Aetna's Approach to Mental Health Parity

Background 

What is the new Federal Mental Health Parity law? 

• The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (“MHPAEA” or the “Act”) was signed into law on October 3, 2008.
• The Act amends the original Mental Health Parity Act of 1996 and applies to group health plans and health insurance issuers for plan years beginning on or after October 3, 2009.  Therefore, for calendar year plans, the Act was applicable starting January 1, 2010.  The effective date of the Act for collectively bargained plans ratified before October 3, 2008, is the plan year beginning after the later of: (a) the date on which the last of the collective bargaining agreements related to the plan terminates or (b) January 1, 2010.
• The Act requires group health plans that choose to offer both medical benefits and mental health or substance use disorder benefits  to offer such benefits in parity.
  Regulations issued by the Departments of Health and Human Services, Labor and the Treasury ( the “Departments”) intended to offer greater clarity and guide implementation of MHPAEA were scheduled for release by the effective date of the Act but were not published until February 2, 2010.
• The regulations associated with MHPAEA were issued as an “Interim Final Rule” (the “Rule”) which means that while the regulations are official and binding, requiring plans’ compliance, the Departments may consider additional comments regarding the regulations and later revise and issue them as a final rule.   A copy of the regulations can be obtained online.
• All plans subject to the MHPAEA are subject to the Rule except for Medicaid Managed Care Plans. Separate regulations applicable to Medicaid Managed Care Plans will be issued by the Centers for Medicare & Medicaid Services (“CMS”) at a later date.

When do the Federal Mental Health Parity regulations take effect? 

• Despite being issued as “Interim Final”, the regulations are effective on April 5, 2010 and apply to group health plans and health insurance issuers for plan years beginning on or after July 1, 2010.  Therefore, for calendar year plans, the regulations will apply starting January 1, 2011. There is a delayed effective date for plans maintained pursuant to one or more collectively bargained agreements ratified prior to October 3, 2008.  For these plans the regulations apply for plan years beginning before the later of either (i) the date on which the last of the collective bargaining agreements relating to the plan terminates or (ii) July 1, 2010.
• The regulatory guidance states that the Departments will take into account “good faith efforts” to comply with a reasonable interpretation of the statutory MHPAEA requirements with respect to a violation that occurs before the applicability date of the regulations.  This does not, however, prevent participants from bringing private actions.
• The effective date of the Rule does not change the effective date for compliance with the Act.  Plans are still required to comply with the provisions of the Act for plan years beginning on or after October 3, 2009, as described above.

Does Federal Mental Health Parity require plan sponsors to cover mental health or substance abuse benefits? 

No. Federal Mental Health Parity does not require plan sponsors to cover mental health or substance abuse benefits. However, if a plan sponsor chooses to offer mental health or substance abuse benefits, the law prohibits imposing more restrictive financial requirements (such as co-pays or deductibles) or treatment limitations (including quantitative treatment limitations, such as day or visit limits, and non-quantitative treatment limitations described below) on mental health or substance abuse benefits than those applied to medical or surgical benefits.

Additionally, the Rule does state that if a plan provides mental health or substance use disorder benefits in any classification of benefits described below, mental health or substance use disorder benefits must be provided in every classification in which medical/surgical benefits are provided.

As stated below, state law will continue to apply and may, for example, mandate additional mental health/substance abuse coverage.

Does Federal Mental Health Parity specify how parity must be achieved? 

No. Federal Mental Health Parity does not dictate how parity should be achieved. For example, the law does not say that parity should be achieved through reducing medical benefits or by increasing mental health benefits. The law only requires "parity" however the health plan chooses to structure the benefits.

What exemptions or “opt outs”, if any, are in place under Federal Mental Health Parity? 

