Mental Health Parity and Addiction Equity Act FAQs

Transcription

1 Mental Health Parity and Addiction Equity Act FAQs This document contains the Frequently Asked Questions and responses (FAQs) concerning implementation of the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA), as amended by the Affordable Care Act. The FAQs were published jointly by the Departments of Health and Human Services, Labor and the Treasury. Although the Departments have published FAQs on a variety of other issues related to health reform, this document contains only those FAQs that relate to MHPAEA. The FAQs in this document retain the original language of the Departments FAQs and responses. The document also retains the appropriate citations (by FAQ issue date and FAQ number). This document is designed to serve as an aid in locating guidance on issues related to implementation of Affordable Care Act market reforms. It should not be construed as legal advice or a legal opinion with respect to any specific set of facts and circumstances. The DOL s version of the FAQs is published at (see FAQs under the heading Health ). HHS s version of the FAQs is published at (see FAQs under the heading Affordable Care Act ). The FAQs are organized in reverse chronological order, under the assumption that the most recent FAQs are often of the most interest. Table of Contents FAQs Published October 23, 2015: Affordable Care Act FAQs Part XXIX... 2 FAQs Published January 9, 2014: Affordable Care Act FAQs Part XVIII... 5 FAQs Published November 8, 2013: Affordable Care Act FAQs Part XVII... 7 FAQs Published November 17, 2011: Affordable Care Act FAQs Part VII...12 FAQs Published December 22, 2010: Affordable Care Act FAQs Part V...16 FAQ Published June 30, 2010: FAQ About Mental Health Parity and Addiction Equity Act...18

2 FAQs Published October 23, 2015: Affordable Care Act FAQs Part XXIX [Note: Questions 1-11 related to issues unrelated to MHPAEA.] MHPAEA amended the PHS Act, ERISA, and the Code to provide increased parity between mental health and substance use disorder (MH/SUD) benefits and medical/surgical benefits. 20 In general, MHPAEA requires that the financial requirements (such as coinsurance and copays) and treatment limitations (such as visit limits), imposed on MH/SUD benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical/surgical benefits. With regard to any nonquantitative treatment limitation (NQTL), 21 the MHPAEA final regulations 22 provide that a plan or issuer may not impose an NQTL with respect to MH/SUD benefits in any classification unless, under the terms of the plan as written and in operation, any processes, strategies, evidentiary standards, or other factors used in applying the NQTL to 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 same classification. The MHPAEA final regulations provide express disclosure requirements. Specifically, the criteria for medical necessity determinations with respect to MH/SUD benefits must be made available by the plan administrator or the health insurance issuer to any current or potential participant, beneficiary, or contracting provider upon request. 23 In addition, under MHPAEA, the reason for any denial of reimbursement or payment for services with respect to MH/SUD benefits must be made available to participants and beneficiaries. 24 The Departments also explained in the preamble to the final regulations that, in addition to these specific disclosure obligations under MHPAEA, ERISA s general disclosure obligation in section 104(b) and the accompanying disclosure regulation at 29 CFR b-1 provide that, for plans subject to ERISA, instruments under which the plan is established or operated must generally be furnished to plan participants within 30 days of request. 20 MHPAEA does not mandate that plans and issuers cover MH/SUD benefits. Rather, it applies only if a plan or issuer provides those benefits. However, other provisions of Federal and State law may require coverage of MH/SUD benefits, including the EHB requirements applicable to non-grandfathered individual and small group market coverage under the Affordable Care Act. 21 NQTLs generally are limits on the scope or duration of treatment that are not expressed numerically. MHPAEA regulations at 26 CFR (c)(4)(ii), 29 CFR (c)(4)(ii) and 45 CFR (c)(4)(ii) contain an illustrative list of NQTLs that includes, among other things, medical management standards limiting or excluding benefits based on medical necessity; formulary design for prescription drugs; network tier design; and plan methods for determining usual, customary, and reasonable charges. See also 45 CFR CFR (c)(4), 29 CFR (c)(4), 45 CFR (c)(4) and CFR (d)(1), 29 CFR (d)(1), 45 CFR (d)(1) and CFR (d)(2), 29 CFR (d)(2), 45 CFR (d)(2) and

