TO: Benefit Plan Decision Makers, HR Contacts, and Accounting/Payroll Personnel

Transcription

1 09/28/09 TO: Benefit Plan Decision Makers, HR Contacts, and Accounting/Payroll Personnel FROM: Hantz Benefit Services RE: The Mental Health Parity and Addiction Equity Act of 2008 Summary of the Mental Health Parity and Addiction Equity Act Generally effective for plan years beginning after October 2, 2009, the Act includes the following provisions: -If a group health plan includes medical/surgical benefits and mental health benefits, the financial requirements (e.g. deductibles and co-payments) and treatment limitations (e.g. number of visits or days of coverage) that apply to mental health benefits must be no more restrictive than the predominant financial requirements or treatment limitations that apply to substantially all medical/surgical benefits. -If a group health plan includes medical/surgical benefits and substance use disorder benefits, the financial requirements and treatment limitations that apply to substance use disorder benefits must be no more restrictive than the predominant financial requirements or treatment limitations that apply to substantially all medical/surgical benefits. -Mental health benefits and substance use disorder benefits may not be subject to any separate cost sharing requirements or treatment limitations that only apply to such benefits. -If a group health plan includes medical/surgical benefits and mental health benefits, and the plan provides for out of network medical/surgical benefits, it must provide for out of network mental health benefits. -If a group health plan includes medical/surgical benefits and substance use disorder benefits, and the plan provides for out of network medical/surgical benefits, it must provide for out of network substance use disorder benefits. -Standards for medical necessity determinations and reasons for any denial of benefits relating to mental health benefits and substance use disorder benefits must be made available upon request to plan participants. -The parity requirements for the existing law (regarding annual and lifetime dollar limits) will continue and will be extended to substance use disorder benefits. Please recognize MHPA does NOT prohibit large group health plans from: -Covering mental health services within network only, even though the plan will pay for out of network services for medical/surgical benefits (although with higher out-of-pocket cost to the subscriber). -Increasing co-payments or limiting the number of visits for mental health benefits. -Imposing limits on the number of covered visits, even if the plan does NOT impose similar visit limits for medical and surgical benefits. -Having different cost sharing arrangements, such as higher coinsurance payments for mental health benefits as compared to medical and surgical benefits. -Although the law requires parity with regard to dollar limits, MHPA does NOT require large group health plans and their health insurance issuers to include mental health coverage into their benefits package. The law s requirements apply only to large group health plans and their health insurance issuers that include mental health benefits in their benefits packages.

2 There are three major exceptions to the MHPA requirements: -MHPA requirements do not apply to small employers who have between 2 and 50 employees. -Large group health plans that can demonstrate that compliance with MHPA increases their cost by at least one percent can notify their beneficiaries that MHPA does not apply to their coverage. -A nonfederal government employer that provides self-funded group health plan coverage to its employees (coverage that is not provided through an insurer) may elect to exempt its plan (opt out) from the requirements of MHPA by issuing a notice of opt out to enrollees at the time of enrollment and on an annual basis thereafter. The employer must also file the opt out with the Center for Medicare Services. HBS is committed to providing exceptional service, and this legislative change offers us another opportunity to make a positive impact in the lives of our employer groups. We realize this communication will likely prompt more questions than answers. Know we will do all we can to continue to provide you the best information we have as quickly as it becomes available from our in-house experts, regulatory resources, carrier support, and legislative contacts. Thank you.

3 -Blue Cross Blue Shield of Michigan Talking Points: Mental Health Parity Law Overview In fall 2008, changes to the Mental Health Parity Law (S.558) were included when Congress passed the Emergency Economic Stabilization Act of 2008 (H.R. 1424). The MHP law is now permanent and states that a health plan s mental health and substance use disorder benefits cannot be more restrictive than the plans medical and surgical benefits. The legislation is effective Oct. 3, It affects Blues customer groups of 51 or more employees who offer mental health and/or substance abuse benefits. It applies to self-funded, ERISA and non-erisa groups as well as insurance companies. It does not apply to individual coverage. These talking points provide key information about the MHP law s impact on Blues customers and our current compliance plans. This document should only be used to gain an understanding of the law. Groups should consult with their legal counsel regarding questions about the Mental Health Parity Act. The federal government has not issued regulations for the new MHP law at this time and has not provided a date of when the regulations will be available; however, the law requires the Blues to become compliant regardless of the availability of the federal regulations. Therefore, changes that the Blues implement for compliance are subject to change after the regulations are released. The Blues will provide additional compliance information as it becomes available. If you have immediate questions, please contact your Managing Agent. New MHP law requirements The 1996 MHP law requirements remain in effect. The following provisions are now included: The definition of mental health benefits now includes substance abuse benefits. Parity of substance abuse benefits is required. 04/20/2009 Talking Points: Mental Health Parity Law 1 Blue Cross Blue Shield of Michigan is a nonprofit corporation and independent licensee of the Blue Cross and Blue Shield Association.

