Traditionally, health insurance has been more restrictive for behavioral health care—that is, treatment for conditions like depression and anxiety as well as addiction— than for all other forms of health care. When you break your leg, or are diagnosed with diabetes, accessing treatment is straightforward. It is fairly easy to locate a provider, and treatment is often covered by your insurance plan.
But when it comes to accessing behavioral health care the process is more challenging. It’s not uncommon to work with a doctor on a treatment plan, only to find out that that recommended treatment is not covered by insurance. Or sometimes prior authorization requirements put hurdles in the way of getting treatment covered by insurance.
Landmark federal legislation was passed in both 2008 and 2010 to remove these barriers to care and provide parity in health insurance coverage for both mental health and substance use disorder. Yet many of the protections within these laws remain unrealized.
Parity is about fairness
It provides the basic framework for ensuring comparability in coverage of mental health and substance use disorder services.
The Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act of 2008 (the Parity Act) generally prohibits employment-based group health plans and health insurance issuers that provide group health coverage for mental health and substance use disorders from imposing less favorable benefit limitations on those benefits than they impose on other medical or surgical benefits.
The Parity Act and its implementing regulations generally:
- Require that the financial requirements (like copays and deductibles) and quantitative treatment limitations (such as visit limits) applied to mental health and substance use disorder benefits can generally be no more restrictive than the predominant requirements or limitations applied to medical or surgical benefits within a specific classification (i.e., in-network outpatient, out-of-network outpatient, in-network inpatient, out-of-network inpatient, emergency care, and prescription drugs).
- Require parity in the application of non-quantitative treatment limitations (NQTLs), like medical management standards.
- Expand to substance use disorder benefits the parity requirements of the Mental Health Parity Act of 1996, which prevent plans and issuers from imposing a lifetime or annual dollar limit on mental health benefits that is lower than the lifetime or annual dollar limit imposed on medical or surgical benefits.
The Parity Act in detail
- While the Parity Act does not require a plan to cover mental health or substance use disorder services or all diagnoses, if a plan does cover these services, it must provide coverage for mental health and substance use disorder services for all the classifications in which general medical or surgical services are provided.
- Under the Parity Act, mental health and substance use disorder benefits must be covered and managed in a way that is no more restrictive than general medical and surgical services under the plan, even when a separate managed behavioral health organization or carve-out arrangement is used to provide or administer mental health and substance use disorder benefits.
- The regulations include mathematical rules for analyzing financial requirements and treatment limitations that are expressed numerically. For NQTLs applied to mental health or substance use disorder benefits (e.g., pre-authorization requirements, concurrent review requirements, provider reimbursement structures), the processes, strategies, evidentiary standards or other factors used to apply the NQTLs must be comparable and cannot be applied more stringently than they are to general medical or surgical benefits.
- The Parity Act requires plans and issuers to disclose the criteria for medical necessity determinations and the reason for any denial with respect to mental health and substance use disorder benefits.
- The law is administered by the Departments of Labor, HHS, and Treasury, in collaboration with the states.
- Final regulations applying the Mental Health Parity and Addiction Equity Act to the Medicaid and CHIP programs are administered by the Centers for Medicare & Medicaid Services, in collaboration with state Medicaid and CHIP agencies.
The Affordable Care Act (ACA) builds on the Parity Act
The ACA increased access to mental health and substance use disorder coverage and extended the reach of parity in several ways:
- Established Health Insurance Marketplaces in each state.
- Coverage that is offered through the Marketplace, as well as through all non-grandfathered health plans in the individual and small group markets, must cover Essential Health Benefits (EHBs), which include mental health and substance use disorder benefits.
- The regulations implementing the EHB requirements require non-grandfathered individual and small group insurance plans to offer mental health and substance use disorder benefits in accordance with the requirements of the Parity Act.
- Extended the Parity Act to apply to the individual health insurance market, as well as to qualified health plans offered through the Health Insurance Marketplaces.
- Provided an expansion of Medicaid to cover low-income Americans ages 19-64.
- Required those newly eligible for Medicaid receive a benchmark benefit or benchmark-equivalent package that includes EHBs that are provided in compliance with parity.