3 Instruments under which the plan is established or operated include documents with information on medical necessity criteria for both medical/surgical benefits and MH/SUD benefits, as well as the processes, strategies, evidentiary standards, and other factors used to apply an NQTL with respect to medical/surgical benefits and MH/SUD benefits under the plan. In addition, 29 CFR , 29 CFR and 45 CFR set forth rules regarding claims and appeals, including the right of claimants (or their authorized representative) upon appeal of an adverse benefit determination (or a final internal adverse benefit determination) to be provided upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant to the claimant's claim for benefits. This includes documents with information on medical necessity criteria for both medical/surgical benefits and MH/SUD benefits, as well as the processes, strategies, evidentiary standards, and other factors used to apply an NQTL with respect to medical/surgical benefits and MH/SUD benefits under the plan. Contemporaneous with the issuance of the MHPAEA final regulations, the Departments published FAQs about Affordable Care Act Implementation Part XVII and Mental Health Parity Implementation 25 addressing a group health plan s disclosure obligations under MHPAEA and ERISA generally, as well as the specific information a participant is entitled to receive when a claim for MH/SUD benefits has been denied. In addition to reiterating that instruments under which the plan is established or operated under ERISA section 104 includes documents with information on medical necessity criteria for both medical/surgical and MH/SUD benefits, as well as the processes, strategies, evidentiary standards, and other factors used to apply an NQTL, this guidance noted that other provisions of Federal law require such disclosures. This guidance provided that under the internal appeals and external review requirements added by the Affordable Care Act, non-grandfathered group health plans and health insurance issuers must provide to an individual (or a provider or other individual acting as a patient s authorized representative), upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant to the individual's claim for benefits consistent with the Department of Labor claims procedure regulation. 26 FAQ 8 of this guidance specifically noted that such information would include documents of a comparable nature with information on medical necessity criteria for both medical/surgical benefits and MH/SUD benefits, as well as the processes, strategies, evidentiary standards, 25 See FAQs about Affordable Care Act Implementation (Part XVII) and Mental Health Parity Implementation, available at FAQs/aca_implementation_faqs17.html. 26 See 29 CFR and ; 45 CFR and for consumer information on internal claims and appeals, external review of health plan decisions, and grandfathered health plans under the Affordable Care Act. -3-

4 and other factors used to apply an NQTL with respect to medical/surgical benefits and MH/SUD benefits under the plan. 27 Q12: I am a participant in a group health plan that provides treatment for anorexia as a mental health benefit. In accordance with the plan terms, my provider, on my behalf, requested prior authorization for a 30-day inpatient stay to treat my anorexia. The request was denied based on the plan s determination that a 30-day inpatient stay is not medically necessary under the plan terms. I then requested from the plan administrator a copy of its medical necessity criteria for both medical/surgical and MH/SUD benefits (including anorexia), as well as any information regarding the processes, strategies, evidentiary standards, or other factors used in developing the medical necessity criteria and in applying them. May the plan administrator deny me this information based on an assertion that the information is proprietary and/or has commercial value? No. The criteria for making medical necessity determinations, as well as any processes, strategies, evidentiary standards, or other factors used in developing the underlying NQTL and in applying it, must be disclosed with respect to both MH/SUD benefits and medical/surgical benefits, regardless of any assertions as to the proprietary nature or commercial value of the information. Whether a plan that is subject to ERISA can refuse to provide instruments under which the plan is established or operated on the basis that the information is proprietary was specifically addressed in the Department of Labor s Advisory Opinion 96-14A. 28 The Advisory Opinion rejected that basis for refusal. In that Advisory Opinion, the Department of Labor stated that any documents or instruments that specify formulas, methodologies, or schedules to be applied in determining or calculating a participant s or beneficiary s benefit entitlement under an employee benefit plan (in that case, a schedule of a plan s usual and customary fees) would constitute instruments under which the plan is established or operated, and must be provided, notwithstanding that the plan asserted that such fee schedules are of a proprietary nature. Such information must be disclosed, even in cases where the source of the information is a third-party commercial vendor. Q13: Can my plan, upon request, provide a summary description of the medical necessity criteria for both MH/SUD benefits and medical/surgical benefits that is written to be understandable for a layperson? 27 See FAQs About Affordable Care Act Implementation (Part XVII) and Mental Health Parity Implementation, Q8 available at and 28 See AO 96-14A, available at -4-