• Small employer exemption - Any employer that has an average of between two and fifty employees during the preceding calendar year is classified as a small employer and is not subject to the federal parity law.   For purposes of Federal Mental Health Parity, employers are required to count all employees (including part-time and full-time) in order to determine if they meet the small employer exemption.
• Cost-based exemption - If the new parity provisions raise the total costs of any group health plan by 2% or more in the first year and 1% in the following years the plan can seek a one year exemption. The cost based exemption can only be claimed every other year.
• Self-funded Non-Federal Government Employers - A non-federal government employer that provides self-funded group health plan coverage to its employees may elect to opt-out from requirements of Federal Mental Health parity.
• Retiree only plans – Plans that meet the definition of a “retiree only” plan are exempt from Federal Mental Health Parity.  A “retiree only” plan is defined as any group health plan (and group health insurance coverage offered in connection with a group health plan) with less than two participants who are current employees.  The plan must be offered solely to retirees and the retiree plan must have a separate, free standing plan for which the former employer issues a separate Summary Plan Description and files a separate Form 5500 with the Department of Labor.

Does Federal mental Health Parity preempt or supersede existing state parity laws?

No. Federal Mental Health Parity establishes a floor for benefits but specifically allows states to continue to enforce any parity requirement deemed stronger than federal law (as long as state law does not compromise the federal law). For plans not subject to state laws (ERISA self funded plans), the new federal law sets both the floor and the ceiling.

What mental health and substance use disorders are covered subject to Federal Mental Health Parity? 

As stated above, Federal Mental Health Parity does not require plan sponsors to offer mental health or substance abuse coverage. However, if an plan sponsor chooses to offer mental health or substance abuse benefits, the law prohibits imposing more restrictive financial requirements (such as copays or deductibles) or treatment limitations (including quantitative treatment limitations, such as day or visit limits, and non-quantitative treatment limitations described below) on mental health or substance abuse benefits than those applied to medical or surgical benefits.

Does Federal Mental Health Parity define mental health and substance use disorder benefits? 

The law defines mental health and substance use disorder benefits as those "defined under the terms of the plan and in accordance with applicable Federal and State law." This means that the law defers to group health plans to define mental and substance use disorders and their coverage. Definitions must be consistent with “generally recognized independent standards of current medical practice” which include the Diagnostic and Statistical Manual of Mental Disorders, the International Classification of Diseases and State guidelines. As previously noted, where state law either defines or mandates coverage of specific mental illnesses or services, those definitions will continue to apply to plans subject to state regulation.

How does this law differ from the original Mental Health Parity Act of 1996? 

The new MHPAEA:

• Includes substance use disorders
• Requires out of network coverage for mental health and substance use disorders if out of network is covered for medical surgical benefits
• Prohibits more restrictive cost-sharing features for behavioral health than those applied to medical/surgical benefits
• Prohibits more restrictive day and visit limitations for behavioral health than for those applied to medical/surgical benefits.
• Applies parity to non quantitative treatment limitations including but not limited to medical management, formulary design, provider network admission standards and provider reimbursements.
• Requires that if a plan provides mental health or substance use disorder benefits in any classification of benefits described below, mental health or substance use disorder benefits must be provided in every classification in which medical/surgical benefits are provided.

When is Aetna implementing the requirements of Federal Mental Health Parity? 

Requirements of the Act were implemented on October 3, 2009 for plan sponsors needing to be in compliance beginning with their first plan year renewal after that date. Additional requirements put forth by Interim Final Rule were  implemented by July 1, 2010 for plan sponsors needing to be in compliance with the regulations by such date and for other plan sponsors beginning with their first plan year renewal after that date (i.e. January 1, 2011 for calendar year plans).

Does Federal Mental Health Parity apply to non-federal government plans? 

Both fully insured and self-funded non-federal government plans are subject to parity.
Self funded non-federal government plans, however, can opt out of the parity requirement by filing an exemption election with the Centers for Medicare & Medicaid Services (“CMS”).

What are the key elements of the Interim Final Rule? 

1. As outlined in the Act, plans must ensure that the financial requirements and treatment limitations applied to mental health and substance use disorders are not more restrictive than those applied to medical surgical benefits. 