Parity is improving, but violations are common
The landscape for access to mental health and substance use services has improved a lot in recent years. Although other factors may have also influenced these changes, health care consumers have benefited from parity changes in tangible ways. And, while there is more work to do, employers and health plans have made progress in complying with the Mental Health Parity and Addiction Equity Act, particularly in identifying and eliminating inequities in financial and quantitative treatment limitations (like different copays or visit limits).
Specifically, in 2012, an HHS Parity Act compliance study found that most group health plans had eliminated most financial requirements that did not comport with the law.1 The study also found a substantial decrease in the number of plans and issuers imposing disparate quantitative limitations (such as inpatient day limits or outpatient visit limits) between behavioral health and medical or surgical benefits.
Overall, state-level substance use disorder parity laws have helped to increase the treatment rate by approximately 9% across substance use disorder specialty facilities and by about 15% in facilities that accept private insurance. This effect was found to be more pronounced in states with more comprehensive parity laws.2
The percentage of adults using mental health services had been flat at 13.8% in the United States since 2002. Parity Act protections took effect for large group health plans in late 2009; by 2014, the percentage of adults using any mental health service climbed to nearly 15%.
Some of the most common violations of the Parity Laws made by insurance plans
- A higher copay or out-of-pocket cost for mental health and substance use disorder services than for other medical care.
- Limits on how many days a patient can stay in a treatment center, or how many times a patient can see a provider—when the plan doesn’t have such limits on treatments for other medical issues.
- Denials claiming the treatment is not “medically necessary.”
- A requirement to try another form of treatment before the insurance plan will cover the treatment recommended by a doctor.
The National Center on Addiction and Substance Abuse (CASA) issued a report3 evaluating the coverage offered by insurance plans. The report found that:
- More than two-thirds of the plans do not comply with the ACA’s requirements for coverage of substance use disorder benefits.
- Almost half of the plans violate the ACA’s requirement for coverage of prescription drugs to treat addiction.
- 18% of the plans definitely violate parity requirements, and 31% of the plans contain possible parity violations.
- None of the plans provide comprehensive substance use disorder coverage. Most plans don’t cover the full array of critical benefits without harmful treatment limitations. The most frequently excluded or not explicitly covered benefits are residential treatment and methadone maintenance therapy.
- 88% of plan documents lack sufficient detail to fully evaluate compliance with the ACA and/or the adequacy of substance use disorder benefits.
We need State Parity Laws to provide details and clarifications
While the Affordable Care Act made important progress for parity in health insurance, a lot of much-needed clarification surrounding parity was left up to the states.
The ACA did not define which substance use disorder benefits must be covered. Instead, each state selects an EHB-benchmark insurance plan to serve as a template. Then, the benefits offered in that plan become the minimum level of substance use disorder coverage that ACA plans sold in that state must offer.
Predictably and regrettably, these decisions about what coverage to offer are often not informed by evidence, or the body of research that shows the amount and duration of treatment needed to help people with substance use disorders get on a path of recovery. A “minimum level of coverage” almost never translates into an effective level of service for what are often very complex and chronic disorders.
Shatterproof, working with ParityTrack, developed the following set of specific recommendations to enforce the federal parity law and reduce violations.
Critical elements of state legislation
- Applies relevant parity sections of state law to all types of plans: large, small, individual, state employee, county and municipal employee, and Medicaid plans.
- Ensures that different levels of coverage are not required for different plans.
- Officially defines mental health conditions and substance use disorders as they are defined in the International Classification of Disease or the Diagnostic and Statistical Manual of Mental Disorders.
- Includes language stating that coverage provided for substance use and mental health disorders must be on the same terms and conditions as it is for other medical coverage.
- Specifies that residential treatment is included with in-patient benefits.
- Requires plans to cover life-saving opioid antagonists, and requires plans that cover prescriptions to cover FDA-approved medications for the treatment of substance use disorders, if such medications are medically necessary.
- Prohibits plans from imposing non-quantitative treatment limitations on mental health or substance use disorder benefits that are designed or applied more stringently than those in place for other medical benefits.
- Requires relevant state regulatory agencies to enforce PARITY ACT and any similar sections of state law, with specifics on how the agencies may do this.
- Requires plans to submit information that is needed to check for compliance with Parity Act and relevant sections of state law.
- Requires regulatory agencies to submit annual reports that describe how they are implementing the Parity Act and similar sections of state law in addition to educating the public about mental health/substance use disorder coverage laws.
Shatterproof is partnering with several organizations to advocate for these critical elements in states.