5 Yes. Although not required to do so, group health plans and issuers can provide a document that provides a description of the medical necessity criteria in layperson s terms. However, providing such a summary document is not a substitute for providing the actual underlying medical necessity criteria, if such documents are requested. FAQs Published January 9, 2014: Affordable Care Act FAQs Part XVIII [Note: Questions 1-11 related to issues unrelated to MHPAEA.] The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) amended the PHS Act, ERISA, and the Code to provide increased parity between mental health and substance use disorder benefits and medical/surgical benefits. In general, MHPAEA requires that the financial requirements (such as coinsurance) and treatment limitations (such as visit limits) imposed on mental health and substance use disorder benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical/surgical benefits. 17 On November 13, 2013, the Departments published final regulations on MHPAEA, which contain some clarifications regarding the statute's protections. 18 Q12: What was the effect of the Affordable Care Act on MHPAEA? The Affordable Care Act builds on MHPAEA and provides that mental health and substance use disorder services are one of ten EHB categories. Under the EHB rule, nongrandfathered health plans in the individual and small group markets are required to comply with the requirements of the parity regulations to satisfy the requirement to provide EHB. In addition, section 1563 of the Affordable Care Act extends the protections of MHPAEA to the entire individual market, both with respect to grandfathered and non-grandfathered coverage. 19 Therefore: For non-grandfathered individual market coverage: For policy years beginning on or after January 1, 2014, all non-grandfathered individual market coverage that is not otherwise subject to the HHS transitional policy 20 must include coverage for mental health and substance use disorder benefits, and that coverage must comply with the Federal parity requirements set forth in the interim final regulations issued in 17 MHPAEA does not mandate that plans and issuers cover mental health and substance use disorder benefits. It applies only if a plan or issuer provides those benefits FR (November 13, 2013). 19 In general, grandfathered coverage is coverage provided by a group health plan, or individual health insurance coverage, in which an individual was enrolled on March 23, 2010, and that has since that time not made certain changes in coverage. See section 1251 of the Affordable Care Act and implementing regulations at 29 CFR and 45 CFR Letter to Insurance Commissioners, Center for Consumer Information and Insurance Oversight, November 14, See -5-

6 February The final regulations apply for policy years beginning on or after July 1, 2014 (which, for calendar year policies, is January 1, 2015). For grandfathered individual market coverage: Grandfathered individual health insurance coverage is not subject to the EHB requirements and therefore is not required to cover mental health or substance use disorder benefits. However, to the extent mental health or substance use disorder benefits are covered under the policy, coverage must comply with the Federal parity requirements set forth in final regulations for policy years beginning on or after July 1, 2014 (which, for calendar year policies, is January 1, 2015). For non-grandfathered small group market coverage: For plan years beginning on or after January 1, 2014, all non-grandfathered small group market coverage that is not otherwise subject to the HHS transitional policy must include coverage for mental health and substance use disorder benefits, and that coverage must comply with the Federal parity requirements set forth in the interim final regulations issued in February The final regulations apply for plan years beginning on or after July 1, 2014 (which, for calendar year plans, is January 1, 2015). Grandfathered small group market coverage is not required to comply with either the EHB provisions or MHPAEA. HHS has also released guidance explaining how the Federal parity requirements will be applied to the Children s Health Insurance Program (CHIP), Medicaid managed-care organizations, and to Alternative Benefit Plans. See the January 16, 2013 letter from CMS to State Medicaid Directors Available at -6-

7 FAQs Published November 8, 2013: Affordable Care Act FAQs Part XVII MHPAEA 1 amended the Public Health Service Act (PHS Act), the Employee Retirement Income Security Act (ERISA) and the Internal Revenue Code (the Code) to provide increased parity between mental health and substance use disorder benefits and medical/surgical benefits. In general, MHPAEA requires that the financial requirements (such as coinsurance) and treatment limitations (such as visit limits) imposed on mental health and substance use disorder benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical/surgical benefits. 2 Today, the Departments issued final rules on MHPAEA, which contain some clarifications regarding the statute s protections. Q1: When are the final rules effective for group coverage? MHPAEA s statutory provisions generally became effective for plan years beginning after October 3, Interim final rules under MHPAEA generally became applicable for plan years beginning on or after July 1, The final rules generally apply to group health plans and health insurance issuers offering group health insurance coverage for plan years beginning on or after July 1, Until the applicability date of the final rules, plans and issuers subject to MHPAEA must continue to comply with the interim final rules. 3 Q2: When do the final rules apply to individual health insurance coverage? The Affordable Care Act amended the PHS Act to apply MHPAEA to health insurance issuers offering individual health insurance coverage (both through the Health Insurance Marketplaces, also known as Exchanges, and outside the Marketplaces). These changes are effective for policy years beginning on or after January 1, The final rules apply to individual health insurance coverage for policy years beginning on or after July 1, 2014 and apply to both grandfathered and non-grandfathered plans. 1 MHPAEA amended and supplemented the Mental Health Parity Act of MHPAEA does not mandate that plans and issuers cover mental health and substance use disorder benefits. It applies only if a plan or issuer provides those benefits. 3 The final rules do not apply by their terms to Medicaid managed care organizations, alternative benefits plans, or the Children's Health Insurance Program. However, MHPAEA requirements are incorporated by reference into statutory provisions that do apply to these entities. See Centers for Medicare & Medicaid Services State Health Official Letter (January 16, 2013), available at Guidance/downloads/SHO pdf. -7-