The Rule also provides specific formulas for determining parity. Key terms are used for the purposes of applying the formulas:

a.) “Classification of benefits”- The Rule establishes six classifications of benefits: (i) Inpatient, in-network, (ii) Inpatient out-of-network, (iii) Outpatient in network, (iv) Outpatient out of network, (v) Prescription drugs and (iii) Emergency.   Parity must be determined on a classification by classification basis and these six are the only classifications that may be used for purposes of satisfying parity. The regulations do not define the different classifications. See #3 which follows for detail regarding the outpatient sub-classification safe harbor as provided by the Department of Labor July 1, 2010.

b.) “Type”- this term is used to refer to financial requirements and treatment limitations that are similar in nature. Different types include copayments, coinsurance, visit limits and episode limits.

c.) “Level” means the degree of a type of financial requirement or treatment limitation, i.e.) dollar, percentage, day or visit amount.

d.) “Coverage unit”- refers to the grouping of individuals for determining benefits, i.e.) single participant, participant plus spouse, children etc)

2. The Rule provides specific formulas for comparing plan benefits in order to apply parity: 

The formulas must be applied to the 6 different benefit classifications (inpatient preferred, inpatient non-preferred, outpatient preferred, outpatient non-preferred, emergency, and pharmacy as noted above. Further guidance issued by the DOL allows sub-classifications within the outpatient benefit.
a. The formulas are applied to determine what the “predominant” medical surgical financial requirement (e.g. member cost share such as co-pays or co-insurance) is that applies to “substantially all” medical/surgical benefits within a classification (i.e. outpatient preferred.)
b. In order to meet the “substantially all” requirement, a single type of member cost share (e.g.) co-pay must apply to at least 2/3 of the medical/surgical benefits within a classification (i.e. outpatient preferred.)
c. If a single type of cost share does not occur at least 2/3 of the time within a classification (i.e. outpatient preferred) the result is that behavioral health benefits within that classification must be covered at 100% without any member cost share.
d. If a single type of cost share does occur at least 2/3 of the time within a classification (i.e. outpatient preferred), the next step is determining what the predominant cost share is, for e.g.) whether the behavioral health benefits should include a $10 co-pay versus a $20 co pay based on the medical surgical benefits.
e. These determinations must be made on a plan design specific basis.

 
3. As noted above, on July 1, 2010, the Department of Labor (DOL) released guidance regarding compliance with the “substantially all” test required by the federal parity interim final regulations. 

Until final regulations are issued, DOL established a non-enforcement “safe harbor” that allows a plan to establish sub-classifications within the outpatient benefit classification.  The only sub-classifications allowed are:  1.) office visits     2.) All other outpatient items and services.  The allowance of sub-classifications will result in most plans being able to pass the substantially all test and apply either co-insurance or co-pay to their outpatient behavioral health benefits.

4.  Addition of non-quantitative treatment limitations. 

The Rule elaborates on the definition of treatment limitations provided in the Act and applies parity to a new category: non quantitative treatment limitations. Non quantitative treatment limitations are limitations that are not expressed numerically but otherwise limit the scope or duration of benefits for treatment. Specifically, any processes, strategies, evidentiary standards or other factors used in applying non quantitative treatment limitations must be comparable for both medical surgical benefits and substance use disorder benefits.

Non-quantitative treatment limitations include but are not limited to medical management (i.e. excluding benefits based on medical necessity or appropriateness), formulary design, provider network admission standards and provider usual and customary reimbursements.

5. Single Deductibles and Out of Pocket Limits Required.   

It was generally understood that MHPAEA was open to two alternative interpretations regarding deductibles and out of pocket limits (that plans could have separate but equal deductibles or out of pocket limits for mental health and/or substance use disorder benefits and medical surgical benefits or that plans needed to have a single deductible for both types of benefits).

The Rule clarifies that plans may not apply cumulative financial requirements or cumulative treatment limitations to mental health or substance use disorder benefits that accumulate separately from similar requirements for medical surgical benefits. The Rule does not require Plans to cross accumulate the lifetime or annual maximums. 

6. Disclosures   

The Rule provides guidance on the two MHPAEA disclosure provisions requiring:
Criteria for medical necessity determinations for mental health substance use disorder benefits are to be made available to participants and beneficiaries upon request.
Reasons for denial of reimbursement or payment for mental health substance use disorder services are to be made available to participants and beneficiaries upon request.

