On October 3, 2008, the federal Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (MHPA) was signed into law as part of the Emergency Economic Stabilization Act of 2008.
Although it has been hailed as an "end to discrimination" against people suffering from mental abuse, MHPA does not require group health plans to provide any level of mental health coverage. Instead, it requires group health plans that offer mental health or substance use disorder benefits to provide the same financial and treatment coverage offered for other medical and surgical benefits.
A. New Protections
MHPA builds upon the limited federal parity provisions already in place, which require group health plans to impose the same annual and lifetime dollar limits to mental health benefits as are imposed on other medical benefits. MHPA amends the Employment Retirement Income Security Act (ERISA) and the Public Health Service Act to provide several additional protections, including:
1. Financial Requirements - financial requirements, such as co-pays, deductibles and coinsurance, for mental health and substance use disorder benefits must be no more restrictive than those imposed on comparable medical and surgical benefits.
2. Treatment Limits - any treatment limitations, such as caps on number of visits or days of coverage, for mental health and substance use disorder benefits must be no more restrictive than those imposed on comparable medical and surgical benefits.
3. Out of Network Coverage- if a plan offers out-of-network benefits for medical or surgical benefits, it must also offer out-of-network coverage for mental health and substance use disorder benefits.
B. Who and When
MHPA applies to all large (employers having 51 or more employees) group health plans, both self funded and fully insured. Employer group health plans with 50 or fewer employers are exempt from MHPA.
In addition, MHPA provides that any group health plan may apply for an exemption from MHPA if the plan can demonstrate that application of the MHPA will raise the plan's costs more than two percent in the first year of application, or more than one percent for each subsequent year.
MHPA becomes effective for plan years starting after October 3, 2009.
C. Impact in Maryland
Many states, including Maryland, already have some form of mental health parity law in place that covers insured health plans. (Employer self-funded health plans are not covered by state law, because ERISA exempts self-funded plans from regulation by the states.)
MHPA does not override existing state mental health parity laws, unless the state law "prevents the application" of MHPA. Therefore, state laws that are broader than MHPA will remain effective, whereas state laws that are less restrictive than the MHPA will be preempted.
Maryland's mental health parity provisions are both broader and less restrictive than MHPA. For example, unlike MHPA, Maryland law requires health insurance policies to provide benefits for the diagnosis and treatment of mental illness, emotional disorder, and drug and alcohol abuse. However, the statutorily mandated coverage that is required for these illnesses can be less than the coverage that is provided for other medical and surgical benefits.
The effect of MHPA, as confirmed by an Opinion of the Maryland Attorney General on February 23, 2009, is that large group health plans (those covering over 50 employees) insuring Maryland residents will have to offer the mental health and substance use disorder benefits required under Maryland law, and will have to provide full parity for those benefits as required by MHPA. Small group health plans and individual policies for Marylanders will only be subject to Maryland's mandated coverage.