8 Q3: What new protections do the final rules provide for individuals? The interim final rules contained an exception for differences in nonquantitative treatment limitations between medical/surgical benefits and mental health or substance use disorder benefits based on clinically appropriate standards of care. This exception has been determined to be confusing, unnecessary, and subject to potential abuse. The underlying requirements regarding nonquantitative treatment limitations (even without this exception) are sufficiently flexible to allow plans and issuers to take into account clinical and other appropriate standards when applying nonquantitative treatment limitations such as medical management techniques to medical/surgical benefits and mental health or substance use disorder benefits. Thus, the final rules have eliminated this exception. The final rules also apply parity requirements to benefits for intermediate levels of care for mental health conditions and substance use disorders. The final rules accomplish this by providing that plans and issuers first identify what is meant by an intermediate service for mental health and substance use disorder care and medical/surgical care and requiring that such intermediate level services be treated comparably within the structure of plan benefits. Under the final rules, parity requirements for nonquantitative treatment limitations also apply to restrictions based on geographic location, facility type, provider specialty, and other criteria that limit the scope or duration of benefits for services (including access to intermediate level services). Finally, the final rules clarify the disclosure rights of plan participants with respect to both mental health and substance use disorder benefits and medical/surgical benefits. See Q8 regarding the type of information that individuals can receive from their plans and issuers under Federal law. Q4: What are the Departments doing to promote compliance? The Departments are working with plans, issuers, and their service providers to help them understand and come into compliance with MHPAEA and to ensure that individuals receive the benefits they are entitled to under the law. The Departments also coordinate with State regulators both individually and through the National Association of Insurance Commissioners to ensure compliance and issue guidance to address frequently asked questions from stakeholders. Compliance assistance is a high priority and the Departments' approach to implementation is marked by an emphasis on assisting plans and issuers that are working diligently and in good faith to comply with the requirements of the law. The Departments receive complaints from group health plan participants and beneficiaries, enrollees in individual market health coverage, providers, and other stakeholders and work with these individuals and the regulated community to correct violations. The Departments also engage in extensive outreach and compliance assistance activities throughout the year on MHPAEA. For a copy of MHPAEA outreach publications, and to get information on upcoming events, see and -8-

9 Q5: Do the final rules address multiple provider network tiers? Yes. The final rules permit plans and issuers to use multiple provider network tiers, provided they are consistent with the parity requirements. Q6: Are there plans that are exempt from MHPAEA? Yes. MHPAEA applies to most employment-based group health coverage, but there are a few exceptions. MHPAEA contains an exemption for a group health plan of a small employer. 4 Nevertheless, under HHS final rules governing the Affordable Care Act requirement to provide essential health benefits (EHBs), non-grandfathered health insurance coverage in the individual and small group markets must provide all categories of EHBs, including mental health and substance use disorder benefits. The final EHB rules require that such benefits be provided in compliance with the requirements of the MHPAEA rules. 5 MHPAEA also contains an increased cost exemption available to plans that meet the requirements for the exemption. The final rules establish standards and procedures for claiming an increased cost exemption under MHPAEA. Additionally, plans for State and local government employees that are self-insured may opt-out of MHPAEA's requirements if certain administrative steps are taken. 6 Finally, MHPAEA does not apply to retiree-only plans. Q7: For a plan or issuer claiming the increased cost exemption, where should the plan or issuer send its notice to the Departments? The increased cost exemption is not effective until 30 days after notice has been sent to group health plan participants and beneficiaries, enrollees in individual market health coverage, and to the appropriate Federal agency. For notice to the Federal Government: An ERISA plan, or a health insurance issuer offering coverage in connection with such plan, must notify the Department of Labor at: Office of Health Plan Standards and Compliance Assistance Employee Benefits Security Administration U.S. Department of Labor ATTN: Increased Cost Exemption for MHPAEA 4 A small employer is generally defined as one that has 50 or fewer employees under ERISA and the Code, and one with 100 or fewer employees under the PHS Act CFR The procedure for plans to file a MHPAEA opt-out election with CMS is explained at If you are an employee of a State or local government and would like to know if your employment-based plan has elected to opt out, see the public list of non-federal governmental employers that have opted out of MHPAEA at -9-

