The Patient Protection Affordable Care Act (PPACA) requires that mental health coverage be put on the same level with insurance coverage for medical and surgical procedures. In practice, this means health plans must offer the same types of deductibles, copayments, and doctor visits for both medical and mental health coverage.
The focus on mental health coverage has garnered more attention in recent years. For example, the Center for Disease Control (CDC) and the World Health Organization report that mental illness accounts for more disabilities in developed countries than any other group of medical illnesses. According to the CDC, about one in four Americans reported having a mental illness in the previous year. With these trends, public policymakers and others want to ensure that insurance coverage for depression, anxiety and other mental health issues are not short-changed.
Legislative Overview
Historically, mental health patients have found it difficult to find affordable health insurance policies that cover their particular conditions, often because of the high cost of treating psychological disorders. However, the Mental Health Parity Act of 1996 (MHPA) and the Mental Health Parity and Addiction Equity Act of 2008 (MHPAEA) attempted to rectify the disparities in price by requiring that financial and treatment limitations imposed on mental health and substance abuse disorder benefits be no more restrictive than those imposed for other medical and surgical treatments. More recently, these efforts have been solidified by PPACA, which requires that mental health and substance abuse disorders be afforded parity with other conditions, such as diabetes and heart disease. PPACA also includes several provisions specific to the treatment of mental health and substance abuse conditions.
MHPA was passed on January 1, 1998. The law made important strides in equalizing the coverage for treatment received by mental health patients, but left some things to be desired. The law required parity for aggregate lifetime and annual dollar limits in plans sponsored by private and public sector employers with more than 50 employees. This established a floor that plans could not fall below in terms of the amount of coverage afforded to mental health services. In addition, the law did not preempt state laws that may have provided increased coverage. However, the law did not mandate that an employer’s health benefit plan actually provide for mental health coverage; rather if a plan did provide for mental health coverage, then that plan had to offer parity with traditional medical coverage.
MHPAEA expanded on the MHPA provisions, by adding parity requirements for substance abuse disorders as well as mental health disorders, expanding parity to include treatment limitations, financial requirements, and out of network covered benefits. MHPAEA also applies to plans sponsored by private and public sector employers with more than 50 employees, including self-insured and full-insured plans. Additionally, MHPAEA set forth specific disclosure requirements and included a provision that allowed health insurers to avoid parity requirements if they incurred costs above a certain threshold.
MHPA and MHPAEA together established the federal mental health parity requirements. Together, these laws required what is known as a “mandated offering parity” approach. Although plans were not required ‘out of the gate’ to offer mental health or substance abuse coverage, these plans were required to comply with the mental health parity requirements if they elected to offer mental health benefits.
In an effort to further expand upon the work of MHPA and MHPAEA, PPACA aimed to expand the reach of federal mental health parity to qualified health plans, Medicaid, and large group plans.
Essential Health Benefits
As mandated by PPACA, qualified health plans must offer essential health benefits (EHBs) through the state-based exchanges. A similar requirement will apply to other types of coverage sold to small groups and individuals outside of the exchanges beginning in 2014.
Although states have some discretion with ultimately how the standardize benefit package is configured, they will need to offer some level of “mental health and substance use disorder services, including behavioral health treatment” as identified in the statute. PPACA also mandates “mental health parity” pursuant to Section 2726 of the Public Health Service Act.
Pre-Existing Conditions
One of the more favorably-viewed PPACA provisions from a consumer perspective is the requirement that health plans may not deny coverage to an individual based on a pre-existing condition. Not only does this requirement cover individuals living with heart disease, diabetes, or asthma, but it also includes individuals with mental health or substance abuse disorders.
Closing the Gaps
PPACA will likely expand mental health coverage beyond MHPA and MHPAEA through the EHB requirements, including the coverage sold through state-based exchanges geared to small employers and individuals. However, several gaps in coverage will likely remain over the next several years. For example, certain types of health plans will qualify for waivers (such as grandfathered health plans), and states may take different approaches to how much mental health coverage will be required as part of the local EHB packages. However, the authors of PPACA clearly intended to increase the services afforded to individuals suffering from mental health and substance abuse disorders.
We have covered many PPACA-related issues since its inception, and will continue to follow these issues for you. Please visit www.HealthcareExchange.com for those and other blog posts, polls, surveys and numerous resources or www.benefitmall.com to view past Legislative Alerts.
The views expressed in this post do not necessarily reflect the official policy, position, or opinions of BenefitMall. This update is provided for informational purposes. Please consult with a licensed accountant or attorney regarding any legal and tax matters discussed herein.
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