as a lever, and continues to support community-based care and cost containment, individual cases must be decided based on particularized findings of medical necessity and should not be injected into the regulations unless and until a systemic problem becomes apparent over time. MHA believes that it is too early to take such action concerning eating disorders or any other mental health condition.
Regulations Link: http://www.federalregister.gov/OFRUpload/OFRData/2010-02167_PI.pdf.
The Mental Health America Board of Directors approved this policy on December 3, 2011. It is reviewed as required by the Mental Health America Public Policy Committee.
Expiration: December 31, 2016
- “Achieving the Promise: Transforming Mental Health Care in America,” New Freedom Commission on Mental Health, p. 1, 2003.
- “Mental Health: A Report of the Surgeon General,” p. 23, 1999.
- 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.
- “An Employer’s Guide to Behavioral Health Services,” National Business Group on Health, p. 68, November 2005.
- “Mental Health Parity Act: Despite New Federal Standards, Mental Health Benefits Remain Limited,” United States General Accounting Office, p. 21, May 2000.
- Id. at pp. 13-14.
- 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.
- 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 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 occur 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.
- An Employer's Guide to Behavioral Health Services," National Business Group on Health, op. cit.
- Coalition for Parity, Inc. v. Sebelius (HHS), Solis (DOL), Geithner(Treasury), -- F. Supp. --, Case #: 10-cv-00527-CKK (USDC DC 2011).
- e.g., http://www.dol.gov/ebsa/newsroom/fsmhpaea.html