10 200 Constitution Avenue, N.W. Suite N-5653 Washington, DC A group health plan that is a non-federal governmental plan (or a health insurance issuer offering coverage in connection with such plan) or a health insurance issuer offering health insurance coverage in the individual market must notify HHS at: Centers for Medicare & Medicaid Services (CMS) Center for Consumer Information and Insurance Oversight (CCIIO) ATTN: Increased Cost Exemption for MHPAEA 200 Independence Avenue, SW Room 737F Washington, DC Or via facsimile to or via to marketreform@cms.hhs.gov. A group health plan that is a church plan (as defined in section 414(e) of the Code), or a health insurance issuer offering coverage in connection with such plan, must notify the Department of the Treasury. Notice should be sent to: MHPAEA Increased Cost Exemption Notice Office of Division Counsel/Associate Chief Counsel (TEGE) CC:TEGE Room Constitution Avenue, NW Washington, DC Q8: My plan uses medical management techniques (such as preauthorization) to manage care for mental health and substance use disorder services, and my mental health benefits were denied. What information am I entitled to receive from my plan? MHPAEA provides that the criteria for medical necessity determinations with respect to mental health or substance use disorder benefits must be made available by the plan administrator or the health insurance issuer to any current or potential participant, beneficiary, or contracting provider upon request. In addition, under MHPAEA, the reason for any denial of reimbursement or payment for services with respect to mental health or substance use disorder benefits must be made available to participants and beneficiaries. Furthermore, under the internal appeals and external review requirements added by the Affordable Care Act, non-grandfathered group health plans and health insurance issuers must provide to an individual (or a provider or other individual acting as a patient's authorized representative), upon request and free of charge, reasonable access to and copies of all documents, records, and other information relevant to the individual's claim for -10-

11 benefits consistent with the Department of Labor claims procedure regulation. 7 This includes documents of a comparable nature with information on medical necessity criteria for both medical/surgical benefits and mental health and substance use disorder benefits, as well as the processes, strategies, evidentiary standards, and other factors used to apply a nonquantitative treatment limitation with respect to medical/surgical benefits and mental health or substance use disorder benefits under the plan. In addition, the plan or issuer must provide the claimant with any new or additional evidence considered, relied upon, or generated by the plan or issuer (or at the direction of the plan or issuer) in connection with a claim. If the plan or issuer is issuing an adverse benefit determination on review based on a new or additional rationale, the claimant must be provided, free of charge, with the rationale. Additionally, under ERISA, documents with information on medical necessity criteria for both medical/surgical and mental health or substance use disorder benefits, as well as the processes, strategies, evidentiary standards, and other factors used to apply a nonquantitative treatment limitation, are instruments under which the plan is established or operated, and copies must be furnished to a participant 8 within 30 days of request. 9 Q9: How can I obtain more information about my health plan benefits and MHPAEA? As stated in Q8, the final rules clarify that participants and beneficiaries in ERISA group health plans are entitled to request certain specific information with respect to both mental health and substance use disorder benefits and medical/surgical benefits, which may be helpful in determining whether or not a plan is complying with MHPAEA. Additional information and FAQs regarding MHPAEA are available on the Department of Labor s MHPAEA webpage at and the Department of Health and Human Services webpage at Protections/mhpaea_factsheet.html. If you have additional questions regarding compliance with MHPAEA, you may contact HHS by calling toll free at extension or ing phig@cms.hhs.gov, or you may contact a benefit advisor in one of the Department of Labor s regional offices at or by calling toll free at Regardless of which number you 7 See 29 CFR and ; 45 CFR See also and for consumer information on internal claims and appeals, external review of health plan decisions, and grandfathered health plans under the Affordable Care Act. 8 ERISA section 3(7) defines the term participant to include any employee or former employee who is or may become eligible to receive a benefit of any type from an employee benefit plan or whose beneficiaries may become eligible to receive any such benefit. Accordingly, employees who are not enrolled but are, for example, in a waiting period for coverage, or who are otherwise shopping amongst benefit package options at open season, generally are considered plan participants for this purpose. 9 See 29 U.S.C. 1024(b)(4), 1132(c)(1) and 29 CFR b

