Employers Face Challenges With New Mental Health Parity Act

Kessler, R.C. , Chiu, W.T. , Colpe, L. , Demler, O. , Merikangas, K.R. , Walters, E.E. , et al. (2004). The prevalence and correlates of serious mental illness (SMI) in the national co-morbidity replication (NCS-R). Available at http://mentalhealth.samhsa.gov/publications/allpubs/SMA06-4195/Chapter15.asp

Citations to the Act and the MHPA are to Section 712 of ERISA, unless otherwise noted.

In 1999, President Clinton issued an executive order requiring the FEHBP Program to provide full mental health and substance abuse parity on an in-network basis beginning in 2001. These benefits cover all medically necessary treatments listed in DSM. FEHBP covers approximately 9 million lives.

Department of Treasury and the Internal Revenue Service (collectively "IRS") published implementing interim final regulations (Treas. Reg. § 54.9812-1T) on December 22, 1997 (62 Fed. Reg. 66932), which essentially track the DOL regulations. The Department of Health and Human Services concurrently published parallel interim final regulations. Hereinafter, all references to these regulations are to the DOL regulations, unless otherwise indicated.

An HMO is a medical plan where the covered individual must go through a "gatekeeper" (PCP) for all medical care. Referrals are only made to providers (hospitals, physicians, labs, etc.) within the HMO's network, and no benefits are provided out-of-network. A PPO is a medical plan that allows covered persons to choose each time a service is provided between a network of "preferred" providers with higher reimbursement levels and out-of-network providers. A PPO does not require a PCP referral to see a specialist or to have lab tests. A POS plan also has network and out-of-network benefits but requires a PCP referral for specialist visits and tests. Stated another way, a POS is an HMO that also has out-of-network benefits.

Authority for treating each benefit package option as a separate group health plan for mental health parity purposes is contained in the DOL Reg. § 2590.712(c). For example, in a group health plan that offers a choice between indemnity coverage and HMO coverage, the mental health parity requirements under the IRS regulations would apply separately to each coverage option. Similarly, the parity requirements would be applied separately to each package, where a plan provides one benefit package for retirees and a different benefit package for current employees.

DSM is the recognized list of mental health disorders.

For details on how self-funded governmental plans may opt out, see http://www.cms.hhs.gov/SelfFundedNonFedGovPlans/02_ProceduresandRequirements.asp#TopOfPage

In our view, the January 1, 2009, deadline for collectively bargained plans with agreements expiring before January 1, 2009, makes no sense. Informal conversations with agency representatives confirm that there is much confusion and uncertainty about the MHPA compliance deadline for plans subject to collective bargaining agreements expiring between now and December 1, 2009. Typical benefits legislation would not require collectively bargained plans to comply before all other plans, which would suggest that collectively bargained plans have until at least November 1, 2009, to comply. Without delving into all the legal arguments on either side of this issue, it appears unlikely that the DOL, IRS, or Department of Health and Human Services will resolve this question without either a legislative technical correction or some other definitive statement from Congress. We believe, however, that the text of the statute contains an error and that "January 1, 2009" should instead read "January 1, 2010," so that collectively bargained plans do not have an earlier effective date than other group health plans.

Goldman, H.H. , Frank, R.G. , Burnam, A. , Huskamp, H.A. , Ridgely, M.S. , Normand, S.T. , et al. (2006). Behavioral health insurance parity for federal employees. New England Journal of Medicine, 354(13), 1415-1417.

American Psychological Association. (2000). Diagnostic and statistical manual of mental disorders (4th ed., text revision). Washington, DC: Author.

Sederer, L.I. , Silver, L. , McVeigh, K.H. , & Levy, J. (2006). Integrating care for medical and mental illnesses. Preventing Chronic Disease. Available at http://www.cdc.gov/pcd/issues/2006/apr/05_0214.htm

Horn, S.D. (2002). Outcomes and expenditures: Lessons from a research paradigm. Drug Benefit Trends, 14 (Supplement "Limiting Access to Medications: Impact on Managing Mental Illness"), 5-18.

Hertz, R. (2002). The impact of mental disorders on work. New York: Pfizer Pharmaceutical Group. Available at Pfizer.com/Pfizer/download/health/pubs-facts-workimpact.pdf

Finkelstein, S. , Berndt, E. , Greenberg, P. , Parsley, R. , Russell, J. , Keller, M. , et al. (1996). Improvement in subjective work performance after treatment of chronic depression: Some preliminary results. Psychopharmacology Bulletin, 32, 33-40.