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July 12, 2010
DOL Posts FAQ on Mental Health Parity and Addiction Equity Act Regulations
The Department of Labor (DOL) recently posted on its Web site an answer to a frequently asked question (FAQ) about the Mental Health Parity and Addiction Equity Act (MHPAEA).1 This FAQ will make it easier for plan sponsors to determine whether financial requirements (such as copayments) or treatment limits applicable to outpatient services for mental health or substance use disorders will be permissible under the MHPAEA regulations.
Background
The MHPAEA generally prohibits financial requirements and treatment limits for benefits for mental health and substance use disorders that are more restrictive than the predominant financial requirements or treatment limits that apply to "all or substantially all" medical and surgical benefits. In February 2010, the Departments of Labor, Treasury and Health and Human Services jointly released interim final regulations implementing provisions of the MHPAEA.2
The regulations created six classifications that must be tested to assure that a plan meets the MHPAEA standards. Two of the classifications are in-network outpatient coverage and out-of-network outpatient coverage. The regulations required that both types be treated as one classification for purposes of MHPAEA testing.
Because many plans use copayments for office visits and coinsurance for other outpatient services (e.g., laboratory and hospital services), the MHPAEA testing process produced an unexpected result: an office-visit copayment was not the predominant financial requirement for outpatient benefits. Consequently, in order to pass the MHPAEA test, many plan sponsors would have had to remove any copayments from office visits for mental health or substance use disorders.
Safe Harbor Provision
The DOL FAQ, posted on July 1, 2010, creates an enforcement safe harbor that allows plans to divide outpatient benefits into two sub-classifications for the purpose of assessing parity under the MHPAEA. In measuring parity, plans and issuers may distinguish between outpatient office visits and all other outpatient services, such as facility charges, laboratory testing and x-rays. With this announcement, plan sponsors that had been concerned that the MHPAEA would require the complete elimination of copayments for office visits for mental health and substance use disorders may be able to revisit their testing and maintain a copayment structure for services for mental health and substance use disorders.
Scope of the Safe Harbor
Although the FAQ is posted on the DOL Web site, the FAQ states that this new enforcement safe harbor is being established by the "Agencies," which appears to mean it would be applicable to all group health plans, not just to those governed by the Employee Retirement Income Security Act (ERISA).
Action Steps for Plan Sponsors
Plan sponsors that have already conducted mental health parity testing and concluded that the plan could not charge a copayment for office visits for mental health or substance use disorders may wish to revisit this issue in light of the new FAQ.
While the DOL enforcement policy reduces the need for testing in many instances, it does not completely eliminate the need to do certain calculations. For example, plans must continue to determine the predominant financial requirement for outpatient office visits as a whole and cannot create separate sub-classifications for generalist and specialist office visits.
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As with all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for authoritative advice on MHPAEA and related guidance. Segal can be retained to work with plan sponsors and their attorneys on compliance and plan redesign.
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- The FAQ is available on the DOL Web site. (Click on the following text to return to the Capital Checkup.)
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- For a summary of the MHPAEA regulations, see The Segal Company's March 2010 Bulletin, "MHPAEA Regulations Released." (Click on the following text to return to the Capital Checkup.)
Capital Checkup is The Segal Company's periodic electronic newsletter summarizing activity in Washington with respect to health care and related subjects. Capital Checkup is for informational purposes only. It is not intended to provide guidance on current laws or pending legislation. On all issues involving the interpretation or application of laws and regulations, plan sponsors should rely on their attorneys for legal advice.