12 call, the Federal Departments will work together and with the States, as appropriate, to ensure MHPAEA violations are addressed. The Departments request comments on what additional steps, consistent with the statute, should be taken to ensure compliance with MHPAEA through health plan transparency, including what other disclosure requirements would provide more transparency to participants, beneficiaries, enrollees, and providers, especially with respect to individual market insurance, non-federal governmental plans, and church plans. Please send comments by January 8, 2014 to FAQs Published November 17, 2011: Affordable Care Act FAQs Part VII [Note: Question 1 related to an issue unrelated to MHPAEA.] [Note: Published prior to publication of Final MHPAEA Rule.] The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) supplemented the Mental Health Parity Act of 1996 (MHPA). Generally, MHPAEA specifies that the financial requirements and treatment limitations imposed on mental health and substance use disorder benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical and surgical benefits. 1 MHPAEA also prohibits separate financial requirements or treatment limitations that are applicable only to mental health or substance use disorder benefits. On February 2, 2010, the Departments published interim final rules implementing MHPAEA. 2 Previously-issued FAQ guidance was jointly prepared by the Departments of Health and Human Services (HHS), Labor and the Treasury (the Departments) and published on June 30, 2010 ( ) and December 22, 2010 ( ). Under MHPAEA and the Departments interim final rules, a group health plan or group health insurance issuer generally cannot impose a financial requirement (such as a copayment or coinsurance) or a quantitative treatment limitation (such as a limit on the number of outpatient visits or inpatient days covered) on mental health or substance use disorder benefits in any of 6 classifications 3 that is more restrictive than the financial requirements or quantitative treatment limitations that apply to at least 2/3 of medical/surgical benefits in 1 MHPAEA does not require plans to cover mental health and substance use disorder benefits. It applies only if a plan chooses to provide those benefits FR The six classifications of benefits defined in the interim final rules are: (1) inpatient, in-network; (2) inpatient, out-of-network; (3) outpatient, in-network; (4) outpatient, out-of-network; (5) emergency care; and (6) prescription drugs. -12-

13 the same classification. Thus, if a plan generally applies a $25 copayment to at least 2/3 of outpatient, in-network, medical/surgical benefits, a higher copayment could not be imposed on outpatient, in-network mental health or substance use disorder benefits. In addition to financial requirements and quantitative treatment limitations, plans and issuers often impose nonquantitative treatment limitations, such as: Medical management standards limiting or excluding benefits based on medical necessity or medical appropriateness, or based on whether a treatment is experimental or investigative; Formulary design for prescription drugs; Standards for provider admission to participate in a network, including reimbursement rates; Plan methods used to determine usual, customary, and reasonable fee charges; Refusal to pay for higher-cost therapies until it can be shown that a lower-cost therapy is not effective (also known as fail-first policies or step therapy protocols); and Exclusions based on failure to complete a course of treatment. The parity standard for nonquantitative treatment limitations does not require applying a simple arithmetic test to compare the treatment of mental health or substance use disorder benefits to the treatment of medical/surgical benefits. The Departments interim final rules provide that, under the terms of the plan as written and in practice, any processes, strategies, evidentiary standards, or other factors used in applying the nonquantitative treatment limitation with respect to mental health or substance use disorder benefits must be comparable to, and applied no more stringently than, the processes, strategies, evidentiary standards, or other factors used in applying the limitation with respect to medical/surgical benefits, except to the extent that recognized clinically appropriate standards of care may permit a difference. The following FAQs answer questions from stakeholders regarding nonquantitative treatment limitations, and one other common question, to help people understand the law and benefit from it, as intended. In addition to publishing these clarifying FAQs, the Departments will continue to investigate complaints by providers, consumers, and others and will take enforcement action for violations to ensure compliance with current law. Q2: For all mental health and substance use disorder benefits, my group health plan requires prior authorization from the plan s utilization reviewer that a treatment is medically necessary, but the plan does not require such prior authorization for any medical/surgical benefits. Is this permissible? No. The plan is applying a nonquantitative treatment limitation to mental health and substance use disorder benefits that is not applied to medical/surgical benefits. This violates -13-

14 MHPAEA s prohibition on separate treatment limitations that are applicable only to mental health or substance use disorder benefits. Q3: My group health plan requires prior authorization from the plan s utilization reviewer that a treatment is medically necessary for all inpatient medical/surgical benefits and for all inpatient mental health and substance use disorder benefits. In practice, inpatient benefits for medical/surgical conditions are routinely approved for seven days, after which a treatment plan must be submitted by the patient s attending provider and approved by the plan. On the other hand, for inpatient mental health and substance use disorder benefits, routine approval is given for only one day, after which a treatment plan must be submitted by the patient s attending provider and approved by the plan. Is this permissible? No. The plan is applying a stricter nonquantitative treatment limitation in practice to mental health and substance use disorder benefits than is applied to medical/surgical benefits. While some differences in prior authorization practices with respect to individual conditions or treatments might be permissible based on recognized clinically appropriate standards of care, the interim final regulations do not permit a plan to apply stricter nonquantitative treatment limitations to all benefits for mental health or substance use disorders than those applied to all medical/surgical benefits. The application of nonquantitative treatment limitations both with respect to the plan s benefits and its care management practices must comply with the nonquantitative treatment limitation rules. Q4: My group health plan considers a wide array of factors in designing medical management techniques for both mental health/substance use disorder benefits and medical/surgical benefits, such as cost of treatment; high cost growth; variability in cost and quality; elasticity of demand; provider discretion in determining diagnosis, or type or length of treatment; clinical efficacy of any proposed treatment or service; licensing and accreditation of providers; and claim types with a high percentage of fraud. Based on application of these factors in a comparable fashion, prior authorization is required for some (but not all) mental health and substance use disorder benefits, as well as for some medical/surgical benefits, but not for others. For example, under my plan, prior authorization is required for: outpatient surgery; speech, occupational, physical, cognitive and behavioral therapy extending for more than six months; durable medical equipment; diagnostic imaging; skilled nursing visits; home infusion therapy; coordinated home care; pain management; high-risk prenatal care; delivery by cesarean section; mastectomy; prostate cancer treatment; narcotics prescribed for more than seven days; and all inpatient services beyond 30 days. The evidence considered in developing its medical management techniques includes consideration of a wide array of recognized medical literature and professional standards and protocols (including comparative effectiveness studies and clinical trials). This evidence and how it was used to develop these medical management techniques is also well documented. -14-