4 Cost-sharing and out-of-pocket expenses are required to be equal to or more lenient than the predominant cost-sharing requirements and out-ofpocket expenses that apply to substantially all medical and surgical services. Treatment and frequency limitations (e.g., limits on number of visits, days of coverage, etc.) must be equal to or more lenient than the predominant limitations that apply to substantially all medical and surgical services. Important note: The new MHP law does not mandate that groups, including those self-funded, offer coverage for mental health and substance abuse benefits. However, underwritten groups must continue to cover residential and outpatient substance abuse benefits up to the state-mandated minimum. Exemptions to the MHP Law Cost exemption: In the past, groups could opt out if the cost of compliance resulted in a 1 percent increase in the actual total plan costs. The new law increases the cost threshold to 2 percent for the first plan year and 1 percent in subsequent plan years and requires the following: A plan must qualify each year for the exemption. It is not permanent. A cost-increase analysis must be made and certified by a qualified and licensed actuary who is a member in good standing of the American Academy of Actuaries. Cost determinations must be provided in a written report. The report and supporting documentation must be maintained by the group health plan for six years. Public Health Services Act: Self-funded, nonfederal governmental groups (e.g., local and state governments, public schools, etc.) may be allowed an exemption from the law under the PHSA. Small group exemption: Groups that have an average of 50 or fewer employees (all employees, not just eligible employees) annually are not subject to the MHP law and can continue with their current mental health and substance abuse benefits. 04/20/2009 Talking Points: Mental Health Parity Law 2 Blue Cross Blue Shield of Michigan is a nonprofit corporation and independent licensee of the Blue Cross and Blue Shield Association.

5 Implementation Activities: The new MHP law requirements become effective Oct. 3, The Blues will comply no later than Oct. 3, 2009, and groups will be required to become compliant on their renewal dates starting Oct. 1, There are two potential effective dates for union groups. It will either be Jan. 1, 2010 or on the group s renewal date following the expiration of last of the plan s union contracts whichever is the later date. New MHP riders are being created and will be available after they are approved by the Office of Financial and Insurance Regulation. MHP and all other benefit changes requested by the group will continue to be handled on their group renewal date through the Group Wide Change process effective Oct. 1, Affected groups will receive notice prior to a change in their benefits. Benefits-at-a-Glance charts and Your Benefit Guides will be updated to reflect benefit changes. As updates become available regarding the Blues compliance with the MHP law, the information will be communicated in alerts and Blues Advantage and Blueprint newsletters, as well as member and provider publications. 04/20/2009 Talking Points: Mental Health Parity Law 3 Blue Cross Blue Shield of Michigan is a nonprofit corporation and independent licensee of the Blue Cross and Blue Shield Association.

6 BCBSM/BCN Fact Sheet Release Date: 10/01/2009 Mental Health Parity Background/ Purpose for Mental Health Parity Plan Benefit Design Target Market Why do we recommend Mental Health Parity? Mental Health Parity - a federal law that requires employers and health plans to provide mental-health and substance-use-disorder benefits on par with the plan s predominant medical and surgery benefits. Changes to the Mental Health Parity Act of 2007 (S.558) were included in the Emergency Economic Stabilization Act of 2008 (H.R. 1424). The MHP law is now permanent and states that a health plan s mental-health and substanceuse-disorder benefits cannot be more restrictive than the plan s predominant medical and surgical benefits. The legislation becomes effective Oct. 3, BCBSM created 14 MHP riders and BCN created 8 MHP riders to bring parity with each certificate s predominant medical and surgical benefits. We interpreted predominant to mean the cost sharing or frequency limits that apply to the majority of the benefits in a contract. The law affects groups of 51 or more employees, that offer mental-health and/or substance-use-disorder benefits. The law applies to self-funded, ERISA and non-erisa groups as well as insurance companies. Exemptions: Groups of fewer than 51 employees Non-federal government groups that have received an exemption through the Public Health Service Act Cost exemption available* *Available if after complying for one year, a group has experienced an increase of 2 percent or more in their total actual cost of coverage and 1 percent for each subsequent year. This exemption is only good for only one year. Groups must reapply for subsequent years. A qualified actuary (member of American Academy of Actuaries) must prepare a written report regarding a plan s cost increase after it has complied with the act for the first six months of the plan year involved. Studies show that, as a result of MHP legislation compliance, the business community experiences a reduction in absenteeism caused by mental illness. Also, there is potential to see reduction in overall health care cost as a result of early treatment of mental illness and substance abuse. The penalty for non compliance under the tax code and Public Health Service Act is $100 per day per member. The penalty is assessed against the plan (if self-funded) or BCBSM (if underwritten). In addition, a member can bring a lawsuit to compel coverage of benefits. Additional penalties may be imposed under ERISA. Blue Cross Blue Shield of Michigan and Blue Care Network are nonprofit corporations and independent licensees of the Blue Cross and Blue Shield Association