Does the Interim Final Rule now clarify the questions that remained outstanding regarding the MHPAEA? 

The Rule clears up many of the issues that were unclear in the Act. The Rule however, contains some language which remains vague and open to interpretation, (e.g. determination of non quantitative treatment limitations.)
The Rule also specifically requests comments on a number of issues not specifically addressed e.g. scope of services).  As further guidance becomes available, we will provide timely informational updates.

Will Aetna support Plan Sponsors in applying the “substantially all” and “predominant” parity formulas? 

 We have completed financial testing for our fully insured plans, in accordance with the Federal Mental Health Parity and Addiction Equity Act and Interim Final Regulations, including the non-enforcement safe harbor issued by the Department of Labor (DOL) on July 1, 2010.  We are in full compliance with the “substantially all” and all quantitative treatment limitation formulas.  We have paid claims based on parity compliant plan designs that are effective for July 1, 2010 and beyond and will continue to do so. For fully insured plans, our account representatives will inform customers and collaborate regarding any plan design changes that are required to comply with the Federal Mental Health Parity and Addiction Equity Act.

It is the legal responsibility of self-funded customers to determine compliance with the parity law and regulations, including any testing of their current plan design benefits.  We recommend that customers work with their legal counsel and consultants to ensure compliance for their self-funded plans.  We can provide case-specific data, for an additional charge, to a customer’s consultant for compliance testing.  If a self-funded customer determines that their self-funded plan design may be problematic and would like official actuarial advice for compliance testing and determination of outpatient classifications, we can supply assistance through arrangements that we have made with an external actuarial firm.  Upon request, we can provide a fee schedule and other details related to this service along with informational examples of plan design scenarios that may have difficulty meeting the testing requirements.

How is Aetna classifying residential behavioral health care?

As a result of the classifications set forth in the Interim Final Regulations the Residential Treatment Facility (RTF) Behavioral Health/Substance Use Disorder (BH/SUD) benefit is comparable to the Medical Surgical Inpatient benefit.. If a plan sponsor currently has the Residential Treatment Facility (RTF) BH/SUD benefit matched to the Skilled Nursing Facility medical benefit, it will be automatically aligned to the Medical Surgical Benefit upon plan renewal on or after 7/1/2010.

How is Aetna classifying partial and intensive outpatient behavioral health care? 

Both partial and intensive outpatient behavioral health care benefits are classified as outpatient benefits.

How is Aetna sub-classifying outpatient benefits?

In accordance with the non enforcement safe harbor issued by the Department of Labor on July 1, 2010, Aetna is sub-classifying outpatient ( OP) benefits into 1.) office visits and 2. all other outpatient items and services for purposes of applying the financial requirement and treatment limitation rules under MHPAEA.  We are defining the outpatient office visits as those routine, speciality, preventative, and rehabilitative services that have a professional component but do not require an overnight stay at their place of service. We are defining all other outpatient items and services as including durable medical equipment and surgical and or diagnostic services.

What impact will parity have on the Aetna Employee Assistance Program (EAP)? 

The Interim Final Rule states that “gatekeeper model” EAPs that require members to exhaust EAP benefits before they can be eligible for their mental health/substance use disorder benefit are in violation of the parity law if there is no equivalent on medical surgical plans.

Costs 

What is parity going to cost? 

Studies indicate that overall claims cost changes resulting from the new federal parity legislation may be as low as 0 percent to 2 percent. The GAO in estimating the cost of current parity legislation estimated impact at 0.4 percent.1 Revised cost projections specific to the addition of parity provisions associated with the regulations, such as parity’s application to out of network benefits,  non quantitative treatment limitations,  and prohibitions against combined deductibles and out of pocket limits have not yet been calculated.

What recommendations is Aetna making to help plan sponsors limit the cost increase of compliance? 

The Interim Final Rule requires that strategies and evidentiary standards in determining medical/surgical and mental health substance use disorder medical management processes be comparable to each other and applied no more stringently for mental health substance use disorders than for medical/surgical disorders.

Aetna has completed an enterprise wide review of current medical management strategies, policies, processes and evidentiary standards to assure that the mental health substance use disorder medical management processes are comparable and no more stringent than those used for medical/surgical conditions.

