In 1996, Congress passed the Mental Health Parity Act (MHPA), which applied to large employer group plans. The MHPA equalized the annual and lifetime benefit limits for mental health and physical health. This was the nation’s first small step to insuring fairness in health insurance for people with mental health conditions.
Massachusetts went much further in 2000 in the Massachusetts Parity Law, An Act Relative to Mental Health Benefits. The law was amended in 2008. The state law applies, with some exceptions, to health insurance policies issued or renewed in Massachusetts. (The exceptions are self-insured private employer group plans, MassHealth, Medicare, and plans for federal employees and the military. Some of these plans are covered by later federal legislation.)
Unlike federal law, the state law mandates coverage for adults and children for 13 biologically-based mental health conditions, including schizophrenia, bipolar disorder, major depression, eating disorders, PTSD and autism. This coverage must be provided on a non-discriminatory basis – that is, annual or lifetime service benefits (e.g., the number of outpatient visits or inpatients days) cannot be less than those imposed for physical illnesses. Likewise, co-payments and deductibles cannot be any higher. Moreover, and equally important, the plans must cover a full range of medically necessary inpatient, outpatient, and “intermediate” services for adults and children. Intermediate services include acute and other residential treatment, detoxification, partial hospitalization, crisis stabilization and other services.
In 2008, Congress expanded the federal parity protections with the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act (Federal Parity Act). Unlike the Massachusetts law described above, the federal statute does not mandate mental health or substance use treatment coverage. However, if such benefits are provided by a health plan, the benefits must be comparable to those for physical health care – that is, for instance, without more restrictive financial requirements or treatment limitations.
The Federal Parity Act applies to group health plans (including self-insured plans) with more than 50 members, some smaller plans, and certain MassHealth (Medicaid) plans. However, it does not apply to all health plans. For example, plans covering only retirees, federal employee plans, military health care plans and Medicare are exempt.
The Affordable Care Act (ACA), or “Obamacare,” established certain Essential Health Benefits that are required in individual and most small employer plans. These benefits include mental health and substance use treatments, making them subject to the Federal Parity Law.
The Federal Parity Law, the Affordable Care Act, and the Massachusetts Parity Law provide strong protections for Massachusetts citizens with mental health or substance use conditions.
Key requirements of federal mental health parity laws
1. Health insurance policies must offer benefits for mental health care in the same service categories that are covered for medical and surgical benefits. So, for example, if the plan offers coverage for inpatient care for physical illness, it must offer inpatient care for treatment of mental health and substance use conditions. The same would be true for outpatient, emergency and prescription medications.
2. Financial requirements like deductibles and copayments generally cannot be any more restrictive for mental health or substance use treatment than for medical or surgical care.
3. There must be parity in limitations on covered treatment. There are several different kinds of limitations. Plans, for example, may limit the number of outpatient visits covered by the plan or the number of inpatient days covered. If a health plan covers unlimited outpatient doctor visits for physical illness, the same coverage must generally apply to mental health and substance use related visits. Not all the financial or coverage limitations have to be identical, however. A financial requirement or a treatment limitation imposed on mental health or substance use care does not violate parity if the same limitation applies to substantially all medical and surgical benefits and is no more restrictive than the predominant requirement applied to physical health care. Determining whether there is parity in these kinds of limitations can be complicated. The U.S. Department of Labor’s Employee Benefits Security Administration has an online tool for determining whether a plan meets the parity law requirements.
4. The ACA prohibits cumulative lifetime or annual dollar limits on care that are Essential Health Benefits.
5.Some other treatment limitations that are not based on dollars or number of visits may violate parity. These limitations could include, for example, prior authorization requirements, limits on medications that are covered, and therapy protocols that require a certain treatment be tried first and fail before another can be tried. If there are arbitrary or discriminatory differences in how these limits are applied, they may violate parity.