15 Has my plan complied with the nonquantitative treatment limitation rules? Yes. It appears that, under the terms of the plan as written and in practice, the processes, strategies, evidentiary standards, and other factors considered by the plan in implementing its prior authorization requirement with respect to mental health and substance use disorder benefits are comparable to, and applied no more stringently than, those applied with respect to medical/surgical benefits. Q5: I am an employer considering several health insurance policy options. One health insurance policy requires prior authorization for all outpatient mental health benefits but only a few types of outpatient medical/surgical benefits (outpatient surgery; speech, occupational and physical therapy; and skilled home nursing visits.) Is this permissible? While some differences in plan requirements for prior authorization might be permissible based on recognized clinically appropriate standards of care, it is unlikely that the processes, strategies, evidentiary standards, and other factors considered by the plan in determining that those three (and only those three) outpatient medical/surgical benefits require prior authorization would also result in all outpatient mental health and substance use disorder outpatient benefits needing prior authorization. Q6: A plan applies concurrent review to inpatient care where there are high levels of variation in length of stay (as measured by a coefficient of variation exceeding 0.8). In practice, the application of this standard affects 60 percent of mental health conditions and substance use disorder conditions, but only 30 percent of medical/surgical conditions. Is this permissible? Yes. The evidentiary standard used by the plan is applied no more stringently for mental health and substance use disorder benefits than for medical/surgical benefits, even though it results in an overall difference in the application of concurrent review for mental health conditions or substance use disorders than for medical/surgical conditions. Q7: Is my group health plan always limited in the amount that it can charge for all mental health/substance use disorder providers to the same rate as medical/surgical generalists? No. The standard for determining the maximum copayment that can be applied to mental health/substance use disorder benefits is determined by the predominant copayment that applies to substantially all medical/surgical benefits within a classification. If the copayment that meets this standard is the one charged for a medical/surgical specialist, that copayment can be charged for all mental health/substance use disorder benefits within that classification. On the other hand, if the copayment that meets this standard is the one charged for a medical/surgical generalist, then that is the copayment that can be charged to all mental health/substance use disorder benefits within that classification. -15-

16 FAQs Published December 22, 2010: Affordable Care Act FAQs Part V [Note: Questions 1-7 related to issues unrelated to MHPAEA.] [Note: Published prior to publication of Final MHPAEA Rule.] The Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) supplemented the Mental Health Parity Act of 1996 (MHPA). Generally, MHPAEA requires that the financial requirements and treatment limitations imposed on mental health and substance use disorder benefits cannot be more restrictive than the predominant financial requirements and treatment limitations that apply to substantially all medical and surgical benefits. 2 For group health plans, MHPAEA is effective for plan years beginning after October 3, On February 2, 2010, the Departments published interim final rules on MHPAEA, which apply for plan years beginning on or after July 1, Q8: After the amendments made by the Affordable Care Act, are small employers still exempt from the MHPAEA requirements? How is small employer defined? Yes, small employers are still exempt. Although there were changes to the definition of small employer for other purposes under the Affordable Care Act, ERISA and the Code continue to define a small employer as one that has 50 or fewer employees. Accordingly, for group health plans and health insurance issuers subject to ERISA and the Code, the Departments will continue to treat group health plans of employers with 50 or fewer employees as exempt from the MHPAEA requirements under the small employer exemption, regardless of any State insurance law definition of small employer. For nonfederal governmental plans, the PHS Act was amended by the Affordable Care Act to define a small employer as one that has 100 or fewer employees. Q9: I am an in-network health care provider and one of my patients is having trouble getting benefits paid for a mental health condition or substance use disorder. Am I entitled to receive a copy of the criteria for medical necessity determinations made by the patient s plan or health insurance coverage? Yes. MHPAEA and its implementing regulations state that the criteria for medical necessity determinations made under a plan or health insurance coverage with respect to mental health or substance use disorder benefits must be made available by the plan administrator or health insurance issuer to any current or potential participant, beneficiary, or contracting provider upon request. Q10: I was denied benefits for mental health treatment by my plan because the plan determined that the treatment was not medically necessary. I requested and received 2 MHPAEA does not mandate plans to cover mental health and substance use disorder benefits. It applies only if a plan chooses to provide those benefits FR