We also recommend that plan sponsors provide information to members regarding the value of in-network usage and higher costs that may result from out-of-network usage. Additionally, we advise that plan sponsors continue to review and refine the in- and out-of-network components of their plan designs to meet the requirements of MHPAEA. 

Standard Coverage 

What will Aetna's standard coverage look like? 

If mental health and substance abuse benefits are offered, the law prohibits imposing more restrictive financial requirements (deductibles, co-payments, co-insurance and out-of-pocket expenses) or treatment limitations (frequency of treatment, number of days, days of coverage) on mental health/substance use disorder benefits than those applied to medical or surgical benefits.
Plans may not establish separate cost sharing requirements applicable only to mental health benefits.

If separate benefits plans exist, the parity requirements must be applied to each benefit plan. Limits can exist but must be the same (or better) as for medical benefits.
Out of network coverage must be offered for mental health/substance abuse if offered for medical.
Plans must use a single deductible for both mental health substance use disorder benefits and medical surgical benefits.

Parity must be established with respect to non quantitative treatment limitations as described in the Interim Final Rule

Our standard coverage will be in compliance with each of these key components and all requirements of the new law.

Coverage Requirements 

Can a plan sponsor opt out of offering mental health or substance use disorder coverage entirely (self-funded and/or fully insured)? 

Federal Mental Health Parity applies to group health plans offering mental health or substance use disorder benefits. It does not require that applicable plans offer these benefits. We strongly recommend however, that plan sponsors do not eliminate offering mental health/substance abuse coverage. Additionally, state law will continue to apply and may, for example, mandate certain mental health/substance abuse coverage.

Is electing not to offer mental health benefits a responsible alternative to parity? 

It has been well established that behavioral health issues are a primary driver of medical costs. There are, for example, high rates of depression with most chronic conditions. These lead to higher medical costs, poorer clinical outcomes and loss of productivity. By addressing the cost of treatment, the MHPAEA helps remove a barrier preventing people from using their benefit to get necessary services. Parity creates opportunities to treat members early before conditions worsen and become more costly.

Medicare 

Are Medicare supplemental insurers subject to parity? 

Medicare Supplemental Insurers are not subject to the Mental Health Parity and Addiction Equity Act.

Are Medicare Advantage Plans subject to parity? 

Medicare Advantage Plans offered through an ERISA group health plan are subject to the Mental Health Parity and Addiction Equity Act, unless the ERISA group health plan isa “retiree-only” plan, as described above.

Aetna's Implementation 

Is Aetna prepared to accommodate the requirements under Federal Mental Health Parity? 

Yes. Aetna’s commitment to innovation, quality of care and our demonstrated integration capabilities are notable differentiators that will enable our plan sponsors to harvest the opportunities that mental health parity has to offer. To this end, Aetna has developed a team of mental health specialists that work in close alignment with our medical care team to ensure a holistic approach to patient management.

Does Federal Mental Health Parity support the value of integrated care? 

Yes. The recognition that mental health benefits should be offered in parity with medical health benefits, coupled with the fact that mental illness has an impact on physical health and vice versa, strongly supports Aetna’s approach to the value of integration of care. When members have access to programs that effectively integrate behavioral and medical benefits, they are more likely to be compliant with medication, have improved health outcomes, lower rates of absenteeism, and ultimately benefit from increased productivity. Aetna will continue to expand and enhance these programs as well as the Employee Assistance Program (EAP) to promote earlier identification and intervention in behavioral health conditions.

Disclaimer

Compliance with the federal parity law is the responsibility of self funded plan sponsors and Aetna cannot provide legal advice in this regard. Plan sponsors should seek their own separate counsel for legal guidance on application of the federal parity requirements.
Any questions about Aetna's approach to Federal Mental Health Parity may be referred to your Aetna sales or account representative. 

1. Mays, J. Growth in Premiums in the FEHBP from Mental Health Parity. U.S. Department of Health and Human Services. May 20, 2005. Available at: http://aspe.hhs.gov/health/Reports/05/mhsamemo.htm. Accessed March 5, 2009.