17 a copy of the criteria for medical necessity determinations for mental health and substance use disorder treatment, and the reason for denial. I think my plan is applying medical necessity standards more strictly to benefits for mental health and substance use disorder treatment than for medical/surgical benefits. How can I obtain information on the medical necessity criteria used for medical/surgical benefits? Under ERISA, documents with information on the medical necessity criteria for both medical/surgical benefits and mental health/substance use disorder benefits are plan documents, and copies of plan documents must be furnished within 30 days of your request. See ERISA regulations at 29 CFR b-1. Additionally, if a provider or other individual is acting as a patient s authorized representative in accordance with the Department of Labor s claims procedure regulations at 29 CFR , the provider or other authorized representative may request these documents. If your plan is not subject to ERISA (for example, a plan maintained by a State or local government), you should check with your plan administrator. Q11: MHPAEA contains an increased cost exemption. How does a plan claim this exemption? MHPAEA contains an increased cost exemption that is available for plans that make changes to comply with the law and incur an increased cost of at least two percent in the first year that MHPAEA applies to the plan (the first plan year beginning after October 3, 2009) or at least one percent in any subsequent plan year (generally, plan years beginning after October 3, 2010). If such a cost is incurred, the plan is exempt for the plan year following the year the cost was incurred. Thus, the exemption lasts one year. After that, the plan is required to comply again; however, if the plan incurs an increased cost of at least one percent in that plan year, the plan could claim the exemption for the following plan year. The Departments interim final regulations implementing MHPAEA did not provide guidance for implementing the increased cost exemption. Accordingly, during an interim enforcement safe harbor until future regulatory guidance is effective, a plan that has incurred an increased cost of two percent during its first year of compliance can obtain an exemption for the second plan year by following the exemption procedures described in the Departments 1997 MHPA regulations (62 FR 66932, December 22, 1997)4, except that, as required under MHPAEA, for the first year of compliance the applicable percentage of increased cost is two percent and the exemption lasts only one year. Calculations of increased costs due to MHPAEA should include increases in a plan's share of cost sharing. Moreover, any non-recurring administrative costs (such as adjustments to computer software) attributable to complying with MHPAEA must be appropriately amortized. Plans applying for an exemption must demonstrate that increases in cost are attributable directly to implementation of MHPAEA and not otherwise to occurring trends in utilization and prices, a random claims experience that is unlikely to persist, or seasonal variation typically experienced in claims submission and payment patterns. -17-

18 FAQ Published June 30, 2010: FAQ About Mental Health Parity and Addiction Equity Act [Note: This FAQ was published separately from other Affordable Care Act FAQs. It is available at [Note: Published prior to publication of Final MHPAEA Rule.] Q: Since the interim final regulations were issued, some plans and issuers have stated that it is common with respect to outpatient benefits for plans and issuers to require a copayment for office visits (e.g., physician or psychologist visits) but coinsurance for other outpatient services (e.g., outpatient surgery, facility charges for day treatment centers, laboratory charges, or other medical items). For purposes of determining parity for outpatient benefits (whether in-network or out-of network), can a plan or issuer establish any sub-classifications, similar to the special rule for multi-tier prescription drugs? Until the issuance of final regulations, the Agencies have determined that they will establish an enforcement safe harbor under which the Agencies will not take enforcement action against a plan or issuer that divides its benefits furnished on an outpatient basis into two sub-classifications for purposes of applying the financial requirement and treatment limitation rules under MHPAEA: (1) office visits, and (2) all other outpatient items and services. After the sub-classifications are established, the plan or issuer may not impose any financial requirement or treatment limitation on mental health or substance use disorder benefits in any sub-classification (i.e., office visits or non-office visits) that is more restrictive than the predominant financial requirement or treatment limitation that applies to substantially all medical/surgical benefits in the sub-classification using the methodology set forth in the interim final rules. Other than as permitted under this enforcement policy, and except as permitted under the interim final rules for multi-tier prescription drug formularies, sub-classifications are not permitted when applying the financial requirement and treatment limitation rules under MHPAEA. Accordingly, and as stated in the preamble to the interim final rules, separate sub-classifications for generalists and specialists are not permitted. -18-